395. Trump, Xi, and how China outsmarted America

Summary

The Rest Is Politics – Episode 395: Trump, Xi, and How China Outsmarted America

Release Date: April 15, 2025

Hosts: Alastair Campbell and Rory Stewart
Podcast: The Rest Is Politics
Description: Alastair Campbell and Rory Stewart break down current affairs in the UK and abroad, offering insider perspectives and expert analysis on British and global politics.

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Introduction

In Episode 395 of The Rest Is Politics, hosts Alastair Campbell and Rory Stewart delve deep into the intricate dynamics of the US-China trade war, exploring how China has strategically positioned itself to outmaneuver the United States. The conversation extends to the implications for global politics, industrial policies in the UK, and the recent coalition agreement in Germany.

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US-China Trade War: China’s Strategic Advantages

Timestamp [01:31] – [10:24]

Alastair Campbell initiates the episode by adopting the perspective of a Chinese diplomat to analyze the ongoing trade war with the United States. He outlines 10 key advantages that China holds over the US in this economic standoff.

1. Long-Term Planning vs. Impulsivity:

   • Campbell: “China has been preparing for this kind of breach for a long time, whereas Trump’s team doesn’t even know what he’s going to be doing day to day.”
     (02:40)

2. Soft Power and Diplomacy:

   • Initiatives: President Xi Jinping's tour of Vietnam, Cambodia, and Malaysia aims to reset regional relationships.
   • Campbell: “The soft power damage Trump is doing to America is opening up unexpected opportunities for improved trade and diplomacy for China.”
     (02:40)

3. Retaliatory Powers Beyond Tariffs:

   • Rare Earths Control: China controls roughly 75% of American rare earths, imposing export restrictions on critical sectors like defense robotics.
   • Campbell: “They are slapping all sorts of control export controls on the firms that send them to, say, Defense Robotics.”
     (03:50)

4. Shifting Market Dependence:

   • Export Dynamics: The US’s reliance on Chinese exports has decreased from 20% in 2018 to 12.8% in 2023.
   • Campbell: “China’s reliance on American products cut in half by the same period.”
     (05:00)

5. Strategic Education and Public Perception:

   • Influence: China has effectively educated the American public about the dependency on Chinese supply chains.
   • Campbell: “They educated the American people and American politicians about the extent to which companies like Apple were completely locked into Chinese supply systems.”
     (06:00)

6. Elon Musk’s Dilemma:

   • Tesla’s Position: Musk’s reliance on Chinese imports and his establishment of factories in China exemplify the complex US-China interdependency.
   • Rory: “Musk is a very, very clear example of this sort of split which we’ve talked about within Trump’s camp.”
     (07:00)

7. Moral High Ground:

   • Blame Game: China uses economic challenges to deflect blame from domestic issues, maintaining moral superiority.
   • Campbell: “China has given America the moral high ground… it gives them somebody else to blame when the economy falters.”
     (08:00)

8. Transshipment Tactics:

   • Tariff Evasion: Chinese products are often rerouted through third countries to circumvent US tariffs.
   • Campbell: “Chinese products get shipped into a country that is not under very high tariffs and then they make their way there.”
     (09:00)

9. Economic Resilience:

   • Vulnerability Balance: China perceives that the US is more dependent on its exports than vice versa.
   • Campbell: “They think America needs them more than they need America.”
     (09:30)

10. Price and Recession Resilience:

    • Economic Flexibility: China can manage rising prices and potential recessions more effectively without the same political constraints faced by the US.
    • Campbell: “They can wear rising prices and even a recession in a way that the Americans can’t.”
      (10:00)

Rory Stewart complements Campbell’s analysis by emphasizing the critical role of rare earths and other essential minerals in modern technology and defense, underscoring China’s strategic dominance in these sectors.

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Economic Implications and Political Resilience

Timestamp [10:24] – [23:11]

The discussion transitions to the broader economic and political ramifications of the trade war. Rory Stewart contrasts the raw economic challenges with the political resilience of both China and the US:

• Economic Calculations:

  • Stewart: “The economics is the kind of raw maths of trying to calculate who suffers more, China or America.”
    (11:00)

• Political Pain Tolerance:

  • Stewart: “China is more likely to be able to ride out the political pain better… Trump is in trouble with midterms and a Congress that can undo all his tariffs.”
    (12:00)

• Public Perception and Media Influence:

  • China effectively uses media to project a positive image, countering US narratives.
  • Campbell: “China is sensing, you could be right, that the economic fundamentals are too weak for them to maximize this properly.”
    (25:00)

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"American Factory" and Cultural Clashes

Timestamp [26:20] – [34:40]

The hosts discuss the documentary American Factory, which portrays the cultural and economic tensions arising from Chinese ownership of an American factory in Dayton, Ohio.

• Economic Decline and Cultural Transformation:

  • Campbell: “You see the gradual change, the changing of the culture, the imposition of Chinese practices and attitudes.”
    (26:50)

• Workers’ Struggles:

  • Stewart: “The factory workers face wage cuts, unionization efforts, and eventual job losses as automation takes over.”
    (28:51)

• Cultural Contrasts:

  • Campbell: “Chinese workers are culturally different—dressed impeccably, singing songs of flexibility and happiness—contrasting with the struggling American workers.”
    (32:22)

The film serves as a microcosm for the larger US-China economic battle, highlighting the human and cultural costs of globalization and trade wars.

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Nationalization of British Steel

Timestamp [39:05] – [48:24]

The conversation shifts to the UK's decision to nationalize its last steel factory in Scunthorpe amidst escalating tensions with China.

• Historical Context and Economic Pressures:

  • Campbell: “This was our last steel-making plant, and the government feared it would shut down due to pressure from Chinese owners.”
    (39:59)

• Political Dynamics:

  • Rory Stewart critiques the nostalgic and simplistic view that nationalization will solve complex economic issues.
  • Stewart: “The conventional market story is... people were voting for Trump because we’re failing to provide decent alternative work.”
    (45:39)

• Cultural and Strategic Concerns:

  • Nationalization is seen as a strategic move to maintain national security, but it raises questions about economic efficiency and state intervention.
  • Campbell: “They had to organize the shipment of raw materials to keep the plant running, fearing shutdown.”
    (42:20)

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Germany’s Coalition Agreement and Migration Issues

Timestamp [48:29] – [58:21]

Alastair Campbell and Rory Stewart explore Germany's recent coalition agreement following its elections, focusing on the complexities of forming a government and handling migration.

• Coalition Negotiations:

  • The Die Verantwortung für Deutschland document highlights extensive policy negotiations between the Conservatives and Social Democrats.
  • Campbell: “The German culture accepts coalition, but the current political climate makes it challenging to present shades of grey.”
    (48:44)

• Policy Disputes:

  • Key disputes revolve around tax policies, minimum wage guarantees, and pension assurances.
  • Stewart: “Merz announced relying on votes from the Greens and SPD to achieve policies previously opposed during the campaign.”
    (52:48)

• Migration Crisis:

  • Migration remains a contentious issue, with pressures to leverage emergency powers to control asylum claims and border security.
  • Stewart: “Triggering emergency rules to stop asylum seekers would likely be thwarted by the European Court, strengthening the AfD’s Euroscepticism.”
    (55:26)

• Strategic Implications:

  • Germany's focus on strengthening ties with Poland and France positions it centrally in European security and economic strategies.
  • Stewart: “Germany could potentially invest hundreds of billions into infrastructure and defense, lifting broader European economies.”
    (59:06)

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Conclusion and Final Thoughts

Timestamp [59:43] – End

The episode wraps up with reflections on the interconnectedness of global trade, politics, and national security. The hosts emphasize the nuanced challenges posed by China’s strategic maneuvers and the internal political struggles within Western democracies striving to counterbalance this influence.

• Future Discussions:
  • Upcoming episodes will explore Australia’s role in global politics, domestic trade union movements, and the Labour Party’s industrial policy.
  • Campbell: “We have much more to talk about tomorrow, both internationally and domestically.”
    (59:48)

Notable Quotes:

• Alastair Campbell: “China has been preparing for this kind of breach for a long time, whereas Trump’s team doesn’t even know what he’s going to be doing day to day.”
  (02:40)

• Rory Stewart: “Imagine you’re a shoe manufacturer in the US making high-quality leather shoes and suddenly you’re scrambling to find alternative suppliers.”
  (22:00)

• Alastair Campbell: “China is sensing... that the economic fundamentals are too weak for them to maximize this properly.”
  (25:00)

• Rory Stewart: “The conventional market story is... people were voting for Trump because we’re failing to provide decent alternative work.”
  (45:39)

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Key Takeaways

1. China’s Strategic Dominance: Through meticulous long-term planning, control of critical resources, and effective use of soft power, China maintains significant advantages in the US-China trade war.

2. Economic vs. Political Resilience: While the US faces political vulnerabilities that China can exploit, China's centralized governance allows for more cohesive economic resilience against external pressures.

3. Global Supply Chain Vulnerabilities: The interdependent global supply chains present significant risks, reminiscent of the COVID-19 pandemic disruptions, highlighting the fragility of the current economic model.

4. Nationalization as a Strategic Move: The UK's nationalization of steel reflects broader themes of economic nationalism and strategic security, though it raises questions about efficiency and state intervention.

5. Complex Coalition Politics in Germany: Germany's coalition government grapples with balancing economic policies and migration control, illustrating the challenges of modern coalition politics in maintaining stability and addressing pressing issues.

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This detailed summary encapsulates the multifaceted discussions between Alastair Campbell and Rory Stewart, offering listeners comprehensive insights into the strategic interplay between global powers and the domestic political landscapes shaping contemporary politics.

Transcript

[Alistair Campbell]

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[Rory Stewart]

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[Alistair Campbell]

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[Alistair Campbell]

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[Rory Stewart]

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[Alistair Campbell]

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[Rory Stewart]

Welcome to the Restless Politics with me.

[Alistair Campbell]

Rory Stewart and me Alistair Campbell.

[Rory Stewart]

And today I think Alistair, we're going to be looking at us China. Obviously we're going to start with the tariffs and trade war and then we're going to move on to talk about industrial policy. We're going to talk about steel factory in the United Kingdom in Scunthorpe and we're going to look at what's happened in Germany where we've just had a coalition agreement put in place, the new Metz government taken over. But where do you want to begin.

[Alistair Campbell]

Us so I've spent the last couple of days really trying to imagine that I'm a Chinese diplomat and looking at this from their perspective because on the one hand they'll be worried that a trade war, massive tariffs from the USA on on their goods, that that will be damaging to their economy. We're now into three figures on both sides. The retaliation has gone up and up and up but if you feel free to jump in at any point, Roy and and agree challenge with any of them. But I've actually worked out, you know, Trump loves to say who's got the cards. He told Zelensky, you don't have any of the cards. I've worked out 10 cards that the Chinese have over the Americans in what's going on now.

[Rory Stewart]

Okay, go on then, give us your 10.

[Alistair Campbell]

Well, number one is that China, historically and now playing a long game up against somebody who is impulsive, clearly doesn't understand trade making up as he goes along, they have been preparing for this kind of breach for a long time, whereas Trump's team doesn't even know what he's going to be doing day to day. So that's the first one. The second one is that the soft power damage that Trump is doing to America is opening up unexpected opportunities for improved trade and diplomacy for China. Now, Xi, as you know, is currently on a tour of Vietnam, Cambodia and Malaysia. That was going to happen anyway, but that that will be part of a reset in the region. They've already had their first dialogue, economic dialogue in five years with Japan and South Korea directly because Trump brought in the tariffs. And they're also the European Union is talking about we need to get moving with China. So that's the second one. Third one, they have got powers of retaliation that we talked about this a little bit in relation to soybean when we first talked about tariffs, but they've got powers of retaliation beyond just tariffs. So for example, what they're doing on the global rare earths, I think is really interesting. Something like 3/4 of American rare earths come out of China and they are slapping all sorts of control export controls on the firms that send them to, say, Defense Robotics.

[Rory Stewart]

Let me come in on that quickly. If we're going to make it through 10, I'll have to come in on number three and then let you keep rolling on your other seven of this will be going. So I think that's a really good point. So critical minerals and rare earths are absolutely vital for the modern world. So in addition to the rare earths, things like cobalt, lithium, nickel, even copper are absolutely vital for batteries. Above all, which powers most of the technological revolution, most of the green revolution. And absolutely vital for semiconductor chips and all the stuff that America needs for its technology. And the problem is that it's not that China just owns a huge amount of the mines around the world. So they own the mines in Democratic Republic of Congo. They have big contracts, even developed world. It's that even that stuff which China doesn't mind itself is processed in China. And the reason why it's processed in China is you don't want to be running a factory processing the stuff in the United States because it is unbelievably not just capital investments setting up the plant, but it is massive pollution, environmental impact of running this slurry, running this processing plant. So nobody wants it. And in fact, if you tried to open those kinds of plants in Europe or the United States, you would face huge public opposition because the impact on the landscape, the environment, on water quality is unbelievable. So China has, as you say, a kind of stranglehold on that. Back to you.

[Alistair Campbell]

Well, also on that. I mean, I didn't realize 10% of chickens in China come from America. We talked before 50% of soybean, roughly 50% of soybean into China. So they're going to different markets now. And they're also planning to up the regulation on American companies as a way of leverage on the US and this is my next point, is that China will think that America needs them more than they need America. So going back to your point just there, three years ago, America relied on China for 532 key product categories, which was four times the level that they relied on 2000. China's reliance on American products cut in half by the same period. And as a result, the American market is not as important as it was to China. At the start of the first Trump trade war in 2018, American bound exports made up 20%, almost 20% of China's total exports, 2023 down to 12.8. So that balance is changing. And they also, they think this is my next one. They think that they helped to force the climb down on smartphones because they educated the American people, not least with some of their very funny memes. They educated the American people and American politicians about the extent to which companies like Apple were completely locked in to Chinese supply systems. So I don't know what number I'm at now, but next one, Elon Musk. They have got Elon Musk.

[Rory Stewart]

Okay.

[Alistair Campbell]

And they think that's an advantage to them unless Trump does what Scaramucci keeps saying he's going to do, get him right outside the tent. So they think Musk was an important voice in arguing for what they were trying to do. Next point.

[Rory Stewart]

And the reason for that is that Musk both relies on imports from China for his goods, thinks tariffs are mad. You know, he's been out calling Peter Navarro, who's Trump's tariff guru, Peter Ritado in an incredibly offensive way on X. Yeah. But also has opened large Tesla factories in China. So Musk is a very, very clear example of this sort of split which we've talked about within Trump's camp.

[Alistair Campbell]

Yeah.

[Rory Stewart]

Between the sort of tech bros who tend to be very anti tariff, often pro immigration, particularly skilled immigration, against the sort of MAGA base that tends to lean in a very different direction. Okay, your next one.

[Alistair Campbell]

My next one is America has given China the moral high ground, which is a rare, rare, rare achievement for them. So. And that in turn, this is actually coming out in his little tour of some of the language that President Xi Jinping is using. They also, it gives China somebody to blame. You keep making the point that Chinese economy is not as strong as it was. Yes, it's growing, but it's not growing as fast as it was. And they've got all sorts of problems, their housing crisis, their youth unemployment crisis and so forth. But this is giving them somebody else to blame. And when the economy goes tits up, it's always good to have somebody else to blame. And Trump is such a big figure in this debate and they've been developing other markets. Now, the next. My last two, I think I'm up to. I think I'm up to nine. My last two. One is transshipment. And this is something Navarro's onto. He knows that what China does to get around tariffs is basically to. And this may be again, why he's in Vietnam and Cambodia, even though they were going to get hit very hard as well, is actually that Chinese products get shipped into a country that is not under very high tariffs and then they make their way there. And they think they're very clever at doing that because they've been clever at doing that for quite a long time. And then the final one, they believe that Trump will have to back down first and that will be humiliating for him. And the reason for that is that prices, they can wear rising prices in a way that the Americans can't. They can, they could even wear a recession in the way the Americans can't, not least because they're not a dictatorship at all. And related to that, the weakening reputation of the American dollar and the American treasury bonds. So all of that bad news says they think Trump will back down first. There you are. There's the Chinese view.

[Rory Stewart]

That's beautiful. Beautiful. So I think, just listening to you, there are maybe there's the sort of economics that I'm listening to and there's the politics. So the economics is the kind of raw maths of trying to calculate who suffers more, China or America. And you've made a very, very good argument for why this is a big Big problem for the United States. And then the second argument is, I guess, around the politics. Who can ride out which one of these administrations can ride out a political and economic pain of this better? So let's start with the last one, and then we'll come back to the economics. You have to be right. I think that China is more likely to be able to ride out the political pain better. As you've pointed out, they're not a democracy. Trump is in trouble now. I mean, the tariffs are not popular with the American people. He's got midterms coming, and he's going to be facing a Congress that can undo all his tariffs if they want to. Now, at the moment, if you're a Republican senator or congressperson, you are balancing the fact that you're frightened of going against Trump because Trump and Musk will fund people against you in the primaries. You might lose your seat. But if you begin getting more worried about your voters than you are about Trump and Musk, you could start flipping in the other direction. And Xi Jinping, he's an authoritarian. But it's also true that they have been preparing for this for years, as you've just pointed out. They've spent the last eight, nine years trying to get ready for this, trying to be less reliant on the US Trying to diversify their markets, trying to make sure they develop strategic industries which aren't dependent on the US So that China really is only vulnerable. Then we get onto this in a second in relatively limited sectors. This also, as you say, I think it was part six or seven. It's very, very important that he has been trying to say for years as the Chinese economy struggles, this is because of the US it's not because I've been, you know, I, Xi Jinping, have made mistakes. So it's not that I've screwed up the property sector or I've been locking up tech giants or I've been undermining. It's because the US doesn't want us to grow. They're trying to wreck us. And Trump has given him that. It's now very, very plausible because Trump is saying it openly. I'm trying to destroy the Chinese economy because I don't want a rival. And that, of course, then helps him with allies. So the European Union, and maybe I'll come to you on this now, the European Union, maybe under Biden, would reluctantly have thought about lining up with the US against China, but reluctantly, because 50% of the profits of European luxury goods manufacturers and automobile manufacturers are made in China. And even if German car manufactures, their market share might decline, it's still unbelievably profitable, the sales of Mercedes and BMWs into China. So the German car industry does not want a trade war with China. And now Europeans will feel probably more angry with Trump than they do with China, which opens up the opportunity for China to cut Europe off from the US and this is the point Dominic Lawson made in an article in the Daily Mail and your least favorite newspaper. But he was saying if Trump had actually been serious and strategic about trying to undermine the Chinese economy, it was absolutely vital that he didn't alienate Europe. At the same time, he needed to keep Europe on side in order to isolate the Chinese economy. This reckless imposition of tariffs on Europe going up and then down again, and all the other stuff he's done to anger Europe almost guarantees that, that we're going to be in a situation where China and Europe and we can already see this conversation on electric vehicles becomes closer. So over to you on Europe for a second.

[Alistair Campbell]

See, I said last week about our media yesterday, every second of his meeting with President Bukele of El Salvador live on the news channels here, whereas I think quite newsworthy, last week, Prime Minister of Spain Pedro Sanchez met President Xi in Beijing. And they talked. And Sanchez talked about Europe deepening ties with China. And he warned against American protectionism. And you could sort of feel the kind of a different tone to his voice than there might have been even a few months ago had he been in China and then the European Union announcing that there's going to be a summit with China in July. And so I think what you've got is China adapting to this in the usual, very Chinese kind of way. How does this fit with where we're trying to get to and what have you? But they're doing it pretty ruthlessly. Whereas America, particularly this, America under Trump, locked into this idea of their own superiority. And because of the way that Trump is. We saw this yesterday. I don't know if you saw him droning on about how fit he was. And it was the best cognitive test that's ever been done by any human being. And Obama didn't even do them. Biden did it. But I love cognitive tests because I'm, I'm so clever and blah, blah, blah. And he's droning in this kind of sense of superiority. But I tell you what I think will be nagging away at the back of his mind, who is going to back down on this because. And he has backed down already in some pretty significant ways. And then he sends that poor guy Scott Besant out to say it was all part of the plan. And Lutnik says it was all part of the plan. So I think that the, I think this is a sense of a long term strategy. China up again and Europe trying to put together a long term strategy, but dealing with somebody who is literally minute to minute, hour to hour, very, very tactical. So that again, plays into, I think, plays to Chinese hands.

[Rory Stewart]

Let me for a second play devil's advocate and disagree agreeably. So I spent yesterday evening with somebody who is one of Trump's new appointees and who says he's become a friend of Trump over the last two, three years. And it was sort of interesting for me and kind of troubling, but he was trying to make the case for what they think they're doing. So maybe just for listeners, worth explaining what the Trump view is on what they're doing. So the Trump view is that China's economy is in trouble and that this is the time to hit them. And the reason why China's economy is in trouble is that although China has a trade surplus, there is a real problem with their balance of payments. There's basically capital flight happening. Foreign investors have been increasingly reluctant to put money into China over the last few years, partly because of American pressure, partly because they were spooked by what happened with Russia, Ukraine, a lot of diversification wave. China, a lot of Chinese businessmen have been frightened by Xi Jinping, imprisoning people, accusing them of corruption. So they've been slowing their own investment and they've been moving their money abroad. They've been getting around the capital controls, take their money abroad. We talked about the other problems, housing market collapse, unemployment. So there's quite a lot of, particularly amongst the business elite in China, quite a lot of anxiety about Xi Jinping and quite a lot of anxiety that he's a nationalist who unnecessarily keeps provoking confrontations with the US and therefore, as the capital flows out, China is more and more dependent on these exports. And the us, even with all that drop you've talked about, is still a huge, huge bit, $500 billion worth of Chinese exports. And as the Chinese export, as the Chinese economy struggles, those exports are really important to China. So the Scott Besant view, and remember Scott Besant, the Treasury Secretary worked for Soros and made his reputation taking on the bank of England, crashing the British economy, crashing the British economy. Yeah. So he may be looking, or this is the story, looking at China, thinking this is the time to hit them, they're weak. On the other hand, just to take the argument the other direction, you've pointed out that in many ways the US is probably too late to do this, that the Chinese economy is too big. I mean, one of the most interesting points I thought you made last week in passing is when I said the US largest economy in the world, you said, well, maybe. Because of course, what you're pointing out is this in purchasing power parity terms, which is not just looking at US dollar ranked economy size, but actually what you can buy with your money. China is significantly larger than the US already as an economy. And the final thing I picked up two days ago, I was talking to somebody who focuses on supply chain. So I was talking firstly to Dmitry Grozubinsky, who I keep quoting, and then I was talking to somebody on supply chains. What they pointed out is that nobody knows really what goes on in supply chains. Nobody can map it. We have this idea maybe that the US government has a spreadsheet with every company in the world on it that tells them exactly how many component carts comes from China. And of course, if you think about it, it's impossible. And I've done a little bit of this because when we were working with Turkhaus Mountain, for example, doing fair trade goods and you try to track every component in your goods in order to look at their carbon footprint or their human rights footprint, it's very, very difficult to do. And with big companies, there are suppliers, sub suppliers, sub sub suppliers. So even the companies themselves cannot tell you exactly how many of their intermediate component parts come from China. A lot of those is guesswork. And there are sort of big brains in the IMF and the World bank tearing their hair out trying to model this, but nobody can fully model this. So in the worst case scenario, and this is my sort of nightmare for you, the worst case scenario is, of course this will feel uncomfortably like Covid. Global supply chains will collapse. And that isn't just prices going up. Remember Covid was for the United Kingdom, the biggest recession that we'd had since the 1930s. That's real disruption because as Dmitry is pointing out, what's happened this week is that all those companies, all those small, medium sized businesses that were dependent on getting their stuff from China. So sorry, I'm being a bit long here, but just his final example, imagine you're a shoe manufacturer in the US making high quality leather shoes in the US and you want your shoelaces from China. Your shoelaces are already on a ship, but when they land You've either got to pay a tariff of 145% or you've got to pay a fee to send the shoelaces back to China. Meanwhile, you and all your competitors are desperately trying to Google alternative suppliers. I mean, shoelaces, maybe it's a silly example, but imagine this 10,000 times across the economy. But you've had reliable supplies from China. You know the price, you know the quality, you know that it's provided. And suddenly you and everybody else is trying to out of nowhere find an alternative supplier of whatever it is. Could be bolt number five that you need from a machine, could be your shoelaces, could be your copper, could be your lithium. And you're all doing it at the same time, which means that your new supplier sitting in Indonesia or Vietnam is sitting pretty. They probably don't have enough of the product. The price is being shot up. You don't know whether they're going to deliver it reliably. And it's these kind of things which in the worst case scenario means that the conventional economic analysis, which says, well, this isn't a big deal for the US because the US is quite a closed economy, its imports from China are relatively small percent. This maybe is only 2% of GDP, may underestimate weirder chaotic effects in supply chains. And of course the impact on psychology and the financial markets. People panicking around this overdue.

[Alistair Campbell]

The Chinese really have been quite effective this week on trolling the Americans. And they've been doing these films about the MAGA hats. The MAGA hats which most of the MAGA merch, if you go to Trump Tower and it's full of Trump models and Trump flags and Trump hats and what have you. And they're all either made in China, Hungary, quite like in Hungary, Orban getting a few favors in return for his political support. And one of the best ones that the Chinese put out, the Chinese foreign minister was picture of the MAGA hat and it was just the prices going up and up and up and up. But one thing that was constant was made in China. Now I'll tell you the other thing that's interesting as we were I read somebody suggested I read. It's interesting to see what they say about each other. So if you go to the State Department website and see what they say about economic relations with China and they say that their goal is to end China's abusive, unfair, illegal economic practices. China's economy is one of the most restrictive investment climates in the world. Arbitrary legal enforcement, lack of religious transparency, unfair trade practices. Including forced labor, massive state subsidies, etc. Etc. Etc. So then you go to the Chinese state paper. Chinese position on issues concerning China US economic and trade relations. 1. China, US economic and trade relations are mutually beneficial and win, win in nature. Two, The Chinese side has scrupulously honored the phase one economic and trade agreement. Three, The American side has failed to meet its obligations. Four. China upholds the principles of free trade and complies with WTO rules. 5. Unilateralism and protectionism undermine China US economic and trade relations. Now they take that. So we all know, because we see so much of it that Trump makes his argument. Doesn't matter if they're factual, just goes out and keeps making them. China's doing the same. And so in Vietnam, these are the talking points that they're using. You can trust China as a reliable partner. You can look to China to uphold the international rules based order. It's almost like we're seeing a flip of what we have become used to. And I thought that. And then, you know, when you throw in. And yet again yesterday, Trump saying that Zelensky started the war, putting Zelensky on a par with Putin in terms of how many people were dying and so forth. And so I just think that China is sensing, you could be right, that the economic fundamentals are too weak for them to be able to maximize this properly. But you can really sense that they are building a strategy out of what they see as Trump's succession of tactical errors.

[Rory Stewart]

Can I lean into the politics just once more? Stepping away from this immediate tariff war is the background to Trump's views on stuff. And we both watched this film, American Factory. Do you want to do a sort of brief explainer just to explain to people what that story was about? Because I think it's quite important to this story.

[Alistair Campbell]

I think it's very important to this story. I think it's very important as well to the steel story that we're going to come onto about Scunthorpe, because one of the questions is, should we be allowing Chinese companies to own very important parts of our national infrastructure? So American Factory is the story of this factory that was run by GM Motors in General Motors in Dayton, Ohio, shut down 2013, was it? And 2000 jobs went.

[Rory Stewart]

2008. I think it shut in 2008.

[Alistair Campbell]

Okay, so. So shut down 2008. And. And then it was brought back under Chinese ownership and to make the windscreens for cars. So not the whole car, but the windscreens. And what you see, I don't know what your Impression was it's two hours long. But you see the gradual change, changing of the culture, you see the gradual imposition of Chinese practices, Chinese attitudes. You see, there's one of the highlights of the film for me was when they took some Americans who were all very, very large and quite badly dressed to China, where they met their opposite numbers who were very svelte and well dressed and charming. And you just sort of have the sense of the Americans thinking, oh, we thought, as Vance was saying last week, we thought they were all going to be like peasants. And it turns out they're quite clever. And then by the time they get back, you said last week there was a guy who was virtually having his wages halved, eventually losing his job. They were trying to get unionized. There was a guy got paid a million dollars as the union avoidance consultant. And the Chinese owner flying in and saying, if there is a trade union here, I am out. And the politicians who were trying to help the union, the workers get a union, they were being vilified. And then by the end, the final scene, basically the robots are taking over and the guy, the Chinese chairman, is being shown around the factory by this on site manager saying, I'm getting rid of four more from there next week. I've got five from there I can get rid of. And you sort of see there's very little overt politics in the film, but you kind of see why this was fertile ground for the Trump message on China. So what was your big takeaway?

[Rory Stewart]

Yeah, let's begin at the beginning. So obviously these are people who in Dayton, Ohio in 2008 are earning, I think it's $23 an hour working in a GM car factory and then they lose their jobs. So at the beginning of the story, they represent the end of that American dream, which probably started in the mid-1940s where you could be a blue collar worker without higher education, working in a factory and earning a decent living, what Americans would call a middle class lifestyle, able to pay for their reasonably nice house. And you see some of those workers in the film have these quite nice houses with paddocks and horses, lots of guns, lots of guns. And suddenly they've lost all that. And now they're in a situation where if they get their job back in the factory, they're going to be earning $12 an hour. And as one of the people points out, his daughter is earning $18 an hour working in a nail bar. Second thing you pick up is of course this very, very strong story which has gone all the way through America, and which is fed partly by the unions. I was talking to someone in the Democratic Party last night who said that the unions only emphasize China. If you go to any of these communities, what the unions are saying to people who've lost their job is it's all because of China. Now, actually, I guess in Britain we'd have a slightly different view on this because in some ways this story is not a million miles away from what happened in Thatcher's Britain, what happened with coal mining, what happened with steel. But in Britain it happened earlier. What was happening in the US in the 2000s in Britain was happening in the 1980s. And in Britain, of course, it's. There was a big, big debate about what it was about. So some people thought this was mad voodoo economics from Thatcher. Some people thought it was because the unions were made too weak. If labor had remained strong, they would have been able to keep decent incomes coming in. Obviously, if you're on the right, you say, no, no, no. This is actually changing world conditions. These factories were not profitable anymore. They weren't productive anymore. And technology is changing. I mean, one of the amazing statistics in Britain is I believe we produce the same number of cars that we produced in the early 1970s with 1/10 the number of people. Same number of cars, 1/10 the number of people. Because these robots come in. So fast forward to where Trump is now. He's got these people represented in that movie who feel they've lost their jobs because of China. But he seems to have a nostalgic idea that the answer is that if you shut China out, you could get these people back into the factories again. And there, I guess one of the questions is, do Americans want to work in factories? Your friend Frank Luntz has just provided this amazing poll where he said 80% of Americans, Luntz, who we interviewed on Leading. 80% of Americans say there should be more manufacturing, but only 20% of Americans say they want to work in manufacturing. And as you see in that movie, most of the people working in that factory are older, they don't seem very physically fit. And of course they are beginning to let the audience see that it's not actually that great working in a coal mine or working a steel plant.

[Alistair Campbell]

But the other thing that comes through very strongly is the cultural clash. So you have, these are Americans who are living pretty rough lives, but you have Chinese people who come over from China, including that really good looking guy who became a friend with the guy who had all the guns in his garden, who ended up being sacked as well, and he had a wife and two children who he reckoned he was probably going to see once a year. And even in the factory in China, when the Americans went to visit the factory in China, they were talking to Chinese workers who were working 12 hour shifts, no overtime, no paid overtime, no paid breaks. And there was a woman there who thought she might, if she was lucky, she might see her daughter, I think she said, a couple of times a month. And yet, culturally, what was amazing was to see the culture of these. When they were welcomed by these Chinese workers, all from the factory, dressed up in amazing clothes, with their children coming in, dressed up as chickens, singing these songs. I don't know if you read the subtitles carefully. One of the songs was Lean and Flexible Management Will Lead Us to a Great and Happy Future. And they're all singing these songs happily. And the Americans are looking what the future is this all about? And then, of course, and then. And the Chinese in the American factory with interpreters going around because of the language barriers, you see the big difference in the American workers meetings and the Chinese workers meetings, including that one where the Chinese chairman said to the Chinese workers, don't forget, we're not just here to work. We're here to show America that we deserve to have factories here. They see themselves as part of this national mission. And, you know, maybe that. And, you know, the other thing that it left me thinking, when you align it with the things that Trump is doing, I think there's a part of Trump that wants to turn America into a form of China. No real democracy, acceptance of authoritarian leadership. I control the laws, I control justice, and people do as they're told. It's sort of. You had that. And the Chinese, they were, I mean, let's be honest. Who do you think seemed happier, the Chinese or the Americans?

[Rory Stewart]

Yeah, well, that was a very interesting question, isn't it? Yeah. Well, final thing before we go for the break, just, I suppose a point that we keep coming back to, but the gap between the way that communication works in politics, in particular in America, a very strong story to unions and to voters that it's all China's fault. And that connected with that. We're going to sort this out by bringing manufacturing back without really talking about the details of how that works and what jobs you're going to do, but also the problem that it's very, very difficult to move the political conversation onto economic details. So my final example is I talked to a Yale colleague called Amit Handelwal yesterday who has done really detailed research on Data sets on what happened last time Trump brought in tariffs. And before he did this research, economists believed that if you put up tariffs, a lot of the cost would be borne by the producers. And this was a story I was hearing from Trump's friend last night. Don't worry about it, we'll put up the tariffs. But it's the Chinese companies will take the hit because they'll want to keep selling at low prices into the U.S. amit's very detailed research demonstrates that 100% or very close to 100% of the entire tariff is passed on to the American consumer, that the Chinese companies didn't last time absorb this cost. And that's really central to this whole debate because that's at the core of is this a tax on the Americans or is this a tax on the Chinese? But how on earth I translate my colleague Amit's very detailed work on data sets into a public conversation, I have no idea at all.

[Alistair Campbell]

Well, the stuff's all right there because I mean a book I read a guy called Paul Bluesheim who I think is a, I think he works one of the big American papers, but he wrote a book called Schism China, America and the Fracturing of the Global Trading System. And again, once you get into the facts, it's what is obviously a very complicated story. But I guess the Americans have been force fed a very one sided story. And when you get into the complication, that's when you realize that maybe the Chinese have played this better than they sometimes get credit for. Okay, Maria, so let's have a quick break and then we'll come back and talk about the nationalization, it would seem, of British steel. And then the German coalitions vertrack the coalition's agreement.

[Rory Stewart]

Very good. Looking forward to it.

[Alistair Campbell]

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[Rory Stewart]

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[Alistair Campbell]

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[Alistair Campbell]

Welcome back to the Restless Politics with me, Alistair Campbell.

[Rory Stewart]

And with me Rory Stewart. And Alistair, let's begin with this amazing story, which is something I never saw as a member of Parliament, which is Sir Keir's time of the Prime Minister recalled Parliament on a Saturday. You know, that's the kind of thing that they kept threatening to do. But if David Cameron ever threatened to do it, he would occasionally kind of cancel our resets and try to bring us back from hol. Alan Duncan would always say, I'm sorry, I can't vote in the Syria vote because I'm on a yacht in the Mediterranean and I'm not obtainable. But my goodness, it's unpopular with MPs because you've just got up to your constituency, you've organized all your constituency meetings on a Saturday. You've got the local charity waiting, the school's waiting for you.

[Alistair Campbell]

A lot of people on holiday.

[Rory Stewart]

Oh, a lot of people on holiday, yeah. And suddenly you've got to come back and do this emergency vote just sort of quickly that presumably parts of him doing it on a Saturday and doing it in that way was to reinforce the story, the sitcoms aspect to it.

[Alistair Campbell]

Well, I don't. I think it's more complicated than that and rather more alarming than that. I think they felt they had to. That the relationship goes back to what we're talking about in the first half about China. Some of the relations with the, with the Chinese owners that they had become so bad that they were genuinely worried. I didn't understand. I don't understand how blast furnaces work. But apparently if you switch it off, you can't switch it back on again. It's got to be going 24 hours the whole time, otherwise it's not going to be making steel for you. And they were worried that they were literally running out of supplies to keep it going. And I think part of that worry was whether the owners were slowly getting to a place where it was going to have to shut down. One of the people in the government that I spoke to said that they thought they'd come to a deal that was a very, very, very substantial deal. And then the Chinese came back and asked for three times more. And at that point they thought, shit, this is really, this is really, really dangerous. So they felt they had to take the powers. And you're seeing it today. You literally, you've got government officials at the moment organizing the shipment of raw materials to go to Scunthorpe to be fed into this plant. And this is our last steel making plant. And the reason why the sort of Ian Duncan Smith, kind of real China hawks and the Nigel Farages who has suddenly become a fan of nationalization. And actually this is hilarious. Apparently he told load of steel workers that he worked in metals in the past. He was a fucking commodity trader. I mean, I mean, you know, if somebody says to a steel worker, I worked in metals, I'm imagining, haha, hard hat, he's a. He was a metals commodity trader. They're out saying, you know, in favor of, of nationalization now. But I think that for the government it was a really, really tough call. And of course it then got into, as it always does, the sort of. Well, Badenoch is sitting there, Johnny Reynolds, the business secretary, saying, well, why didn't you sort this out? And she's saying, how has it come to this? That it's. You've had to recall Parliament on a Saturday. But I think that's what happened is that they had to do this to keep it going. The point I was made about the China hawks is they probably do think that China somehow is behind this, trying to end UK's capacity for steel production.

[Rory Stewart]

So this relates really interestingly to the first half because people like Ian Duncan Smith and the China hawks who are saying that, you know, that they're saying, as I saw it in the Daily Mail, they were saying, you know, this was a plot by China that China wanted to bankrupt this.

[Alistair Campbell]

So, Rory, I've had two references to the Daily Mail and you've also had dinner with somebody who's working with Trump. Have you gone to the dark? Have you gone to the dark side in your.

[Rory Stewart]

I've embraced. I've become a Massive Ian Duncan Smith fan. Yeah. But interesting about it is that it's going to be the fight, isn't it, within Europe? On the one hand, there's huge reasons for us to get closer to China, particularly as the US goes more and more off on its own path, because China will be where we'll get our cheap goods from. China will be where we'll get cheap steel from. Famously, I think the bridge across the 4th was built with Chinese steel, et cetera. On the other hand, you'll have the and Duncan Smith types replaying the U.S. national security argument that becoming too reliant on China makes you very vulnerable to this authoritarian regime that's going to undermine you. I was also really struck that who would have predicted even a year ago that re nationalizing British steel would have almost universal support? I mean, it's really amazing. I mean, all parties seem to be coming behind it. And it's really interesting because I don't think we even really necessarily most listeners. Listeners won't remember what nationalized industries were like because once something's removed from the market, this thing is losing, I think, £250 million a year. And we can talk a little bit about some of the interesting reasons why that's happening. British steel claims that energy costs in the UK are 50% higher than in Europe and four times higher than they are in the US. There's a lot of people saying, and this is partly the thought of the Green Agenda and Ed Miliband and one of the reasons that British industry is uncompetitive.

[Alistair Campbell]

You're now fully fledged form. Bloody hell. What has happened to you?

[Rory Stewart]

Thank goodness I'm airing some different views on this, on this podcast.

[Alistair Campbell]

I could easily, quite easily come back and trace quite a lot of what's happening right now to the Thatcher Reagan revolution. But anyway, I'll let you carry on.

[Rory Stewart]

Your failure to get Jeremy Corbyn on this show is one of the. Is one of the problems we don't have. His voice talking enough about the Thatcher Reagan revolution.

[Alistair Campbell]

Well, I've tried, I've tried, I've tried.

[Rory Stewart]

I've tried John McDonnell. I've just read actually a. A book on Labour Party history with a nice preface from John McDonnell, who I'm sure would be.

[Alistair Campbell]

Well, he got a lot of flack when he, when he, when he agreed to be interviewed by me for GQ magazine. But here's an open invitation to John McDonnell and Jeremy Corbyn. We can have the one together. That'd be nice.

[Rory Stewart]

So to finish the story, though, if we Go back to the dream world of John McDonnell and Jeremy Corbyn just getting listeners to adjust. The fact that if the government is running a factory that's losing £250 million a year, you are no longer setting your salary and your productivity targets by market pricing. Increasingly, you are running it like a civil service department. You're deciding roughly what the market rate is to pay people, and you're setting little targets and you're sending in ultimately a sort of civil service managers. The reason you're doing it, presumably, is that you think that it's absolutely vital to national security that we retain some steel manufacturing capacity.

[Alistair Campbell]

No, I think there's a strategic national interest that relates to the economy, relates to defense. Defense related to your rail network and all that stuff. It's not yet nationalized. What the legislation that went through on Saturday has done is give the business secretary powers to run the place day to day. So I don't know. When he signed up to be a politician, Johnny Reynolds realized he was going to be sort of basically general manager of a steel production factory. But that's what he now is. It was interesting, the. The SNP reaction. A lot of it was about, well, hold on, if you. If you're going to be saving this industry, what about this industry? What about that industry? What about Grangemouth? What about why wasn't Port Talbot looked after down in Wales? And the answer seemed to me. Because this literally was on the brink.

[Rory Stewart]

Yeah, exactly. Because. Because the other side of it to. To rediscover my conservative roots in a way that I clearly. This is a journey in this podcast, right? The conventional market story is here, is that this is a very, very inefficient way of supporting people to subsidize £250 million a year to keep a steel factory open. It's much more economically efficient to allow. Let's put the national security arguments aside, but in general, if we're talking about Port Talbot, if we're talking about Grangemouth, if we're talking about the coal industry, the consensus, Reagan, Thatcher, and to some extent your government, was, broadly speaking, that we need to move into new industries and we need to imitate Germany, where you go to the Black Forest and there are some incredible industries, but they are very, very robot intensive. They're very, very educated labor, they're producing very niche, specialized products in Sweden or Denmark on turbines, and that you want to generate growth, you want to generate productivity. And the whole problem, and this is the problem why people are voting for Trump. This is part of the reason why people voted for Brexit. It's part of what's going on with the S&P's arguments is that we are failing when these businesses close, when a coal mine closes, when a steel factory closes, to actually provide what the neoliberal economists promised, which is good dignified alternative work. I mean theoretically you're generating growth, you're generating surplus in the economy. So these things close and then you should be providing people opportunities to do something more dignified. And it's our failure to do this that leads to these very, very inefficient attempts to try to protect US manufacturing.

[Alistair Campbell]

Well, let's talk about Deutschland then. So we had the election a while back, we've had these negotiations going on for a few weeks and finally a 146 page document called Die Fer ant for Deutschland. The responsibility for Germany is published.

[Rory Stewart]

Just explain to us for this because it's really weird. 146 page documents. I mean the coalition agreement between the Conservatives and Lib Dems were not like this in Germany. It seems to be like a marriage contract between two partners who really don't trust each other. Can you explain these very detailed documents?

[Alistair Campbell]

Yeah. So what they do is they set up all these working groups, they have the leaders at the top who are brought in from time to time. It actually is a sort of very political version of your, of your citizens assemblies where they, they go away, they sit in groups, they talk about it, they prepare papers, the papers go backwards and forwards. And then the big guns, Merz, who's going to be chancellor, Marcus Serda, the leader of the Christian, the CSU down in Bavaria, Lars Klingbael, who's the co leader of the Social Democrats and his partner Saskia Essen, they come in at the end. You were on to one of them about immigration. But it turned out that the really big disputes at the end were about tax because fairly late on the SPD came in and wanted to bring in new taxes and wealth taxes and they wanted a guarantee on the minimum wage and they wanted guarantees on pensions. And so it became quite a traditional labor conservative sort of argument. But what's been interesting about it is I've been watching yesterday I watched several TV interviews that Mertz has done and Klingbal, I watched them both and it's really interesting to see how this form of coalition politics is so difficult in this Trumpian black and white age. So Merz, who he did a very long interview with this woman I've mentioned before called Karen Mioski, who's a very Good interviewer. And what was really interesting was that, so the German culture, you think, accepts coalition. But most of the arguments that he was feeling vulnerable was when she was playing him clips of things he'd said in the campaign which he's now had to water down. And likewise for Klingbal, on his interview, it was, you know, you said you were going to do this, but actually you're doing this. And having to explain that there are these shades of grey is actually quite difficult for a modern politician. In a way that I'd say when Merkel was in power, that was kind of accepted. That's what you had to do. But I think the big thing now, he, Merz took a decision not to be high profile during the negotiations, as a result of which his standing kind of went down a bit. I think now they've got this agreement, there will be difficulties over the minimum wage, there are going to be difficulties over tax, but it's going to be interesting. He's starting from a tough place.

[Rory Stewart]

Yeah, starting from a tough place. Partly because of his own missteps, I'd argue his very stupid initiative on trying to do something illegal to control asylum and relying on AfD votes. His party's ranking 34% down to 28%. Election now down at sort of 24%. The AfD is now polling number one in the country. There is inevitably from Merz's own party. It seems a real sense from party members that he's sold out to the left. Even though you and I, I think, and most Germans actually probably would feel he's done the right thing on the debt break, on particular on the debt break. So that was really interesting. He went into the election and at least as far as I can understand, and do correct me, because you understand Germany much better than me, but it seemed as though the Greens were essentially saying, what we need to do is get rid of the debt break so that we can put hundreds of billions into public infrastructure investment and put money into defense. They said Merz's party, absolutely not. We're good old right wing neoliberals. What we're going to do is, yes, we'll spend on defense, but we're going to achieve it by cutting the deficit, cutting spending. We're going to keep the debt break in place, comes into office, and a week after he comes into office or not comes into office a week after the election, suddenly announces, oh, the whole world's changed. I suddenly noticed Donald Trump's in the White House, which apparently I didn't notice six weeks ago when he was already in the White House. And I'm going to now rely on votes from the Greens and the SPD to do everything that I was attacking the Greens for proposing. So I'm going to get rid of the debt break and by the way, I'm going to do it by using the old parliament because I need a 2/3 majority to get it through. So I'm not even going to wait and use the maths of the new election. I'm going to push it through using the old maths to change all this stuff.

[Alistair Campbell]

Well, two things to say about that. The first is on the polls. You'd rather be behind in the polls just after an election than just before. And secondly, I think he knew he would pay a price for doing that. If it looked a bit like political chicanery, you could argue that it was to use the old parliament to get something through arguing absolute urgency. I think things will settle down a bit. I think he's a much more impressive. He gets a lot of criticism for his style of speaking. So I think he's a much more impressive speaker and he's very good at these long form interviews. But the other thing of course they've had to do, they've had to negotiate on the ministries. In one of the interviews he was confronted with this, I think it was Bilt Zeitung did a broadcast interview with him. He said, you know, you know, the running joke in your party at the moment is if the negotiations had got on three days longer, Klingpal would have ended up as Chancellor because. Because they've ended up with six ministries for the cdu, three for the csu, including Immigration, which is obviously very important, the Interior Minister, and then seven for the SPD, who of course got under 20% in the vote. So I think it's fair to say the SPD ran a very, very hard bargain. But I think what he was thinking, well, I'll be Chancellor. We're going to do the Foreign Ministry, we're doing the Ministry of Economic affairs, we're doing the new digital department, we're controlling the Federal Chancellery, which is I guess the closest thing they have to a cabinet office. But it was fascinating to watch these interviews because it requires a completely different style to how you campaign and we'll have to see now where it heads. He's going to be chancellor probably on May 6th.

[Rory Stewart]

Well, let me come back to my obsession with what I think is going to be the most dangerous thing, which is the migration issue. So just to remind people, he proposed before the election that he would use emergency powers under an obscure article of the EU to suspend asylum claims in Germany and he would defend the entire border against Austria, for example, the green border with Austria. And he'd send the police up to that border and nobody likes it except for the AfD who said, Absolutely tremendous. It's what we've always been asking for and actually we should go a little bit further. He's now returned to this and he may feel forced to push ahead with it because as I said, the right wing of his party is angry with him. He's worried that he's losing votes. The AfD. He doesn't need to worry too much about his coalition partners anymore now that he's got the deal through, he's Chancellor. They're not going to collapse the government because they're not going to have 50% of the votes.

[Alistair Campbell]

Oh no, I think he's going to. Oh, no, no, no, no, no. I think he's. I mean they've got a small majority between them. I mean it was come they got the debt break thing through comfortably. They're going to have to work together.

[Rory Stewart]

But the problem for the SPD is they can't afford to collapse the government because they've got so little vote share now that if they collapse the government, they together those two parties wouldn't have 50%.

[Alistair Campbell]

But both of them have to think of that. Both of them have to think of that. So I think actually they will have to work pretty well together. I don't think. I definitely don't think you can take the Social Democrats for granted.

[Rory Stewart]

Let's develop this. So one possibility is that the SPD keeps the whip hand and they retain some kind of control over mets on immigration and they push ahead with probably the most sensible proposal.

[Alistair Campbell]

There's a bigger problem. Well, in the coalition agreement he basically, he's had to water it down substantially already and basically he'll say that this will be done in consultation with neighboring countries and in fact that in this interview I watched last night, that was where he really did sound very uncomfortable because he was being asked to say, well, what would Macron think about it? Well, I have a very good relationship with Macron and we'll sort it out kind of thing was where he was. So I think that's the bigger problem than necessarily the Social Democrats.

[Rory Stewart]

Well, so with that you're absolutely right. It's this language about in consultation and obviously you then immediately have the very right wing Austrian interim minister saying, well, forget that, we do not consent to this at all. So then there are some people in the CDU who seem to be saying no, no, no consultation just means we're going to inform them, we're not going to give them a veto over whether or not we can do this. If he pushes ahead, and I don't know whether he will, but if he pushes ahead, and maybe you're right, he can't push ahead, but if he pushes ahead there is a problem because if he tries to do this, it's totally unworkable. You know, the German border is 3,800 km long. All these countries have been in Schengen for decades. They don't have border police, they don't have fences. They simply logistically cannot fence the Bavarian border or it would be unbelievably difficult to do. And if he tries to trigger emergency rules to say Germany is not going to have any asylum seekers, it then goes to the European Court. European Court would probably feel forced to find against Germany. And that's a big problem because then the AFD can say, aha, it's Europe that's stopping us from doing what we need to do on immigration, which then gives real strength to the AfD's desire to leave Schengen Euroscepticism. So that is a very, very dangerous gamble. So one really has to hope that Metz is not going to return to his pre election idea, but instead that Germany's going to look at third party returns, some smarter version of Rwanda scheme, and do it with Europe as a whole.

[Alistair Campbell]

Also Klingbal. Yes. Who's going to be the Deputy Prime Minister, the Deputy Chancellor and Finance Minister. He was asked about it and I think this is in front of Merz, I think it was at the, the joint press conference. He basically said that the basic right to asylum remains inviolable and Germany is a country of immigration that benefits socially and economically from newcomers. So there's no doubt the tensions are still there. Final point, Rory, very interesting. He was asked what his first foreign trips would be and of course there's the Britain me thinking, ah, this is the bit where he says post Brexit, Britain needs lots of TLC and I'll be on the first plane to London. He did talk very nicely about Britain, I have to say in a different interview. But he said his first trips were going to be Paris and Warsaw.

[Rory Stewart]

So putting Europe at the center and thinking about Poland as the big rising national security. And really, I suppose just final thing for me, the big picture of what he's done, regardless of the politics is amazing. On debt, Germany, its debt to GDP ratio is only 60%. There's a lot of headroom there, much more than in most European countries. And if they are able to really put hundreds of billions into infrastructure, really invest in defense, there is a possibility that this could provide a real lift not just to Germany, but to to many other European economies.

[Alistair Campbell]

Okay. Lots of lots done, lots talked about. Lots more to talk about in question time tomorrow.

[Rory Stewart]

Thank you, Alison. And we'll be back tomorrow. And that will give us a chance to talk about many more international domestic things. So internationally, we'll be looking at Australia. Domestically, we'll be looking at trade union movements, industrial policy and the Labour Party. So much to talk about tomorrow. And thank you very much.

[Alistair Campbell]

See you then. Bye.