Latest / Stephanomics / Why China Surpassing America’s Economy Isn’t a Sure Thing

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Why China Surpassing America’s Economy Isn’t a Sure Thing · Stephanomics

• 0:00
  Speaker 1: I think we've got to be open about it and
• 0:01
  Speaker 1: not make it to do, and not be embarrassed about it,
• 0:03
  Speaker 1: and be really clear. If you have out of rubbish
• 0:05
  Speaker 1: night seat because of it, then share that experience, because
• 0:08
  Speaker 1: there'll be lots of other women going through exactly the
• 0:10
  Speaker 1: same thing as me each and every day. Hello and
• 0:16
  Speaker 1: welcome to Stephonomics, the podcast that brings the global economy
• 0:19
  Speaker 1: to you. If you think about the really big changes
• 0:22
  Speaker 1: coming down the track over the next twenty to thirty years,
• 0:25
  Speaker 1: the aging of the global population would be high on
• 0:28
  Speaker 1: anyone's list. It could affect the growth rate of our economy,
• 0:32
  Speaker 1: how much we spend, what we spend it on, the
• 0:35
  Speaker 1: kind of jobs that are needed, could affect pretty much
• 0:37
  Speaker 1: everything in fact. But one consequence that probably hasn't crossed
• 0:41
  Speaker 1: your radar is that nearly one in four women around
• 0:45
  Speaker 1: the world could be going through the menopause. By Bloomberg
• 0:49
  Speaker 1: Economy reporter Lizzie Burden has looked into the economics of
• 0:52
  Speaker 1: that mildly alarming prospect. You'll hear from her in a
• 0:56
  Speaker 1: few minutes, but first, let's talk about another major chain
• 1:00
  Speaker 1: age we're expecting the global economy to go through. Becoming
• 1:03
  Speaker 1: more Chinese. Betting when exactly China overtakes the US as
• 1:18
  Speaker 1: the world's largest economy is a popular pastime among economists.
• 1:22
  Speaker 1: Whether that handover will happen doesn't arouse much debate at all,
• 1:27
  Speaker 1: especially not in Beijing, where they've just been celebrating the
• 1:30
  Speaker 1: hundred anniversary of the Chinese Communist Party, and its leaders
• 1:34
  Speaker 1: have been doing their best to present that passing of
• 1:36
  Speaker 1: the battern from the US to China as both imminent
• 1:40
  Speaker 1: and inevitable. The Chinese nation, president shi Jingping said last
• 1:45
  Speaker 1: week is marching towards a great rejuvenation at an unstoppable pace.
• 1:51
  Speaker 1: But is it so unstoppable? Is China really destined to
• 1:54
  Speaker 1: take over the world in the near future. Well, Bloomberg's
• 1:58
  Speaker 1: chief economist Tom Orlick, friend of Stephanomics, has asked exactly
• 2:02
  Speaker 1: that question in some research with our China economist Eric
• 2:06
  Speaker 1: Schu and come up with some interesting answers. Tom, thanks
• 2:10
  Speaker 1: for joining us again. Tell me about this research before
• 2:13
  Speaker 1: we go on to have a broader debate about it.
• 2:16
  Speaker 1: So China has a lot of things in its favor, Stephanie.
• 2:19
  Speaker 1: There's one point for billion Chinese people GDP per capita
• 2:24
  Speaker 1: in China is a fraction of the level in the
• 2:27
  Speaker 1: United States, pointing to substantial space for continued development, and
• 2:32
  Speaker 1: China's leaders have a formidable track record on delivering on
• 2:36
  Speaker 1: their development their development objectives. So at one level, it
• 2:40
  Speaker 1: seems like a no brainer that China will inevitably overtake
• 2:44
  Speaker 1: the United States and claim the top spot in the
• 2:47
  Speaker 1: global economic rankings. At the same time, there's a bunch
• 2:51
  Speaker 1: of vulnerabilities and uncertainties. A shrinking working age population, are
• 2:56
  Speaker 1: stalled reform agenda, an overhang of which raises the possibility
• 3:01
  Speaker 1: of a financial crisis and increasingly the risk of isolation
• 3:06
  Speaker 1: in the global community, slowing the flow of technology and
• 3:10
  Speaker 1: ideas and innovations which have catalyzed China's development. So what
• 3:14
  Speaker 1: we did in this piece, my colleague Eric Jew and
• 3:16
  Speaker 1: myself is put some numbers around those risks and identify
• 3:21
  Speaker 1: scenarios from a kind of rapid overtake which would see
• 3:25
  Speaker 1: China claiming the top spot at the beginning of the
• 3:28
  Speaker 1: twenty thirties, to stall financial crisis and other misfires which
• 3:33
  Speaker 1: would see China's trapped in a perpetual second place. It
• 3:38
  Speaker 1: did seem and you do you go through? You go
• 3:40
  Speaker 1: through all of these. There are three factors that seemed
• 3:44
  Speaker 1: like the sort of three components of the positive scenario.
• 3:48
  Speaker 1: The things that China would have to get right would
• 3:50
  Speaker 1: have to turn out China's way for it to overtake
• 3:55
  Speaker 1: the US economy fairly soon. And I guess those three
• 3:58
  Speaker 1: are I guess, first, how the US does relative to China.
• 4:01
  Speaker 1: If US continues to go like gang busses and the
• 4:04
  Speaker 1: next few years, one has to assume it's going to
• 4:06
  Speaker 1: be a bit harder for China to overtake. And this
• 4:09
  Speaker 1: the second that you also highlight is whether or not
• 4:14
  Speaker 1: the rest of the world makes it easier or harder
• 4:16
  Speaker 1: for China to grow. It's been a very hospitable place
• 4:20
  Speaker 1: the global trading system for most of China's recent development,
• 4:24
  Speaker 1: but we know that that's the tide has been turning
• 4:26
  Speaker 1: on that under President Trump, but also under President Biden.
• 4:30
  Speaker 1: And then I guess the third pieces whether how successfully
• 4:33
  Speaker 1: it reforms its economy and deals with those challenges that
• 4:36
  Speaker 1: you highlight, the aging population, declining productivity. So I guess
• 4:41
  Speaker 1: maybe just if we could, if we could run through
• 4:43
  Speaker 1: each one of those, I mean, firstly, just the relative
• 4:45
  Speaker 1: performance of the rest of the world. How how much
• 4:48
  Speaker 1: does that figure in the faster scenarios. So there's two
• 4:53
  Speaker 1: areas where the rest of the world can have a
• 4:55
  Speaker 1: big impact on China's development trajectory. The first one is
• 5:00
  Speaker 1: the US does at home. Biden has a plan for infrastructure,
• 5:05
  Speaker 1: He's got a plan for families, which could significantly increase
• 5:09
  Speaker 1: workforce participation. If these plans turn out to be down
• 5:13
  Speaker 1: payments on a more aggressive development strategy for the United States,
• 5:19
  Speaker 1: we could see the US growing faster than expected over
• 5:22
  Speaker 1: the next ten years twenty years. As you mentioned, a
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  Speaker 1: faster growing US would obviously be a harder US for
• 5:30
  Speaker 1: China to catch up with an overtake. The second area
• 5:34
  Speaker 1: where the U s could have a significant impact on
• 5:36
  Speaker 1: China's trajectory is the sort of set of issues around decoupling.
• 5:42
  Speaker 1: One of the reasons China has grown so fast is
• 5:45
  Speaker 1: because they've been able to tap global markets for technology,
• 5:49
  Speaker 1: for ideas, for innovations. What we're already seeing is the
• 5:54
  Speaker 1: door to global markets for China is starting to swing closed.
• 5:58
  Speaker 1: The US and it's allies are taking a hard look
• 6:01
  Speaker 1: at China. They don't like what they see. They don't
• 6:04
  Speaker 1: want to support China's development. They certainly don't want to
• 6:08
  Speaker 1: support China's acquisition of strategically important technologies, so they're making
• 6:13
  Speaker 1: that harder. On the Chinese side, there's this kind of
• 6:17
  Speaker 1: laundry list of reforms which are necessary to boost productivity
• 6:22
  Speaker 1: and to offset the demographic drag. So it's critical for
• 6:27
  Speaker 1: China to continuing investing in research and development. It's critical
• 6:31
  Speaker 1: for them to have space for dynamic private sector entrepreneurs.
• 6:36
  Speaker 1: They would love to see fertility move higher. The one
• 6:40
  Speaker 1: child policy has been a disaster for their demographics and
• 6:44
  Speaker 1: now threatens to crypt size of their working age population.
• 6:48
  Speaker 1: And at the other end of the age spectrum, they
• 6:50
  Speaker 1: need to raise the pension age to keep workers on
• 6:53
  Speaker 1: the job a bit longer. And if you if you
• 6:57
  Speaker 1: sort of pull that together and just trying to kind
• 6:59
  Speaker 1: of crystalli as in our minds, what what difference it
• 7:02
  Speaker 1: makes to the to the sort of in the future
• 7:06
  Speaker 1: for the ten and twenty year time frame. Obviously, it's
• 7:11
  Speaker 1: like sticking in a figure in the air. You can't
• 7:12
  Speaker 1: necessarily predict the exact year when China is going to
• 7:15
  Speaker 1: overtake the US, not least because we're talking about the
• 7:18
  Speaker 1: nominal value of GDP here. I know there are lots
• 7:20
  Speaker 1: of people listening saying, hang on, China is already overtaken
• 7:23
  Speaker 1: the US. And that's true when it comes to what
• 7:26
  Speaker 1: they call the purchasing power parity basis. So if you're
• 7:29
  Speaker 1: taking too account the fact that things are cheaper in
• 7:31
  Speaker 1: China than the US, China has already overtaken it. But
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  Speaker 1: if we're just looking as you are in this piece,
• 7:39
  Speaker 1: if you're looking at the sort of cash value, the
• 7:41
  Speaker 1: nominal value of its economy relative to the US, what's
• 7:45
  Speaker 1: that if everything goes right, what's the fastest you think
• 7:49
  Speaker 1: it could overtake the US or what's the most the
• 7:52
  Speaker 1: soonest date and what is the impact of those factors
• 7:59
  Speaker 1: progressively going worse for China? Is that is it just
• 8:02
  Speaker 1: that it never overtakes or it just pushed it into
• 8:05
  Speaker 1: the sort of fifty year time frame. So if everything
• 8:08
  Speaker 1: goes right, Stephanie, if ties with the US remain robust,
• 8:12
  Speaker 1: if China can push forward its domestic reform agenda, if
• 8:16
  Speaker 1: trying to can dodge a financial crisis, if trying as
• 8:19
  Speaker 1: GDP data is indeed credible and gives an accurate read
• 8:24
  Speaker 1: on the size of the economy, then we think they
• 8:26
  Speaker 1: could overtake. If all of those things go wrong, if
• 8:32
  Speaker 1: ties with the US splinter, if domestic reform fails, if
• 8:36
  Speaker 1: trying to faces a financial crisis, if the GDP data
• 8:40
  Speaker 1: is exaggerated, then China stays in perpetual second place. Okay,
• 8:50
  Speaker 1: so let's let me bring into this conversation the economist
• 8:53
  Speaker 1: and author George Magnus. He's now an associate at the
• 8:56
  Speaker 1: China Center at Oxford University. He's also a former economists
• 9:00
  Speaker 1: for UBS and most importantly for US. He has written
• 9:03
  Speaker 1: extensively about China's economy, including a book in eighteen Red Flax,
• 9:09
  Speaker 1: Why She's China Is in Jeopardy. So George, thanks very
• 9:13
  Speaker 1: much for joining us. I know that some of these
• 9:16
  Speaker 1: questions that Tom's raised in this research definitely are consistent
• 9:22
  Speaker 1: with questions that you've had about China's development and its future.
• 9:27
  Speaker 1: But when we looked at China last year handling COVID,
• 9:30
  Speaker 1: many people thought, well, hang out. This shows yet again
• 9:34
  Speaker 1: that China is incredibly good at managing very tough challenges
• 9:38
  Speaker 1: and has actually managed to grow in this year where
• 9:40
  Speaker 1: the rest of the global economy shrank. Are you feeling
• 9:44
  Speaker 1: have you have you changed your view of the of
• 9:47
  Speaker 1: China's prospects as a result of its effective management of
• 9:50
  Speaker 1: COVID or do you think that Tom's right in this
• 9:53
  Speaker 1: analysis to question it? Well, Step, I mean, I don't
• 9:57
  Speaker 1: think the pandemics really all there's sort of management of
• 10:00
  Speaker 1: the pandemic has really had a material impact on you know,
• 10:05
  Speaker 1: the sort of the fundamental view, because what we're really
• 10:08
  Speaker 1: talking about here, I think, is whether China is going
• 10:11
  Speaker 1: to lapse into or succumb to the middle income trap,
• 10:16
  Speaker 1: under which conditions it's GDP at least certainly per capita
• 10:20
  Speaker 1: terms will never converge with the United States substantially may
• 10:25
  Speaker 1: converge a bit, but also in which it's the monetary
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  Speaker 1: value of its GDP may also, as Tomas indicated or suggested,
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  Speaker 1: might permanently stay less than it is in the United States.
• 10:37
  Speaker 1: That the pandemic certainly has had a very significant effect
• 10:41
  Speaker 1: in the way in which people kind of evaluate how
• 10:44
  Speaker 1: you deal with the pandemic. I mean, if you can
• 10:47
  Speaker 1: impose draconian suppression using public health measures, measures as the
• 10:52
  Speaker 1: Chinese have done, which are not really we've had lockdowns,
• 10:55
  Speaker 1: but not nothing like the kind of measures which the
• 10:59
  Speaker 1: Chinese were able to to bring about, then yeah. I mean,
• 11:04
  Speaker 1: there's an efficiency if you want to, if that's the
• 11:07
  Speaker 1: right word, that you can use about in the way
• 11:10
  Speaker 1: in which you can deal with such problems. But I
• 11:12
  Speaker 1: don't think that really cuts any ice with opinion, which
• 11:17
  Speaker 1: is really about well, you know, they were very efficient
• 11:20
  Speaker 1: in dealing with it when it was a problem, and
• 11:22
  Speaker 1: the economy turned around much more quickly than anybody's else.
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  Speaker 1: But actually, in the wash, we're all going to end
• 11:29
  Speaker 1: up in a comparable place. I mean, sooner or later,
• 11:32
  Speaker 1: you know, we'll all be vaccinated, sooner or later. Lost
• 11:35
  Speaker 1: output will be regained sooner or later, you know, the
• 11:38
  Speaker 1: pandemic hopefully we'll just be kind of history. But what
• 11:43
  Speaker 1: we'll be left with is why was it all so untransparent?
• 11:46
  Speaker 1: Why didn't we hear here about it? Why did they
• 11:49
  Speaker 1: try to suppress information about it? And and then I
• 11:52
  Speaker 1: think will be the lasting legacy rather than the speed
• 11:54
  Speaker 1: with which they clamped down on on this virus. And
• 11:58
  Speaker 1: you talk about the middle link come trapped, I mean,
• 12:00
  Speaker 1: I guess the other example is not so much a
• 12:02
  Speaker 1: middle income chap but of a of a country that
• 12:05
  Speaker 1: we predicted would overtake and then didn't. Is Japan, And
• 12:09
  Speaker 1: you could say it was the sort of cautionary tale.
• 12:11
  Speaker 1: Do you think there are any any comparisons there? Do
• 12:13
  Speaker 1: you think there's some of the same weaknesses in China's
• 12:17
  Speaker 1: development that have come through in Japan's case. Yes, In fact,
• 12:21
  Speaker 1: i'd sort of broadened a little bit. I'd say, you know,
• 12:24
  Speaker 1: think about Japan in the nineteen eighties, think about Brazil
• 12:27
  Speaker 1: in the nineteen seventies, the Soviet Union in the fifties
• 12:31
  Speaker 1: and sixties, even Germany in the nineteen thirties. With hindsight,
• 12:35
  Speaker 1: of course, we all know that these were basket cases,
• 12:37
  Speaker 1: or that they were making terrible errors in their economic
• 12:41
  Speaker 1: and kind of commercial financial policies. But actually, in real
• 12:45
  Speaker 1: time it was genuinely felt kind of concerned that that
• 12:50
  Speaker 1: they would overtake us. So, you know, Kristcheff said in
• 12:52
  Speaker 1: nineteen fifty six, history is on our side, and we
• 12:55
  Speaker 1: will bury you. I mean, I don't think the Japanese
• 12:58
  Speaker 1: ever said anly think as aggressive as that, as well
• 13:01
  Speaker 1: as far as I can remember, But certainly the Americans
• 13:03
  Speaker 1: were absolutely paranoid that, you know, the Japanese would eat
• 13:07
  Speaker 1: their their commercial and economic lunch and so on and
• 13:10
  Speaker 1: so forth, and these things never happened, and I think
• 13:14
  Speaker 1: the reasons why the why they never actually did happen.
• 13:17
  Speaker 1: I mean, actually often there is six of one, half
• 13:20
  Speaker 1: a dozen the other. Sometimes it's a question of just
• 13:23
  Speaker 1: a failure of institutions to adapt. Sometimes it's that the
• 13:28
  Speaker 1: boom periods, which we all kind of think are going
• 13:31
  Speaker 1: to go on forever, are founded on much more temporary
• 13:36
  Speaker 1: phenomena than we recognize at the time, like credit or
• 13:40
  Speaker 1: you know, commodity prices in the case of Brazil. I mean,
• 13:44
  Speaker 1: one of my favorite kind of examples nowadays actually is
• 13:47
  Speaker 1: to cite in the case of the Soviet Union, when
• 13:49
  Speaker 1: Gorbachev came to power, we still thought that at that
• 13:54
  Speaker 1: time that you know, Russia was a fort the Soviet
• 13:57
  Speaker 1: Union was a force. But actually income ahead and consumption
• 14:01
  Speaker 1: per head in the Soviet Union relative to the relative
• 14:05
  Speaker 1: to the United States was actually a bit higher than
• 14:07
  Speaker 1: it is in China today. So you know, China has
• 14:10
  Speaker 1: the income ahead of Malaysia or Russia, but a consumption
• 14:14
  Speaker 1: per head which is flanked by Jamaica and Iraq. Now
• 14:17
  Speaker 1: that's basically there's something fundamentally wrong in the structure of
• 14:21
  Speaker 1: the Chinese economy because they have this very kind of
• 14:24
  Speaker 1: leninist view about the significance of production supply. Um, there's
• 14:31
  Speaker 1: certainly not the enamored or enlightened view about consumption and
• 14:36
  Speaker 1: service producing industries, which we think are you know, I
• 14:39
  Speaker 1: mean we would say that, wouldn't we, Because in liberal
• 14:41
  Speaker 1: leaning democracy is it's it's our leading edge. It's the
• 14:45
  Speaker 1: main thing that we've got. M But the development model
• 14:50
  Speaker 1: in China, I think everybody agrees, including China's leaders, you know,
• 14:53
  Speaker 1: does need a makeover. It's just that I think, you know,
• 14:56
  Speaker 1: and I'm impressed often when I hear privately here Chinese
• 15:00
  Speaker 1: officials talking about why it needs it. But I think
• 15:03
  Speaker 1: the problem is that it's politically really really difficult for
• 15:07
  Speaker 1: them to agree the kind of governance changes which would
• 15:10
  Speaker 1: be necessary for that shift to happen. Tom, your recent
• 15:16
  Speaker 1: book on China actually had a fairly positive take and
• 15:21
  Speaker 1: at least was reminding people how effectively China has been
• 15:26
  Speaker 1: able to deal with this leadership has been able to
• 15:28
  Speaker 1: deal with some pretty big challenges already, and the feeling
• 15:31
  Speaker 1: of your book is that we shouldn't underrate their ability
• 15:35
  Speaker 1: to overcome these challenges. So what would you say back
• 15:38
  Speaker 1: to George on this? Well, I mean George makes it
• 15:41
  Speaker 1: makes a survey the vast range of economic history and
• 15:45
  Speaker 1: made a number of compelling points, so there's a lot
• 15:48
  Speaker 1: to agree with their. At the same time, I take
• 15:51
  Speaker 1: a different view um when we think about sort of
• 15:56
  Speaker 1: China in international comparison, I think the obvious comparison to
• 16:01
  Speaker 1: make is not with the USSRVE or Brazil in the seventies,
• 16:09
  Speaker 1: or Japan. I think the obvious comparison to make is
• 16:14
  Speaker 1: with Japan and Korea, and indeed Taiwan at an earlier
• 16:19
  Speaker 1: stage of their development. China is following the East Asian
• 16:24
  Speaker 1: development model, where the state plays a strong guiding role
• 16:30
  Speaker 1: in allocating capital towards achieving development objectives. And we've seen
• 16:36
  Speaker 1: in Korea and Japan and in Taiwan that that development
• 16:41
  Speaker 1: model is a very powerful driver, and in the case
• 16:45
  Speaker 1: of Japan and Korea has lifted those economies pretty close
• 16:50
  Speaker 1: to US levels of GDP per capita. If we think
• 16:54
  Speaker 1: about where China is right now, significantly behind in terms
• 16:58
  Speaker 1: of GDP per capita, but following broadly the same development model,
• 17:03
  Speaker 1: I didn't see a compelling reason why they wouldn't be
• 17:07
  Speaker 1: able to continue following that trajectory. George, Yes, there is
• 17:13
  Speaker 1: there are similarities, but I think they are less convincing
• 17:18
  Speaker 1: from my point of view than that I think the
• 17:21
  Speaker 1: way Tom explained and understands it. I mean, the reliance
• 17:25
  Speaker 1: on exports is certainly a genuine comparison, although in China's case,
• 17:31
  Speaker 1: of course, the export orientation of the economy is now
• 17:34
  Speaker 1: and has been since two thousand and eight two thousand nine,
• 17:37
  Speaker 1: now playing second fiddle by a long shot really to investment.
• 17:41
  Speaker 1: And the first kind of difference then is that the
• 17:43
  Speaker 1: investment share of GDP in China is higher than any
• 17:47
  Speaker 1: of those countries ever achieved, at least perhaps maybe for
• 17:51
  Speaker 1: no more than perhaps they were for a year or two.
• 17:53
  Speaker 1: But China is, I think, taken this kind of investment
• 17:58
  Speaker 1: model to extreme, and it is fine, really difficult to
• 18:01
  Speaker 1: wean itself off it. The second thing is that these
• 18:04
  Speaker 1: countries of the Tiger economies in Japan all indulged in
• 18:08
  Speaker 1: political reform and saw the necessity for institutional and political
• 18:13
  Speaker 1: change to enable structural change in the economy to take place. Third,
• 18:19
  Speaker 1: differences of the demography, and so when the Tiger economies
• 18:23
  Speaker 1: by and large had China's income per head, they were
• 18:26
  Speaker 1: able to look forward for some time to a continuous
• 18:31
  Speaker 1: rise in the working age population. China can't do that anymore.
• 18:34
  Speaker 1: It's demography basically turned around in two thousand and twelve,
• 18:39
  Speaker 1: and we know that it will now relentlessly deteriorate, so
• 18:43
  Speaker 1: to speak, until well for the foreseeable future, and then last,
• 18:47
  Speaker 1: but not least, it's the idea about liberalizing economic reform.
• 18:51
  Speaker 1: We know that from China's past, in the last thirty
• 18:54
  Speaker 1: or forty years, its highest productivity periods where those that
• 19:00
  Speaker 1: were associated with the liberalizing economic reform, which the pragmatic
• 19:05
  Speaker 1: elements of the Communist Party were quite happy to embark on.
• 19:09
  Speaker 1: And I think my issue really with Tom's suggestion is
• 19:12
  Speaker 1: that in two thousand and twelve everything changed with sech
• 19:15
  Speaker 1: Pain coming to power, and I think that appetite for
• 19:19
  Speaker 1: liberalizing economic reform and pragmatism has basically gone out the
• 19:23
  Speaker 1: window now, I mean to all intents and purposes, and
• 19:25
  Speaker 1: so I don't really have very very high confidence. I
• 19:28
  Speaker 1: think it would be churlish for me to say they
• 19:29
  Speaker 1: can't do it, because it's a data driven economy. As
• 19:33
  Speaker 1: we all are information driven, We've got new metrics according
• 19:37
  Speaker 1: to which to try to evaluate economic performance. But I
• 19:41
  Speaker 1: think that the departures or the dissimilarities now between contemporary
• 19:46
  Speaker 1: China and the tiger economies in Japan are now much
• 19:49
  Speaker 1: more impressive than the similarities. I would say I'm perplexed
• 19:58
  Speaker 1: the idea that China's investment is a source of weakness. Clearly,
• 20:04
  Speaker 1: China's investment is overdone. There is overcapacity in industry, in
• 20:08
  Speaker 1: real estate, in infrastructure. At the same time, it's the
• 20:13
  Speaker 1: capacity of the government to a mass funds for investment
• 20:18
  Speaker 1: and then implement that investment in a strategic way. There's
• 20:22
  Speaker 1: actually been the main lever for lifting China from a
• 20:26
  Speaker 1: backwards agrarian economy at the end of the nineteen seventies
• 20:30
  Speaker 1: to a middle income economy today. So I would actually
• 20:33
  Speaker 1: put strong investment in the kind of success part of
• 20:37
  Speaker 1: the equation rather than the failure part of the equation.
• 20:41
  Speaker 1: On the idea that there's been a kind of a
• 20:43
  Speaker 1: radical shift or a failure in China from twenty twelve on, well,
• 20:48
  Speaker 1: I certainly agree that China has moved on to a
• 20:51
  Speaker 1: different trajectory from twenty twelve on. But the idea that
• 20:55
  Speaker 1: there's been a kind of a wholesale failure of economic
• 20:59
  Speaker 1: management or financial management or reform I don't actually agree with.
• 21:05
  Speaker 1: If we think about the period from twelve on, We've
• 21:07
  Speaker 1: had the completion of interest rate liberalization, the completion of
• 21:11
  Speaker 1: exchange rate liberalization, the supply side reform agenda, which closed
• 21:16
  Speaker 1: down significant amounts of over capacity and industry and dealt
• 21:19
  Speaker 1: with over capacity in real estate. And we've had the
• 21:23
  Speaker 1: rise of tech giants like ten Cents, Ali Baba and
• 21:27
  Speaker 1: ma Juan. So certainly China is diverging from a kind
• 21:31
  Speaker 1: of Western Washington consensus path over the course of the
• 21:35
  Speaker 1: last decade, but it's trying to kind of failing in
• 21:39
  Speaker 1: a kind of economic governance sense. I would I would
• 21:42
  Speaker 1: not agree with that assessment. We're going to get come
• 21:44
  Speaker 1: to an end, but I wanted I'm interested hearing both
• 21:47
  Speaker 1: of you whether you think ultimately the biggest threat to
• 21:51
  Speaker 1: China's future supremaci if you like, is going to be
• 21:55
  Speaker 1: inside or outside its borders, Because clearly, as George has
• 21:59
  Speaker 1: just said, the leadership has changed and has perhaps become
• 22:04
  Speaker 1: more authoritarian and certainly more more into centralized control over
• 22:10
  Speaker 1: the last few years, and that one could say, does
• 22:13
  Speaker 1: pose a threat to the ability to reform in the future.
• 22:16
  Speaker 1: And the world has become a less suspitable place. So
• 22:18
  Speaker 1: I just wondered, I mean, maybe you first tom which
• 22:21
  Speaker 1: you think is ultimately the bigger threat outside or inside? Um,
• 22:26
  Speaker 1: there are risks in both directions, but I think we
• 22:30
  Speaker 1: probably overstate China's kind of dependence or risk from foreign forces.
• 22:37
  Speaker 1: I think probably China's own government kind of pays too
• 22:41
  Speaker 1: much attention to that. I think China's biggest policy failings,
• 22:45
  Speaker 1: from the Great Leap forward to the Cultural Revolution, to
• 22:49
  Speaker 1: the one child policy which is now hammering their demographic trajectory,
• 22:53
  Speaker 1: those biggest reformed failings have all come from close to home,
• 22:57
  Speaker 1: and I think that's where the biggest risks are going
• 22:59
  Speaker 1: forward as well. George last word, Yeah, I think I
• 23:04
  Speaker 1: think we agree on that at least. I mean, I
• 23:07
  Speaker 1: think the external of our environment is going to be
• 23:09
  Speaker 1: a factor, which it has not been since the nineteen
• 23:12
  Speaker 1: fifties and nineteen sixties. I mean, China does still have
• 23:16
  Speaker 1: huge dependency on semiconductors. You, I mean, how do you
• 23:19
  Speaker 1: have advanced technologies in the twenties and the twenty thirties
• 23:23
  Speaker 1: if you are so far behind in terms of advanced
• 23:26
  Speaker 1: and high end semiconductors and integrated circuits. And I think
• 23:31
  Speaker 1: you know, the United States and liberal leaning democracies are
• 23:34
  Speaker 1: going to make it harder for China to compete in
• 23:37
  Speaker 1: these areas. And I think that is a factor which
• 23:40
  Speaker 1: we can't really quantify. But I do agree that to
• 23:43
  Speaker 1: the extent that there's a threat to China's you know,
• 23:47
  Speaker 1: GDP trajectory, it's middle income UH status and so on and
• 23:52
  Speaker 1: and so forth. I think it is internal, and I
• 23:54
  Speaker 1: think it's for the very recent time just denied. I mean,
• 23:57
  Speaker 1: I don't really see any evidence of I mean, I
• 24:00
  Speaker 1: see evidence of change, and I see evidence that inciging
• 24:03
  Speaker 1: pink government are trying to do things that are important
• 24:07
  Speaker 1: in terms of reducing inequality and maintaining employment and all
• 24:12
  Speaker 1: these kinds of things. But actually I think they keep
• 24:15
  Speaker 1: on running up against a brick wall actually, and it's
• 24:18
  Speaker 1: not really being very successful. So these are the early
• 24:21
  Speaker 1: days I think of governance weakness and how totalitarian governance
• 24:26
  Speaker 1: systems basically failed to deal with fundamental economic problems. I
• 24:30
  Speaker 1: just think they're going to get worse. So internally, I
• 24:33
  Speaker 1: think the biggest threat lies there. Yeah, George Magmas, tom Alick,
• 24:37
  Speaker 1: thank you very much. Now, the menopause doesn't get talked
• 24:46
  Speaker 1: about much in polite company, or even in impolite company
• 24:50
  Speaker 1: for that matter. But women of a certain age are
• 24:53
  Speaker 1: leaving the workforce in rising numbers just when we might
• 24:56
  Speaker 1: have wanted older women to make a bigger contribution. That's
• 24:59
  Speaker 1: le some senior business leaders to say we need to
• 25:02
  Speaker 1: break that to boo and start talking about what the
• 25:05
  Speaker 1: menopause means for women and for the economy. Here's Lizzie Burden.
• 25:13
  Speaker 1: It's not every day that a foot see one hundred
• 25:15
  Speaker 1: boss tells you about her nightly hot flashes, but for
• 25:19
  Speaker 1: forty five year old Live Garfield, chief executive of British
• 25:23
  Speaker 1: water services provider seven Trent, sharing her own experience is
• 25:27
  Speaker 1: an important way of breaking down stigma around menopause in
• 25:31
  Speaker 1: the workplace. I think we've got to be open about
• 25:33
  Speaker 1: it and not make it to boo, and not be
• 25:35
  Speaker 1: embarrassed about it, and be really clear. If you have
• 25:37
  Speaker 1: out of rubbish night seat because of it, then share
• 25:40
  Speaker 1: that experience because there'll be lots of other women going
• 25:42
  Speaker 1: through exactly the same thing as me each and every day.
• 25:45
  Speaker 1: About a quarter of the world's female population will be
• 25:48
  Speaker 1: menopausal by twenty thirty. However, many will suffer in silence,
• 25:53
  Speaker 1: feeling uncomfortable disclosing symptoms to a male or younger manager,
• 25:57
  Speaker 1: and unlike pregnancy, menopause isn't commonplace in HR policy. Symptoms
• 26:03
  Speaker 1: negatively affect three and five women at work, according to
• 26:07
  Speaker 1: research by the London based c i p D the
• 26:10
  Speaker 1: Charted Institute of Personnel and Development. They can include hot flashes,
• 26:15
  Speaker 1: night sweats, loss of sleep and mood swings leading to
• 26:19
  Speaker 1: embarrassing episodes in front of colleagues, reduced ability to concentrate,
• 26:23
  Speaker 1: and erratic behavior. Some women will have no issues. For others,
• 26:28
  Speaker 1: menopause can be debilitating. Scores of women will even leave
• 26:33
  Speaker 1: the workforce. A survey by healthcare group Booper reckoned almost
• 26:38
  Speaker 1: a million UK women had quit their jobs because of
• 26:41
  Speaker 1: menopausal symptoms. This has an economic cost. I spoke to
• 26:46
  Speaker 1: Open University professor Joe brewis one of the authors of
• 26:50
  Speaker 1: a seventeen UK government report on the issue. She notes
• 26:54
  Speaker 1: that the biggest gap in gender pay in the UK
• 26:57
  Speaker 1: is between men and women in their fifties. There's very
• 27:01
  Speaker 1: strong evidence that that widening at that particular point is
• 27:06
  Speaker 1: because women are leaving work and best guesses a lot
• 27:11
  Speaker 1: of that will will have to do with menopause and
• 27:14
  Speaker 1: then that that gender pay gap, the fact that it's
• 27:16
  Speaker 1: so big between men and women in their fifties, also
• 27:20
  Speaker 1: feeds into a gender pension gap um later in life,
• 27:24
  Speaker 1: which at the moment is in excess of Globally. Consulting
• 27:28
  Speaker 1: firm Frost and Sullivan estimates that menopause related productivity losses
• 27:33
  Speaker 1: added to associated healthcare costs amount to more than eight
• 27:37
  Speaker 1: and ten billion dollars a year. Some companies are taking
• 27:42
  Speaker 1: action back to live Garfield at seven Trent where we
• 27:47
  Speaker 1: introduced menopause training for all managers. We went right across
• 27:51
  Speaker 1: the workforce and talks about what would make it feel
• 27:53
  Speaker 1: a bit less awkward to talk about, and we kind
• 27:55
  Speaker 1: of realized that if you bring them up at least
• 27:57
  Speaker 1: once a week, then it becomes less to be So
• 28:00
  Speaker 1: since then what we've done is realized that you need
• 28:02
  Speaker 1: this almost like adjustment passport. So just again almost like
• 28:05
  Speaker 1: a like a miniability to contractor your line manager to
• 28:08
  Speaker 1: say this is the help that I need. I asked
• 28:10
  Speaker 1: the c I p D S. Rachel suff what practical
• 28:13
  Speaker 1: steps this could involve. Fransic could be as simple as
• 28:18
  Speaker 1: having fans open the window, having good ventilation, good good
• 28:26
  Speaker 1: access to washrooms, allowing people to take comfort breaks whenever
• 28:30
  Speaker 1: they need them. Flexibility is really important as well. Garfield
• 28:35
  Speaker 1: says the benefits go beyond the financial. So I think
• 28:39
  Speaker 1: the best organizations are made up of diversity, whether it's
• 28:41
  Speaker 1: diversity of age, of thought, and of experience. To miss
• 28:45
  Speaker 1: to not employ swathes of women in their forty five
• 28:48
  Speaker 1: to sixties has got to be a relation, hasn't it,
• 28:51
  Speaker 1: because otherwise you're missing all of that insight from that
• 28:53
  Speaker 1: particular generational category. Deborah Garlic, founder of hen Picked Menopause
• 28:58
  Speaker 1: in the Workplace, which was training on the issue, says
• 29:02
  Speaker 1: change is underway. The UK is ahead of the rest
• 29:06
  Speaker 1: of the world. We believe. We know that. From a
• 29:09
  Speaker 1: standing start of a fat years ago when there was
• 29:12
  Speaker 1: absolutely nothing in the UK, we've made great progress. Menopause
• 29:18
  Speaker 1: has even landed on the bank of England's radar. Governor
• 29:21
  Speaker 1: Andrew Bailey said in April that although previously not considered
• 29:25
  Speaker 1: part of the world of work, menopause can no longer
• 29:28
  Speaker 1: be ignored. Still, the pandemic and successive lockdowns have kicked
• 29:33
  Speaker 1: menopause down the agenda at many corporations, while also creating
• 29:37
  Speaker 1: some new challenges for female workers. For some women, working
• 29:41
  Speaker 1: from home has enabled them to manage their symptoms better.
• 29:45
  Speaker 1: For others, the uncertainty has exacerbated the psychological side. In
• 29:50
  Speaker 1: female dominated public facing roles. Brewis says, those suffering hot
• 29:54
  Speaker 1: flashes have faced an added burden, but also because of
• 29:57
  Speaker 1: the very poor supply of PPU, very often women were
• 30:01
  Speaker 1: having to wear PPU that didn't fit them, so drowning
• 30:04
  Speaker 1: in math head coverings that are designed for men. Economically
• 30:10
  Speaker 1: researched by the Resolution Foundation shows the pandemics had a
• 30:14
  Speaker 1: worse impact on older working women than any other major
• 30:17
  Speaker 1: crisis since the nighties. But Garfield is hopeful. So there's
• 30:23
  Speaker 1: no doubt that for some sectors it is a game
• 30:25
  Speaker 1: of survival and that they the best thing they can
• 30:28
  Speaker 1: do right now to look after their workforce is to
• 30:30
  Speaker 1: get their business back up and running and able to jobs.
• 30:33
  Speaker 1: So that's fair when you're in that mode. There were
• 30:35
  Speaker 1: some sectors. I think there are other sectors which the
• 30:38
  Speaker 1: power of people has become their greatest asset, And this
• 30:41
  Speaker 1: is around protecting people, isn't it? Which is there your
• 30:43
  Speaker 1: greatest asset? This is the opportunity to truly push onto
• 30:46
  Speaker 1: another gear. So that's it for this episode of Stephanomics.
• 31:01
  Speaker 1: Tom Orlip will be in the chair next week while
• 31:04
  Speaker 1: I take a week off. In the meantime, please rate
• 31:07
  Speaker 1: the program and follow as Economics on Twitter for more
• 31:10
  Speaker 1: news and analysis from Bloomberg Economics. This episode was produced
• 31:14
  Speaker 1: by Magnus Hendrickson, with special thanks to Tom Olick, George Magnus,
• 31:18
  Speaker 1: and Lizzie Burnon. Mike Sasso is executive producer of Stephanomics,
• 31:22
  Speaker 1: and the head of Bloomberg Podcast is Francesca Levy. M