Donald Trump believes Taiwan should be paying the US for its defence, as covered in an interview ahead of the Republican National Convention.
He also claimed Taiwan took 100 percent of the US’s chip business, due to Taiwan’s huge investments into its local semiconductor manufacturing company TSMC – the world’s biggest chip foundry.
But Asia business correspondent Peter Lewis says Taiwan already pays the US for its defence – and Taiwan is one of the largest markets for US defence companies.
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Speaker 1 (00:00):
Dame.
Speaker 2 (00:01):
Time to catch up with our Asia business correspondent Peter Lewis,
who is with this evening.
Speaker 1 (00:06):
Hi, Peter, Good Evening. Jack.
Speaker 2 (00:08):
Donald Trump reckons that Taiwan should be paying the US
for its defense, as explained to Bloomberg. So what's he
here to say?
Speaker 1 (00:17):
Well, yes, this was a Bloomberg interview that was done
about a month or so ago, but only released last
week in time for the Republican National Convention. He's basically
what he said in this interview was he knows the
people of Taiwan very well. He claims he respects them gratefully,
but he says, first of all, they took one hundred
percent of our chip business. And then he says, I
(00:38):
think Taiwan should pay US for defense. Now I'm not
totally sure what is actually means by that, because Taiwan
already does pay for its defense. All the arms that
it buys it pays for. It doesn't get them for
three And what's more, it buys nearly all of it
(00:58):
from the United States the government negotiated military sales agreements.
But nevertheless, it makes Taiwan one of the largest markets
for American defense companies and arms manufacturers. So he is
already paying a lot of money to the United States.
Now on the point he makes about Taiwan taking one
(01:20):
hundred percent of our chip business, as we're obviously referring
to Taiwan's semiconductor manufacturing company, which is the world's biggest
chip foundry. It's hard to say, though, in the case
of TSMC, that they've somehow stolen America's chip business. It
is true that companies like Intel, for example, used to
(01:41):
be the world's dominant force in semiconductor manufacturing, and it's
also true that that's been overtaken by firms like Samson
Electronics in South Korea and TSMC in Taiwan. But that
has happened because TSMC has made huge investments into the business.
It's plowed a lot of money, a lot of resources
(02:03):
into it, taking big risks in the process. But nevertheless,
in particular has built up in the AI space. It
has very very well managed plants and factories which are
regarded as producing extremely high quality products and producing them
on time. So this is down to Taiwan's investment in
(02:25):
its business and companies liked he SMC, companies like Intel
have really fallen behind, particularly in the AI space. They
really haven't anticipated the growth in that particular sector at all,
unlike some of the Asian chip manufact factorers. But that's
not really Taiwan's steaming or taking one hundred percent of
(02:48):
America's chip business, as Donald Trump likes to claim.
Speaker 2 (02:51):
Yeah, some tracking ahead. It would be fascinating to see
what happens in the early months of next year, if
indeed he is the next president. The third plan them
in China this week in security was a major focus.
Speaker 1 (03:04):
It was indeed, they talked very much about protecting national security.
That's been a top priority for a while. But also
it seems to me that it sort of takes presidents
over the economy, that if there's a choice between initiatives
that are going to protect national security are going to
(03:25):
boost the economy, Even though they say they're equal, I
suspect that national security will win. The communicate that came
out yesterday warned very much about geopolitical risks. It says
China should lead global governance. I presume that means creating
alternative organizations to some of the Western dominated institutions. They
(03:50):
talked about balancing economic development with security, but as I say,
I rather suspect security is very much going to be
at the forefront of their minds. What I found more
alarming was they wanted to talk about, first of all,
creating a socialist modern power. I'm not sure what they
meant by that. They didn't exactly say, but they were
(04:12):
talking very much about coordinating, implementing various measures to prevent
and resold risks. And they want to weave what they
say is a dense social security risk prevention and control
network and maintain social stability. And also they say they
(04:32):
want to step up state propaganda. They say it's necessary
to strengthen public opinion guidance. Now this sounds rather alarming
to me. It sounds like a lot more internal controls.
As we know, the Communist Party under Jijipin what's to
control everything, every aspect of life in China, whether it
be economic, whether it be business, whether it be social,
(04:55):
whether it be aspects of your personal life. They very
much control social media. They cramp down on dissent very
very harshly. It seems to me that some of those
statements warning and more coming along those lines and really
trying to indoctrinate people's thinking and even key issues like
(05:16):
the economy, they feel you know that people are bad
mouthing the economy and that people should be much more
positive and supportive about what they're doing on the economic front.
Speaker 2 (05:27):
Speaking of the economy public secti versus private sector, is
there any indication the Chinese leadership wants to scale back
investment in the public sector.
Speaker 1 (05:37):
Well, they talk all the time about being business friendly
and the important of private companies. However, the rhetoric is
not really matched by the actions. When you look at
the actions, it seems very clear to me that the
big state owned enterprises do get preferential treatments by local
(06:00):
government and by the central government in Beijing. You only
have to look at the economic data we had. The
data for fixed investment came out on Monday. Well, private
companies invested just zero point one percent. Oh, it grew
private investment just by zero point one percent in the
first half of the year. Public investment, in other words,
(06:21):
through stateholed enterprises grew nearly seven percent. So that just
tells you when you see private companies just not really
willing to invest, that they just don't have the confidence
in doing so and in building more of their business
and investing in more of their businesses over time.
Speaker 2 (06:42):
Yeah, yeah. Meanwhile, India is embracing Apple products.
Speaker 1 (06:47):
Oh yeah. This is a very deliberate strategy by Apple
to try and diversify away from China. That's what's known
as the China plus one strategy. In that's post COVID
companies learnt very hardly, very harshly about the risks of
putting all your eggs in one basket and just relying
(07:08):
on China for your supply chains. So Apple's chosen markets
where it wants to develop is India. It now produces,
you know, about one in seven of its products in India.
It's got a couple of flagship Apple stores in the
country now, and its revenue from India is jumping. It's
(07:29):
up about a third now in the last twelve months.
It's up to about six billion dollars a year. So
Apple is quite deliberately diversing its manufacturing and revenue sources
beyond China. Now, it's not going to abandon China altogether,
but nevertheless, India is becoming a much more important market,
(07:49):
and it seems as a very good market in many ways,
not just for Apple, but for other tech companies as well.
It's got a very young, well educated population and the
demographics have very much in India's favor, unlike in China,
which is getting more and more elderly. And you've got
developing infrastructure in the country, still nowhere near as good
(08:13):
as China, but nevertheless developing, so providing a lot of
the things that technic companies like Apple require.
Speaker 2 (08:20):
Yeah, very good. As your business correspondent, Peter Lewis, thank
you for your time. Always great to chat for more
from hither Duplasy Alan Drive. Listen live to news talks
it'd be from four pm weekdays, or follow the podcast
on iHeartRadio.
Dame.
Speaker 2 (00:01):
Time to catch up with our Asia business correspondent Peter Lewis,
who is with this evening.
Speaker 1 (00:06):
Hi, Peter, Good Evening. Jack.
Speaker 2 (00:08):
Donald Trump reckons that Taiwan should be paying the US
for its defense, as explained to Bloomberg. So what's he
here to say?
Speaker 1 (00:17):
Well, yes, this was a Bloomberg interview that was done
about a month or so ago, but only released last
week in time for the Republican National Convention. He's basically
what he said in this interview was he knows the
people of Taiwan very well. He claims he respects them gratefully,
but he says, first of all, they took one hundred
percent of our chip business. And then he says, I
(00:38):
think Taiwan should pay US for defense. Now I'm not
totally sure what is actually means by that, because Taiwan
already does pay for its defense. All the arms that
it buys it pays for. It doesn't get them for
three And what's more, it buys nearly all of it
(00:58):
from the United States the government negotiated military sales agreements.
But nevertheless, it makes Taiwan one of the largest markets
for American defense companies and arms manufacturers. So he is
already paying a lot of money to the United States.
Now on the point he makes about Taiwan taking one
(01:20):
hundred percent of our chip business, as we're obviously referring
to Taiwan's semiconductor manufacturing company, which is the world's biggest
chip foundry. It's hard to say, though, in the case
of TSMC, that they've somehow stolen America's chip business. It
is true that companies like Intel, for example, used to
(01:41):
be the world's dominant force in semiconductor manufacturing, and it's
also true that that's been overtaken by firms like Samson
Electronics in South Korea and TSMC in Taiwan. But that
has happened because TSMC has made huge investments into the business.
It's plowed a lot of money, a lot of resources
(02:03):
into it, taking big risks in the process. But nevertheless,
in particular has built up in the AI space. It
has very very well managed plants and factories which are
regarded as producing extremely high quality products and producing them
on time. So this is down to Taiwan's investment in
(02:25):
its business and companies liked he SMC, companies like Intel
have really fallen behind, particularly in the AI space. They
really haven't anticipated the growth in that particular sector at all,
unlike some of the Asian chip manufact factorers. But that's
not really Taiwan's steaming or taking one hundred percent of
(02:48):
America's chip business, as Donald Trump likes to claim.
Speaker 2 (02:51):
Yeah, some tracking ahead. It would be fascinating to see
what happens in the early months of next year, if
indeed he is the next president. The third plan them
in China this week in security was a major focus.
Speaker 1 (03:04):
It was indeed, they talked very much about protecting national security.
That's been a top priority for a while. But also
it seems to me that it sort of takes presidents
over the economy, that if there's a choice between initiatives
that are going to protect national security are going to
(03:25):
boost the economy, Even though they say they're equal, I
suspect that national security will win. The communicate that came
out yesterday warned very much about geopolitical risks. It says
China should lead global governance. I presume that means creating
alternative organizations to some of the Western dominated institutions. They
(03:50):
talked about balancing economic development with security, but as I say,
I rather suspect security is very much going to be
at the forefront of their minds. What I found more
alarming was they wanted to talk about, first of all,
creating a socialist modern power. I'm not sure what they
meant by that. They didn't exactly say, but they were
(04:12):
talking very much about coordinating, implementing various measures to prevent
and resold risks. And they want to weave what they
say is a dense social security risk prevention and control
network and maintain social stability. And also they say they
(04:32):
want to step up state propaganda. They say it's necessary
to strengthen public opinion guidance. Now this sounds rather alarming
to me. It sounds like a lot more internal controls.
As we know, the Communist Party under Jijipin what's to
control everything, every aspect of life in China, whether it
be economic, whether it be business, whether it be social,
(04:55):
whether it be aspects of your personal life. They very
much control social media. They cramp down on dissent very
very harshly. It seems to me that some of those
statements warning and more coming along those lines and really
trying to indoctrinate people's thinking and even key issues like
(05:16):
the economy, they feel you know that people are bad
mouthing the economy and that people should be much more
positive and supportive about what they're doing on the economic front.
Speaker 2 (05:27):
Speaking of the economy public secti versus private sector, is
there any indication the Chinese leadership wants to scale back
investment in the public sector.
Speaker 1 (05:37):
Well, they talk all the time about being business friendly
and the important of private companies. However, the rhetoric is
not really matched by the actions. When you look at
the actions, it seems very clear to me that the
big state owned enterprises do get preferential treatments by local
(06:00):
government and by the central government in Beijing. You only
have to look at the economic data we had. The
data for fixed investment came out on Monday. Well, private
companies invested just zero point one percent. Oh, it grew
private investment just by zero point one percent in the
first half of the year. Public investment, in other words,
(06:21):
through stateholed enterprises grew nearly seven percent. So that just
tells you when you see private companies just not really
willing to invest, that they just don't have the confidence
in doing so and in building more of their business
and investing in more of their businesses over time.
Speaker 2 (06:42):
Yeah, yeah. Meanwhile, India is embracing Apple products.
Speaker 1 (06:47):
Oh yeah. This is a very deliberate strategy by Apple
to try and diversify away from China. That's what's known
as the China plus one strategy. In that's post COVID
companies learnt very hardly, very harshly about the risks of
putting all your eggs in one basket and just relying
(07:08):
on China for your supply chains. So Apple's chosen markets
where it wants to develop is India. It now produces,
you know, about one in seven of its products in India.
It's got a couple of flagship Apple stores in the
country now, and its revenue from India is jumping. It's
(07:29):
up about a third now in the last twelve months.
It's up to about six billion dollars a year. So
Apple is quite deliberately diversing its manufacturing and revenue sources
beyond China. Now, it's not going to abandon China altogether,
but nevertheless, India is becoming a much more important market,
(07:49):
and it seems as a very good market in many ways,
not just for Apple, but for other tech companies as well.
It's got a very young, well educated population and the
demographics have very much in India's favor, unlike in China,
which is getting more and more elderly. And you've got
developing infrastructure in the country, still nowhere near as good
(08:13):
as China, but nevertheless developing, so providing a lot of
the things that technic companies like Apple require.
Speaker 2 (08:20):
Yeah, very good. As your business correspondent, Peter Lewis, thank
you for your time. Always great to chat for more
from hither Duplasy Alan Drive. Listen live to news talks
it'd be from four pm weekdays, or follow the podcast
on iHeartRadio.
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