Latest / Stephanomics / Is It Curtains for the U.S.-China Economic Relationship?

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Is It Curtains for the U.S.-China Economic Relationship? · Stephanomics

• 0:05
  Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
• 0:08
  Speaker 1: global economy to you. If you don't like a bit
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  Speaker 1: of road rage with your daily commute, I'd advise you
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  Speaker 1: not to move to Ulan Bator or Moscow. Karachi and
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  Speaker 1: Lagos would also be bad bets. According to a new
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  Speaker 1: index compiled by a UK car parts supplier mr Auto.
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  Speaker 1: The index pulls together a whole lot of data on
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  Speaker 1: things like congestion, road safety, the quality of infrastructure, and
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  Speaker 1: the number of road rage incidents to decide which are
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  Speaker 1: the best and worst cities in the world for drivers.
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  Speaker 1: The bad news for India is that two of its cities,
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  Speaker 1: Mumbai and Kolkata, feature in the bottom three. If you
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  Speaker 1: want to find out who comes top out of a
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  Speaker 1: hundred world cities, well you'll have to wait till a
• 0:58
  Speaker 1: bit later. I'll be talking through results and the more
• 1:01
  Speaker 1: serious lessons with Bloomberg reporter Zoe is schnave iis but
• 1:06
  Speaker 1: first the future of China and its technology, both of
• 1:09
  Speaker 1: which are going to feature prominently at the Bloomberg New
• 1:13
  Speaker 1: Economy Forum, which gets underway on November twentieth in Beijing.
• 1:17
  Speaker 1: We touched on this a little while ago. You remember
• 1:19
  Speaker 1: when I was in Singapore. The idea that a more
• 1:23
  Speaker 1: antagonistic relationship between the US and China could drive a
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  Speaker 1: technological fault line through the global economy, with countries and
• 1:31
  Speaker 1: businesses being forced to choose which side they were on.
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  Speaker 1: But of course, all that assumes that China can start
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  Speaker 1: developing world beating technologies that don't depend on the US.
• 1:42
  Speaker 1: In a minute, I'll talk to Bloomberg's chief economist, an
• 1:44
  Speaker 1: old China hand Tom Orlick, about China's plans to dominate
• 1:48
  Speaker 1: the technologies of the future and how they might have
• 1:50
  Speaker 1: been affected by Donald Trump. But first, Bloomberg Economy reporter
• 1:54
  Speaker 1: Karen and Look has this report from Beijing and Guandjong
• 2:05
  Speaker 1: h Here in China, American ideas, brands and technology are everywhere.
• 2:12
  Speaker 1: Strolling down the street in my neighborhood and Beijing, I
• 2:15
  Speaker 1: can see teenagers wearing Nike stepping out of you A
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  Speaker 1: minivans on their way to Starbucks while rivetted to their
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  Speaker 1: Apple iPhones. But will that change if the confrontation between
• 2:26
  Speaker 1: China and the US morphs into a battle to control
• 2:29
  Speaker 1: the technologies of the future. To help find an answer,
• 2:38
  Speaker 1: I've come to talk to local business people at the
• 2:40
  Speaker 1: Canton Fair. It's a massive trade show for Chinese exporters
• 2:45
  Speaker 1: that takes place twice a year in Guangzo. How massive,
• 2:49
  Speaker 1: the space is equivalent to a hundred eighty five soccer
• 2:51
  Speaker 1: fields with some exhibitors and a hundred eighty thousand foreign buyers.
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  Speaker 1: There's everything here, from Bluetooth earbud two, solar powered refrigerators
• 3:02
  Speaker 1: to portable saunas. This is Mr Jong, who hails from
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  Speaker 1: the surrounding Guangdong province. He's a sales manager at a
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  Speaker 1: company that makes large led screens and smart TV's. He
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  Speaker 1: would only give us his last name. All around him
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  Speaker 1: and his booth are his company's televisions, which rely on
• 3:22
  Speaker 1: you guessed it, the Android operating system from American tech
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  Speaker 1: giant Google. We use some Google and YouTube features in
• 3:31
  Speaker 1: some of our products, and especially for products are sold overseas.
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  Speaker 1: If it is cut off, it could affect our manufacturing
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  Speaker 1: and production. Mr Jong feels vulnerable. Earlier this year, the
• 3:44
  Speaker 1: Trump administration blacklisted Huawei Technologies, a big Chinese maker of
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  Speaker 1: telecom equipment. It means that people who buy Huawei's new
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  Speaker 1: smartphones won't get the latest versions of an Android. For
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  Speaker 1: companies lower down on the technology chain. That's also a problem.
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  Speaker 1: If the tech confrontation widens and draws them into they
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  Speaker 1: could also lose access to these high tech parts and
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  Speaker 1: operating systems that China can't replicate. The result could mean
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  Speaker 1: the end for some businesses. This is what people mean
• 4:13
  Speaker 1: when they talk about a silicon curtain descending between the
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  Speaker 1: US and China. We are very concerned about this trade
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  Speaker 1: war between China and the US and if it involves
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  Speaker 1: issues with Google, because we don't have anything better to
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  Speaker 1: replace it for people who need this stuff around the world,
• 4:31
  Speaker 1: You don't have the better product that can replace it.
• 4:34
  Speaker 1: In the worst case scenario, would China be hopelessly left
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  Speaker 1: behind without American technologies or could it adapt its own
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  Speaker 1: innovations to fill the gap. The answer to that depends
• 4:45
  Speaker 1: on which sector you're looking at. That's according to Nicole Pung,
• 4:49
  Speaker 1: an expert in Hong Kong at Canalysts, a consulting firm
• 4:53
  Speaker 1: for some emerging technologies like cloud computing and AI. China
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  Speaker 1: is actually a leading player on the global stage. But
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  Speaker 1: when it come to some hardware, especially when it comes
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  Speaker 1: to chipset manufacturing, and then some key materials for some
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  Speaker 1: consumer devices for example, then Sho we know that US
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  Speaker 1: as well as some other countries they're holding UM the
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  Speaker 1: pattern and I P and and also don't know how
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  Speaker 1: as well as the capability to develop an R and
• 5:27
  Speaker 1: D and also more importantly the human resources, the key
• 5:34
  Speaker 1: engineer people on this industry. They've been working on this
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  Speaker 1: area for a very long time, and that's a very
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  Speaker 1: strong foundation in certain areas. It definitely would take China
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  Speaker 1: and Chinese company UM many years, say five to ten years,
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  Speaker 1: to to be able to get to the level. Right now,
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  Speaker 1: the US company is at Huawei, plans are well underway
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  Speaker 1: to survive and grow even without access to U S technology.
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  Speaker 1: The company is developing its own smartphone operating system known
• 6:08
  Speaker 1: as Harmony OS. That may not be an ideal solution
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  Speaker 1: for now, but the Tech Giants founder and junk Fei
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  Speaker 1: doesn't seem to expect the confrontation between China and the
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  Speaker 1: US will last forever. Here's what he said at a
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  Speaker 1: Bloomberg event this month. We have the ability to survive. However,
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  Speaker 1: this is not what we pursue. We have no intention
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  Speaker 1: in that personally, don't support doing everything every innovation ourselves.
• 6:37
  Speaker 1: But if we have to do it. Then we have
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  Speaker 1: a temporary approach that we will well go on it ourselves. However,
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  Speaker 1: this is not our long term strategy. Now we have
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  Speaker 1: no problem to sustain our development. Back at the cant Unfair,
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  Speaker 1: we talked to business people who also offered a nuanced perspective.
• 7:03
  Speaker 1: Tourette Muslim came to China from Syria twelve years ago.
• 7:07
  Speaker 1: He and a business partner set up a company that
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  Speaker 1: makes home automation products. Their WiFi connected smart home systems
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  Speaker 1: help you control your air conditioning and your lighting and
• 7:17
  Speaker 1: even your curtains. But look inside their products and you'll
• 7:20
  Speaker 1: find a lot of microchips and other components imported from
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  Speaker 1: the US to be exact. But Muslim says he's not
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  Speaker 1: so worried. Well, there's a lot of alternatives if we
• 7:34
  Speaker 1: who didn't get this from the US, so from the
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  Speaker 1: China there is a lot of suppliers and they are
• 7:39
  Speaker 1: ready to supply to China or any other way. Nobody
• 7:47
  Speaker 1: could now with a bridgure or a sanction, I guess
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  Speaker 1: one gay, So how much decoupling will actually happen. In
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  Speaker 1: the last few years, we've seen a surge and barriers
• 8:01
  Speaker 1: that includes tariffs, foreign investments, even access to Chinese researchers
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  Speaker 1: and scientists in the US, but the country's economies are
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  Speaker 1: still extremely intertwined. Here's Scott Kennedy, an expert on the
• 8:14
  Speaker 1: US China economic relationship at the Center for Strategic and
• 8:17
  Speaker 1: International Studies in Washington. If Chinese would see the negotiations
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  Speaker 1: with the United States is an opportunity to liberalize their
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  Speaker 1: economy and make it more productive and see it less
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  Speaker 1: as a threat that challenges their opportunity to develop and rise,
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  Speaker 1: they could take advantage of this and there would there'd
• 8:41
  Speaker 1: be adjustments in the nature of supply chains and the
• 8:44
  Speaker 1: type of relationships we have, but it wouldn't be anything
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  Speaker 1: close to decoupling. It be a reorganization that would benefit
• 8:51
  Speaker 1: China tremendously. At the same time, China's government, under President
• 8:56
  Speaker 1: Seegin Ping, it's going to do all it can to
• 8:58
  Speaker 1: reduce the country's rely on foreign technology suppliers. If Donald
• 9:03
  Speaker 1: Trump's goal really is to limit China's rise, then his
• 9:06
  Speaker 1: current approach is making them try all the harder to
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  Speaker 1: build the technology of tomorrow. Even Mr Jung believes that
• 9:13
  Speaker 1: with a little bit of time, China might just be okay.
• 9:18
  Speaker 1: I believe that as time goes by, perhaps in ten
• 9:21
  Speaker 1: to fifteen years, Chinese companies will be able to have
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  Speaker 1: business that could compete to be at the US top
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  Speaker 1: technology companies. That is not to say that we will
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  Speaker 1: replace them, but that Chinese companies will be able to
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  Speaker 1: compete with them in the market. Fairly. So far, I
• 9:37
  Speaker 1: think we're a bit leg behind, and in the future
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  Speaker 1: I think we can be as good. Give me some
• 9:42
  Speaker 1: time for Bloomberg News. I'm Caroline. Look so that's the
• 9:58
  Speaker 1: view of China and technology on the ground, But for
• 10:02
  Speaker 1: a longer view, I thought it would be worth having
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  Speaker 1: a quick chat to our chief economists here at Bloomberg,
• 10:07
  Speaker 1: Tom Orlick, who's in Washington but spent eleven years in
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  Speaker 1: Beijing and has published one soon to be two books
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  Speaker 1: on the Chinese economy. Thanks for joining us, Tom, you
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  Speaker 1: listen to that report there. I mean, it's an issue
• 10:22
  Speaker 1: we keep coming back to. How is China going to
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  Speaker 1: navigate this next stage of its economic development and what
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  Speaker 1: are the implications going to be um for the for
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  Speaker 1: the rest of the world. Do you think that the
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  Speaker 1: trade wars trade tensions we've had over the last couple
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  Speaker 1: of years have changed the way the Chinese leadership is
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  Speaker 1: thinking about that. So there's a couple of things which
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  Speaker 1: are happening to China at the same time, Stephanie. So
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  Speaker 1: the first one is that there's drivers of growth that
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  Speaker 1: they've relied on traditionally, very very low cost labor, very
• 11:02
  Speaker 1: very extensive investment in expanding the capital stock. Um. These
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  Speaker 1: drivers are running out of steam. Labor is expensive, the
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  Speaker 1: workforce is shrinking, and the capacity to grow by investment
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  Speaker 1: is just much less than it used to be. Now,
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  Speaker 1: as that's happening, China needs to find new sources of growth,
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  Speaker 1: and the obvious thing to do is to rely more
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  Speaker 1: on the rest of the world. We were at the
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  Speaker 1: rest of the world economy, So as the domestic drivers
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  Speaker 1: dry up, China wants to export more and it wants
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  Speaker 1: to accelerate the process of well. Friends call it technology
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  Speaker 1: transfer um and enemies call it technology theft from the
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  Speaker 1: rest of the world to drive increases in productivity. So
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  Speaker 1: the challenge for China is that just at the moment
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  Speaker 1: when the domestic drivers are fading, the scope to turn
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  Speaker 1: to the global economy for a leg up, for an
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  Speaker 1: acceleration in terms of growth, it's just become much weaker
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  Speaker 1: because of that trade war with the United States, and
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  Speaker 1: I mean we've we've talked, we've talked about it over
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  Speaker 1: over the months, and in fact, when I was in
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  Speaker 1: Singapore a couple of weeks ago, there was some concern
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  Speaker 1: about this, I mean, the arguments with the US over Huawei,
• 12:19
  Speaker 1: over the sort of technological side of China's development. I mean,
• 12:25
  Speaker 1: they're not they're not going away. But when you hear
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  Speaker 1: as in that piece, when you hear them talking about
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  Speaker 1: how they're going to replicate these US technologies and become
• 12:36
  Speaker 1: less and less dependent on them from your experience in China,
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  Speaker 1: do you think they'll manage to do that? Do you
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  Speaker 1: think I mean, do you think they are they are
• 12:42
  Speaker 1: really accelerating their efforts to do innovation, and do you
• 12:45
  Speaker 1: think they will succeed? So, I think the first thing
• 12:50
  Speaker 1: to say is that if the Silicon curtain falls, if
• 12:55
  Speaker 1: China and the US do separate their technology sectors, there's
• 13:00
  Speaker 1: going to be an immediate blow to both sides. You've
• 13:04
  Speaker 1: got companies like Google, like Apple here in the United
• 13:09
  Speaker 1: States who in one way or another are deeply in
• 13:13
  Speaker 1: meshed with the Chinese technology sector. And on the Chinese side,
• 13:18
  Speaker 1: you have an entire electronics manufacturing supply chain that in
• 13:22
  Speaker 1: one way or another is dependent on imported US technology,
• 13:27
  Speaker 1: imported US ideas and components. So if you separated the two,
• 13:32
  Speaker 1: there would be an immediate and crushing blow to both sides. Um.
• 13:37
  Speaker 1: The question, looking further forwards is could China close the gap?
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  Speaker 1: Could China do itself what it's currently relying on US
• 13:47
  Speaker 1: firms to do, And in a sense it's kind of
• 13:49
  Speaker 1: it's imponderable um or possibly the kind of question you'd
• 13:53
  Speaker 1: really want a kind of a technology expert rather than
• 13:56
  Speaker 1: an economists talking about yourself down. I know, I will
• 14:01
  Speaker 1: do healthcare next, and then we'll do genetics, and I'll
• 14:04
  Speaker 1: have an opinion on all of them. Um. But I
• 14:06
  Speaker 1: think there's a few things which which would make me
• 14:08
  Speaker 1: think that China's clan chances of closing the gap were
• 14:11
  Speaker 1: actually rather high. Um. So, firstly, China is just making
• 14:15
  Speaker 1: absolutely enormous investments in accelerating its research and development capacity.
• 14:22
  Speaker 1: It's investing more than anyone else in the world apart
• 14:24
  Speaker 1: from the United States in R and D. It's graduating
• 14:28
  Speaker 1: more science and technology graduates than anyone else in the world.
• 14:32
  Speaker 1: If we look at how it's doing UM. There's an
• 14:35
  Speaker 1: index called the Global Innovation Index. It's kind of the
• 14:38
  Speaker 1: benchmark in terms of how countries are doing and broadly
• 14:42
  Speaker 1: understood on their innovation program. China is accelerating up the
• 14:46
  Speaker 1: rankings on the Global Innovation Index. In the latest score,
• 14:50
  Speaker 1: they come in at number fourteen. That's ahead of Japan.
• 14:54
  Speaker 1: I think the idea that China is already and more
• 14:56
  Speaker 1: innovative economy than Japan is pretty striking UM. And then
• 15:01
  Speaker 1: the third reason why I think that they would have
• 15:03
  Speaker 1: some hope of closing the gap is that the US
• 15:06
  Speaker 1: is not the only show in town when it comes
• 15:08
  Speaker 1: to technology. Yes, in Silicon Valley, in the universities of
• 15:13
  Speaker 1: the Ivy League, there are some world beating scientists and
• 15:16
  Speaker 1: world beating innovators, but they're not the only ones in
• 15:20
  Speaker 1: the world. There's also Germany, There's also Japan, there's also
• 15:24
  Speaker 1: Career UM, there's also the United Kingdom UM. And if
• 15:28
  Speaker 1: there's one thing which the United States has not done
• 15:30
  Speaker 1: very well in the last two or three years, it's
• 15:33
  Speaker 1: bring these other countries with it in a kind of
• 15:36
  Speaker 1: alliance of the willing or coalition of the willing. And
• 15:39
  Speaker 1: if there's one thing that China is extremely good at
• 15:41
  Speaker 1: doing it's taking advantage of those breaks in relations between
• 15:47
  Speaker 1: other countries that that competitive, the competitive nature of the
• 15:50
  Speaker 1: relationship between other countries to get deals done and make
• 15:54
  Speaker 1: sure it continue to advance towards the technology frontier. And
• 15:59
  Speaker 1: they also seems to be able to use its scale
• 16:02
  Speaker 1: to its advantage in a way that other big countries
• 16:05
  Speaker 1: have not always been able to do. I mean, I remember,
• 16:07
  Speaker 1: you know, one reads about the failed development strategies of
• 16:11
  Speaker 1: the fifties and sixties, the f big effort of imports
• 16:14
  Speaker 1: substitution in India and Brazil, where there was this kind
• 16:19
  Speaker 1: of idea that if you if you had a big market,
• 16:21
  Speaker 1: that was all you really needed to do, and you
• 16:23
  Speaker 1: could close yourself off from the world and you would
• 16:25
  Speaker 1: be able to match anything that the US achieved. I mean,
• 16:28
  Speaker 1: those countries famously were not able to do that. But
• 16:31
  Speaker 1: somehow China has managed to make that it's the size
• 16:36
  Speaker 1: of its domestic market a real springboard. Yeah. I think
• 16:41
  Speaker 1: that's right, Stephanie. And clearly there are examples, and you
• 16:44
  Speaker 1: mentioned Brazil and India of big countries where size hasn't
• 16:47
  Speaker 1: been the determining factor, but size clearly is an advantage
• 16:52
  Speaker 1: and when you combine size with a relatively efficient government,
• 16:58
  Speaker 1: with a relatively skilled workforce UM, and with a state
• 17:04
  Speaker 1: owned banking system which can provide the finance businesses require,
• 17:09
  Speaker 1: I think scale does become extremely important UM and in
• 17:13
  Speaker 1: a sense that is why China presents the threat it
• 17:17
  Speaker 1: does to the United States. Because if you take an innovation,
• 17:22
  Speaker 1: whether it's a Chinese innovation or a US innovation or
• 17:25
  Speaker 1: a Japanese innovation, and you plug it into the Chinese
• 17:30
  Speaker 1: business sector, then because of the scale of the Chinese market,
• 17:35
  Speaker 1: China will be able to produce at a significantly larger
• 17:38
  Speaker 1: scale then it's foreign competitors. And when it does that,
• 17:43
  Speaker 1: the risk is that whether or not that's an indigenous
• 17:46
  Speaker 1: Chinese innovation or an innovation which has been borrowed or
• 17:50
  Speaker 1: paid for from from the US or elsewhere, it's the
• 17:53
  Speaker 1: Chinese firm that's going to become the global champion UM
• 17:57
  Speaker 1: and it's the foreign rivals that that are going to
• 17:59
  Speaker 1: be left scrambling for scraps. We should talk a little
• 18:02
  Speaker 1: bit about the short term because actually one of the
• 18:04
  Speaker 1: things that striking about the slowdown in the Chinese economy
• 18:08
  Speaker 1: UM that many people worry about is that the import
• 18:13
  Speaker 1: growth has slowed, particularly sharply when you're just looking short term,
• 18:17
  Speaker 1: is there a risk that China will turn out to
• 18:19
  Speaker 1: be even weaker than we thought next year and possibly
• 18:22
  Speaker 1: be the last straw in terms of the global recovery.
• 18:26
  Speaker 1: So there's always been this concern about China's growth data.
• 18:30
  Speaker 1: I mean, to put it charitably, China's economic data represents
• 18:35
  Speaker 1: a compromise between reality and political message management UM and,
• 18:40
  Speaker 1: so there's always been a question about whether we can
• 18:44
  Speaker 1: trust the GDP data or not. UM Now, import data
• 18:49
  Speaker 1: has a kind of intuitive appeal as an alternative gauge
• 18:52
  Speaker 1: of what's going on in the economy. It tells us
• 18:55
  Speaker 1: about consumers, it tells us about businesses, also tells us
• 19:00
  Speaker 1: about the exports sector, because a lot of China's exports
• 19:04
  Speaker 1: include substantial components and parts which they purchased from Korea
• 19:08
  Speaker 1: and Japan and elsewhere. UM So, imports are an important alternative,
• 19:13
  Speaker 1: alternative gauge of what's going on in China's economy, and
• 19:17
  Speaker 1: right now they present a picture of startling weakness. They're contracting.
• 19:23
  Speaker 1: So our view UM and we look at a broad
• 19:26
  Speaker 1: range of China's data. We look at GDP, we look
• 19:29
  Speaker 1: at imports. We look at things like electricity production and
• 19:32
  Speaker 1: rail freight and the pace of bank lending. Um Our
• 19:36
  Speaker 1: view is that, yes, imports are extremely weak, and there
• 19:39
  Speaker 1: are some serious problems in China's exports sector. We don't
• 19:42
  Speaker 1: think the overall economy is anything like contract, anything close
• 19:46
  Speaker 1: to contraction, and we don't think that's likely going forwards,
• 19:50
  Speaker 1: in large part because China's policymakers retain the means and
• 19:55
  Speaker 1: the motivation to provide sufficient stimulus to keep the economy growing. Well,
• 20:00
  Speaker 1: I'm excited to say we will get more insight into
• 20:02
  Speaker 1: that from Chinese policymakers and others at the New Economy
• 20:06
  Speaker 1: Forum next week, where you and I will both be
• 20:09
  Speaker 1: tom So watch this space. Thanks definitely. Now I'm going
• 20:19
  Speaker 1: to turn seamlessly to the twenty nineteen Driving Cities Index.
• 20:24
  Speaker 1: Which city in the world is best for drivers? Well,
• 20:28
  Speaker 1: the prize goes to Calgary in Canada, with runner up
• 20:32
  Speaker 1: rosettes for Dubai, Ottawa, burn in Switzerland, and wait for it,
• 20:37
  Speaker 1: al Paso, Texas. So those are the winners in overall rankings,
• 20:42
  Speaker 1: and if you look at just the individual measures, New York, Singapore,
• 20:46
  Speaker 1: Tokyo and London all come top for public transport. Manchester
• 20:51
  Speaker 1: in England interestingly comes top for safety with the smallest
• 20:55
  Speaker 1: number of road fatalities per a hundred thousand inhabitants. It's
• 20:59
  Speaker 1: followed by Stockholm and Oslo and Vienna, maybe less surprising.
• 21:03
  Speaker 1: The most dangerous cities on that measure of fatalities are Lagos,
• 21:08
  Speaker 1: not surprising, and Orlando, Florida, which I guess is probably
• 21:12
  Speaker 1: less surprising if you live in Orlando, Florida. Well, we're
• 21:15
  Speaker 1: going to talk a bit more about this and maybe
• 21:18
  Speaker 1: a bit more serious conclusions you can draw with Zoe
• 21:22
  Speaker 1: schneve Ice are economy editor here in London previously of
• 21:27
  Speaker 1: Vienna and Zurich, relevant to this conversation. And I was struck, Zoe,
• 21:32
  Speaker 1: when I was looking through this report. I mean, in
• 21:34
  Speaker 1: a sense, it's not surprising, but there is a clear
• 21:37
  Speaker 1: north south divide. I mean on the top you have Calgary,
• 21:40
  Speaker 1: burned dustl Edorf, and then towards the bottom there's Moscow, Lagos, Mumbai.
• 21:47
  Speaker 1: I mean, why is it that cities in developing countries
• 21:50
  Speaker 1: are struggling on all these measures? Infrastructure here does seem
• 21:54
  Speaker 1: to be key. Typically, we're experiencing a substantial increased in
• 21:58
  Speaker 1: individual wealth, and that in turn has led to an
• 22:01
  Speaker 1: increase in car ownership. At the same time, cities haven't
• 22:05
  Speaker 1: adapted the infrastructure to facilitate that boosting cars, and they
• 22:09
  Speaker 1: also haven't invested in public transport to give people in
• 22:14
  Speaker 1: a different way of getting around. Yeah, and it sort
• 22:17
  Speaker 1: of tells you, I guess the other thing that we
• 22:18
  Speaker 1: and it's one of the reasons why they are going
• 22:20
  Speaker 1: to be talking about urbanization and cities at the New
• 22:23
  Speaker 1: Economy Forum next week that when we talk about the
• 22:27
  Speaker 1: recipe for economic success these days, we are often talking
• 22:30
  Speaker 1: about these super successful connurbations. You know, there's these are
• 22:34
  Speaker 1: parts of countries that are doing fantastically well. And so
• 22:38
  Speaker 1: the recipe for success, if you like, is to create
• 22:40
  Speaker 1: these very livable places and you have and you have.
• 22:43
  Speaker 1: Competition between cities now almost more important than competition between countries.
• 22:51
  Speaker 1: So what is it that you know, we've talked about
• 22:53
  Speaker 1: the cities that are not doing well. What are cities
• 22:55
  Speaker 1: doing right that we can see in this in this index, again,
• 22:59
  Speaker 1: infrastruct is the key measure here. Nowadays it often feels
• 23:04
  Speaker 1: like being able to get around a city without a
• 23:06
  Speaker 1: car is the real sign of a city's prosperity. Um My.
• 23:11
  Speaker 1: Our colleague Justin Fox pointed out on this podcast just
• 23:14
  Speaker 1: a month ago that the US census data suggests that
• 23:19
  Speaker 1: public transport is now increasingly used by more affluent people.
• 23:23
  Speaker 1: So when I think about the cities that I've lived in,
• 23:26
  Speaker 1: um they all have had incredible public transport systems, and
• 23:30
  Speaker 1: in two of them, in Zurich and in London, now
• 23:34
  Speaker 1: I'm in the luxurious position of not even having to
• 23:36
  Speaker 1: use them. I can walk. So cities that are walkable,
• 23:39
  Speaker 1: cities that are approachable, cities where you can afford to
• 23:43
  Speaker 1: live near where you work, or if you work further away,
• 23:47
  Speaker 1: where there is an easy way of getting to work.
• 23:49
  Speaker 1: That does increasingly make cities more livable and make people
• 23:54
  Speaker 1: want to stay in these cities. You've got a large
• 23:56
  Speaker 1: number of people will now hate you that they've heard
• 23:58
  Speaker 1: that you can walk to work in the center, in
• 24:00
  Speaker 1: the center of London, but I certainly enjoy are quite
• 24:03
  Speaker 1: often cycle to work. It strikes me though, I mean,
• 24:06
  Speaker 1: there's definitely a downside to having a fantastically successful city,
• 24:09
  Speaker 1: and we have seen it in spades in the UK.
• 24:13
  Speaker 1: There's so much concentration of wealth and economic success in
• 24:18
  Speaker 1: the southeast of England, and particularly around London. There is
• 24:23
  Speaker 1: a great lot of resentment outside the southeast for that success,
• 24:29
  Speaker 1: and a feeling not entirely unjustified that people in the
• 24:32
  Speaker 1: southeast don't understand the struggles that people and the rest
• 24:36
  Speaker 1: of the country have had, which I think did feed
• 24:39
  Speaker 1: importantly into that into that Brexit vote, and of course
• 24:43
  Speaker 1: most people in London voted Remain. It's going to be
• 24:47
  Speaker 1: a test, isn't it, Zoe the next few years if
• 24:50
  Speaker 1: and when Britain does leave the EU. London still has
• 24:53
  Speaker 1: a lot of the advantages we see in this index
• 24:56
  Speaker 1: of infrastructure livability, but it won't to have those kind
• 25:00
  Speaker 1: of legal advantages of being in the EU. And we
• 25:03
  Speaker 1: see some people have already had to move because of
• 25:05
  Speaker 1: those changes. And the reason that I can walk to
• 25:09
  Speaker 1: work is because people have left and made flat more affordable,
• 25:13
  Speaker 1: at least for me in this case. Um No, but
• 25:17
  Speaker 1: London is an amazing city and I think people will
• 25:19
  Speaker 1: be torn whether to actually leave. Some of them, of course,
• 25:22
  Speaker 1: will have to leave. Frankfort Luxembourg are becoming banking hubs,
• 25:27
  Speaker 1: and that is in part because of Brexit, and because
• 25:30
  Speaker 1: certain bank functionality will have to be conducted from within
• 25:34
  Speaker 1: the European Union at the same time when they look
• 25:36
  Speaker 1: at the infrastructure in those cities. I've never had to
• 25:40
  Speaker 1: miss a flight in London, huge as it may be.
• 25:42
  Speaker 1: I certainly have in Frankfort. Yeah, and I'm headed to
• 25:45
  Speaker 1: Berlin tomorrow and that's another rather challenging airport, so we
• 25:49
  Speaker 1: shall see Zernie. Thank you, thank you very much. I
• 25:52
  Speaker 1: did a piece once that was around the idea that
• 25:56
  Speaker 1: Britain should let London go, that everyone will be better
• 25:59
  Speaker 1: off if London had formed its own city state with
• 26:03
  Speaker 1: its own priorities, and what was amazing about it was
• 26:05
  Speaker 1: how popular it was among people outside London and inside London.
• 26:10
  Speaker 1: Maybe it was a bit of a precursor to that
• 26:12
  Speaker 1: to that Brexit vote. Thanks for listening to Stephanomics. We'll
• 26:25
  Speaker 1: be back next week and we will be in Beijing
• 26:28
  Speaker 1: in the meantime. You can find us on the Bloomberg Terminal, website,
• 26:31
  Speaker 1: app or wherever you get your podcasts. We'd love it
• 26:34
  Speaker 1: if you took the time to rate and review our
• 26:35
  Speaker 1: show so it can reach more listeners. For more news
• 26:39
  Speaker 1: and analysis during the week from Bloomberg Economics, follow as
• 26:42
  Speaker 1: Economics on Twitter and you can also find me on
• 26:46
  Speaker 1: at my Stephonomics. The story in this episode was reported
• 26:50
  Speaker 1: by Carolyn Look, mio Han, and Yinan Zoo. It was
• 26:54
  Speaker 1: written by Karen and Look and Jeff Black, produced by
• 26:57
  Speaker 1: Magnus Hendrickson, and edited by Scott Lamber, who is also
• 27:00
  Speaker 1: the executive producer of Stephanomics. Special thanks to Tom Rlick,
• 27:05
  Speaker 1: Zoe Schnewiss, Gou Yuan, Stephen Engel, Bobby Islam, and rosslyn Chin.
• 27:11
  Speaker 1: Francesca Levy is the head of bloombow Podcasts.