Episode Transcript
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Speaker 1 (00:03):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
The US presidential election is a week away, and the
contest between Donald Trump and Kamala Harris could not be tighter.
The two candidates are going head to head on everything
from the economy to immigration, but one area they agree
on is the need to curb China's rise.
Speaker 3 (00:28):
We've got hundreds of billions of dollars just from China alone,
and I haven't even started yet.
Speaker 4 (00:34):
But tarifs are two things if you look at it.
Number one is for protection of the companies that we
have here.
Speaker 5 (00:40):
In any policy about China should be in making sure
the United States of America wins the competition for the
twenty first century, which means focusing on the details of
what that requires, focusing on relationships with our allies, focusing
on investing in American based technology.
Speaker 2 (00:58):
So how is the US doing versus China, which superpower
is leading the race for dominance of the twenty first century?
Rebecca Chung Wilkins, Bloomberg's Asia Government and Politics correspondent, says
a good way to try to answer this question is
by looking at the key emerging technologies that China identified
(01:19):
as its priority back in twenty fifteen when it announced
its Made in China twenty twenty five plan.
Speaker 3 (01:27):
Our host came.
Speaker 2 (01:28):
And when you look at that plan now, nearly a
decade later, new research by Bloomberg Economics and Bloomberg Intelligence
shows that Made in China twenty twenty five has largely
been a success.
Speaker 4 (01:42):
So of the thirteen key technologies tracked by Bloomberg researchers,
China has achieved a global leadership position in five of
them and is catching up fast in seven others.
Speaker 2 (01:58):
Welcome to the Big tich Asia from Bloomberg News. I'm wanh.
Every week we take you inside some of the world's
biggest and most powerful economies and the markets, tycoons and
businesses that drive this ever shifting region. Today on the show,
how did China get ahead in key technological advances despite
(02:19):
US efforts to prevent that from happening? And would a
Harris or Trump administration change that? Rebecca says back in
twenty fifteen, when the Maiden China Plan was announced by
the Chinese Communist Party, it was all about helping the
country achieve two big goals.
Speaker 4 (02:41):
One is this self sufficiency, not wanting to be reliant
on other countries. And is preparing for any kind of
scenario where, for example, China might be cut off from
say its energy supply or whatever it might be. And
China more broady, does have a sort of preoccupation or
prevailing concern with preserving its own security, so standing on
(03:03):
its own two feet, and the second is becoming increasingly
competitive and in fact a global leader in some of
these key strategic areas. So there's both a sort of
inward and an outward element to the Maiden in China plan.
Speaker 2 (03:16):
The plan highlighted ten priority sectors for the nation to
focus on, including aerospace equipment, energy saving cars, biomedicine, and
high end machine tools and robots. And now almost ten
years later, according to the analysis by Bloomberg, China has
in fact become a global leader in many of these
(03:38):
key areas.
Speaker 4 (03:39):
So those sectors include solar panels, unmanned aero vehicles, those
are drones, graphene which is a coating material that's using
tons and tons of sectors, high speed rail, and electric vehicles.
Speaker 2 (03:51):
Now, does China have any natural advantages that makes it
possible that it's been able to take leading positions in
these sectors or is this simply by design? And the
world of Beijing.
Speaker 4 (04:02):
Well as worth saying that even in twenty fifteen, China,
as we determine, was already a global leader in three
of these sectors, in graphene, solar panels, and in unmanned
area vehicles, so they had a sort of somewhat of
a headstart in any case. But the other important element
here to remember, I think, is that when Beijing does
signal out an area for support, when it signals out
(04:24):
a key policy priority, it really is able to throw
the full weight of its economy essentially behind that. So,
for example, if it decides that electric vehicles are a priority,
say it can ask banks to lend it credit cheaply.
It can get local governments to lease it land cheaply
or perhaps even at no or low cost. It can
(04:47):
also get large state owned enterprises to use the sort
of full force of its resources, it talents, and direct
it towards those industries. So you know, Beijing has an
incredibly sort of powerful basis here, an incredibly powerful set
of resources to direct towards these industries when it has
selected these priorities.
Speaker 2 (05:08):
But there is one key area where China hasn't caught
up to the US, and that's in advanced semiconductors. That's
in part because of some key things the US has
done to keep its rival from catching up.
Speaker 4 (05:22):
There's sort of three big tools for economic statecraft that
we've seen. One of them is tariffs, imposing these high
costs for imports coming into the US, sometimes prohibitively high.
The second are export controls, essentially trying to prevent the
transfer of US technology, goods, services overseas to other parts
of the world. And the final part of that are
(05:45):
financial sanctions. The big area where we can say that
some of the US export controls and so on had
been more effective is in sort of high advanced semiconductors.
And it's important to remember in this context it's just
a handful of companies involved in this kind of really
advanced semiconductor tech manufacturing. And it's fair to say the
Biden administrations they have been successful in building consensus among allies,
(06:10):
among other countries trying to contain China's access to semiconductors,
and so we saw Dutch companies, Japanese companies essentially falling
in line in preventing China from accessing the actual products
needed to manufacture these types of chips.
Speaker 2 (06:28):
And in light of that of the US having allies
to support its approach to trade on China and its
approach to contain China, what has China done to make
sure it has access to the technologies it needs.
Speaker 4 (06:41):
China's actually has been stoppiling like that. That's the sort
of fundamental basis of this. They're stopped piling a record
amount of semiconductor equipment, and that includes these high end
video chips. It's preparing essentially for a number of further curbs.
It's looking further out thinking if we see these kind
moves accelerate, if they're expanded, where will we be and
(07:03):
how do we try and future prefagainst that.
Speaker 2 (07:06):
But it's not just semiconductors where the US is trying
to use export controls to slow China down. After the break,
a look at the other tools the US is using
and will a new administration keep them going. The US
(07:32):
has leaned on its allies to limit China's access to
advanced technologies like semiconductors. Meanwhile, the US is also concerned
about its ability to be a leader in other sectors
as well. Some of these areas were outlined back in
twenty twenty two by National Security advisor Jake Sullivan.
Speaker 6 (07:52):
Computing related technologies, biotech, clean tech are true force multipliers
through the tech ecosystem, and leadership in each of them
these areas is a national security imperative. We're investing in
the industries of the future and strengthening the resilience and
security of our supply chains.
Speaker 2 (08:10):
Sullivan calls these technologies a national security imperative. Bloomberg's Rebecca
Chung Wilkins says that's an important thing to take note
of because over time she's seen a change in the
way the US talks about the need to restrain China.
Speaker 4 (08:25):
Yeah. I think in the early days of the trade war,
a lot of the focus was on the sort of
wrongdoing as they alleged of Chinese companies, But over time
that has really morphed into this whole discussion over national
security and increasingly this focus on China's preparedness for a war.
And in fact, we've almost seen the true real concerns
(08:49):
at the heart of some of these economic policies over
sort of military might. Essentially, it's this question of deterrence
whether or not Beijing and Washington will essentially adopt this
idea that the costs of this trade conflict and trade
war and the costs of this increasing competition are worth
(09:10):
it or not. It comes sort of, I suppose, to
this fundamental question of to what extent both sides feel
that their own national security is fundamentally at risk.
Speaker 2 (09:25):
On the campaign trio, Trump and Harris have advocated different
approaches towards China, even as both agree on the need
to thwart its rise. I asked Rebecca what Trump currently
has in mind here, Well, we just.
Speaker 4 (09:39):
In a way have just seen an amplification, perhaps unsurprisingly,
of some of his previous policies. He's mentioned this possibility
of sixty percent tariffs across all Chinese imports into the US.
Speaker 2 (09:51):
That would be crazy high.
Speaker 4 (09:52):
That would be crazy high, and it would really hurt
the Chinese economy. One Bank, for example, estimates that it
could essentially harm of Chinese GDP growth. So it would
really be a significant hit to China, but also a
significant hit to the US if that then results in
a higher cost of goods.
Speaker 2 (10:10):
Lumberg's editor in chief, John Mickelsweet pressed Trump on that
point in an interview earlier this month.
Speaker 3 (10:16):
You're talking about sixty percent trade on that sixty perent
tariffs on that you're talking, as you said, one hundred
two hundred percent of things you don't really like. You're
also talking about ten to twenty percent tariffs on the
rest of the world. That is going to have a
serious effect on the overall economy. And yes, you're going
to find some people who were gained from individual tariffs.
The overall effect could be massive.
Speaker 4 (10:37):
I agree, it's going to have a massive effect. Positive effect.
It's going to be a positive not let me just no, no,
let me committed. The other thing to remember with Trump
is that he has taken a more protectionist stance. Writ large,
He's not just concerned about Chinese imports, but he's concerned
about imports from everyone, including, for example, the European Union.
Speaker 2 (10:58):
What do we know about hair approach?
Speaker 4 (11:00):
If she wins Will Harris's approach, we expect to be
more consistent with the Biden administrations. I will say, she
too has focused on this idea of jobs and sort
of American industrial policy, trying essentially to build up some
of those of manufacturing bases. Again, she's been critical of
Trump's proposed tariffs, but she has been quite firm on
(11:22):
some of the national security risks that the US faces.
Speaker 2 (11:26):
So Rebecca is either approach really doing a great job
in containing China's tech development.
Speaker 7 (11:32):
Well, if we look at the success of the Biden
administration and we look just going back to the beginning
at some of those maiden China targets, for example, we
can see that actually they aren't successful, or they haven't
been successful in certain key areas if we exclude semiconductors.
Speaker 4 (11:51):
Actually trade has found a way to get through sanctions
haven't been hugely successful. So that's one quest for Harris
that this need to perhaps recalibrate the approach.
Speaker 2 (12:05):
Despite the US efforts to slow down China, the world
outside the US is increasingly driving Chinese evs, surfing on
Chinese smartphones, and powering their homes with Chinese solar panels,
and Rebecca says there might be better approaches for the
US to maintain its competitiveness.
Speaker 4 (12:23):
One approach to thinking about what would be more effective
than sanctions is this idea that Adam Posen from the
Peterson Institute has mentioned, which is suction not sanctions. Essentially
that the US should be making use and taking up
talent resources innovation coming from China and partnering with it
(12:45):
in order to advance its own industries and its own
key sectors, so.
Speaker 2 (12:50):
Basically taking away all the talents so that the US
makes use of.
Speaker 4 (12:54):
It, taking the best of what China has developed, and
then building on that to develop and innovate at a
faster pace.
Speaker 2 (13:06):
This is the big take Asia from Bloomberg News. I'm
wan ha. If you'd like to hear more about Bloomberg's
research on the Maiden China Plan, check out the conversation
on Odd Lots with my colleagues Joe Weisenthal and Tracy Alloway.
Speaker 1 (13:19):
The other thing that happened that I think was actually
a bigger deal from the Chinese perspective was when the
US added Huawei to the Commerce Department's entity list in
early twenty nineteen, because what that signal was that the
United States was effectively trying to kill what was arguably
China's best global technology company. The US would say, we're
(13:39):
not trying to kill it, but the restrictions are pretty draconian,
and there's very much that vibe.
Speaker 2 (13:45):
And check out our last episode where you can hear
more about one critical market that China's focusing on EVS
and how one Chinese carmaker BYD is dominating the Electric
auto market globally. That's on our Big Take, Asia Feet.
This episode was produced by Young Young, Jessica Beck and Naomi.
It was mixed by Alex Suguera and fact checked by
(14:07):
Eddie Dwan. It was edited by Caitlin Kenny and Daniel
ten Kate Naoy Shaven as our senior producer, Elizabeth Ponso
is our senior editor, Nicole Beamster Bower is our executive producer,
and Sage Bauman is Bloomberg's head of podcasts. Please follow
and review The Big Tick Asia wherever you listen to podcasts.
It really helps new listeners find the show. See you
(14:28):
next time.