Latest / Trumponomics / China's Millennials Are Changing the World

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China's Millennials Are Changing the World · Trumponomics

0:03
Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
0:07
Speaker 1: global economy to you. Now, if you're interested in the
0:14
Speaker 1: global economy, you'll have spent time thinking about China. In fact,
0:18
Speaker 1: I'm amazed it's taken as six episodes of Stephanomics to
0:21
Speaker 1: get around to it. But I was waiting for the
0:23
Speaker 1: perfect story to bring China's economic and social transformation to life.
0:29
Speaker 1: I think the case of China's spendthrift millennials might be it.
0:33
Speaker 1: This new generation of Chinese are not like their parents,
0:37
Speaker 1: and they will change the world economy. And a few
0:40
Speaker 1: minutes I'll talk about that with our resident China hands,
0:43
Speaker 1: the former Wall Street Journal China editor Andrew Brown and
0:46
Speaker 1: Bloomberg Economics chief economist Tom Orlick. I'll also be grabbing
0:50
Speaker 1: a few minutes for the latest on US China trade
0:53
Speaker 1: wars with our senior trade reporter Sean Donnan. But first,
0:57
Speaker 1: here's Bloomberg China Economy reporter Kevin Hamlin with his insight
1:01
Speaker 1: into the world of the parent EATA. Meet Jenny, a
1:12
Speaker 1: bubbly twenty five year old who works in a television
1:15
Speaker 1: station in Beijing. My mona called me, had me seecrets
1:20
Speaker 1: our generations were we are labeled as the lazy, ourself
1:25
Speaker 1: senter and and for me, how I don't save money.
1:30
Speaker 1: I want to spend my money on traveling where I
1:34
Speaker 1: want to enjoy the moment. She's one of more than
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Speaker 1: four hundred million Chinese millennials roughly speaking people aged eighteen
1:43
Speaker 1: to thirty five. That's five times more millennials than in
1:46
Speaker 1: the United States, and it's more than in North America, Europe,
1:50
Speaker 1: and the Middle East combined. Jenny and her millennial peers
1:54
Speaker 1: are very different from the generation who built modern China.
1:58
Speaker 1: The influence of Chinese millennials may even be so great
2:00
Speaker 1: that they also make the world very different from the
2:03
Speaker 1: one we know today. While the previous generation was known
2:08
Speaker 1: for its prolific saving habits, Jenny doesn't put away money
2:12
Speaker 1: at all. She likes to spend spare cash on things
2:15
Speaker 1: including travel and branded cosmetics. She even pays thirty dollars
2:20
Speaker 1: a time for her cat to have a shower in
2:22
Speaker 1: a cat spa. Since Jenny graduated from University in Florida
2:26
Speaker 1: about a year ago, she's traveled to Japan, as well
2:29
Speaker 1: as Shanghai and Chan in China. She's looking to visit
2:33
Speaker 1: Greece and Spain in the next couple of years. Her
2:36
Speaker 1: dream is to be a blogger writing about her travel experiences,
2:40
Speaker 1: something she says her parents think is ridiculous. If there's
2:43
Speaker 1: one thing that sums up Jenny, it's that she likes
2:45
Speaker 1: to live in the moment. I think my parents have
2:48
Speaker 1: saved enough money that I always encouraged them to spend
2:53
Speaker 1: some to spend money um on something they like that.
2:57
Speaker 1: They always try to to to save money. That's the
3:00
Speaker 1: point I don't understand. They worry about the future. The
3:04
Speaker 1: most extreme members of Jenny's generation are sometimes colloquially referred
3:08
Speaker 1: to in a colorful way. They're called the parent eaters
3:12
Speaker 1: or a Mandarin condo, a term with profound implications for
3:16
Speaker 1: China and the global economy. Sky High home prices in
3:21
Speaker 1: big cities mean they struggle to get on the property ladder,
3:24
Speaker 1: and often parents have to use their savings to help
3:26
Speaker 1: them meet large down payments and monthly mortgage payments to
3:30
Speaker 1: buy a home. Zack dyke Wald is an American who
3:34
Speaker 1: wrote a book called Young China, How the Restless Generation
3:38
Speaker 1: will Change China and the world. Here's what he has
3:41
Speaker 1: to say about the potential global impact of millennials. It's
3:45
Speaker 1: the first East Asian power with enough political and economic
3:50
Speaker 1: clout that the way that they live, the way they
3:53
Speaker 1: see the world, what they want, what they want from
3:55
Speaker 1: a product, what they want from a style of loan,
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Speaker 1: what they how they want to see the country perceived
4:00
Speaker 1: in the world, for the first time ever has enough
4:04
Speaker 1: cultural gravity that it could start to change that they
4:07
Speaker 1: could start to change the way that our world spins.
4:09
Speaker 1: This young generation is going to be impacting you personally.
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Speaker 1: They redefine every market they touch. And the craziest part
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Speaker 1: about about a lot of this consumer culture that we're
4:21
Speaker 1: seeing really really blossoming with this young generation in China
4:26
Speaker 1: is it's hardly started yet. The consumer cloud of this
4:30
Speaker 1: young generation has only just begun to articulate itself on
4:34
Speaker 1: the world stage. The spending and saving behavior of the
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Speaker 1: millennial generation already is helping bring down the nation's legendary
4:51
Speaker 1: lofty savings rate from about last year. Here's what Ju
4:58
Speaker 1: Hi Bin, chief China colonomist that JP Morgan had to say.
5:02
Speaker 1: Because the population aging because of these new millenniums, are
5:06
Speaker 1: different spending pattern, China saving red were woken keen to
5:09
Speaker 1: move down. We were still pretty high, but we believe
5:13
Speaker 1: that we were having argued before that we're talking about
5:16
Speaker 1: lovely probably every year two percentage point of receiving rates. Yeah,
5:21
Speaker 1: that's hobby. While the major macro theme to watch out,
5:25
Speaker 1: millennials choosing to spend on tourism and foreign products rather
5:28
Speaker 1: than save their money is one driver behind why China
5:32
Speaker 1: is poised to import capital from the rest of the
5:35
Speaker 1: world this year for the first time in the modern era,
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Speaker 1: after decades of exporting its excess savings to other countries. Deloitte,
5:43
Speaker 1: a big consulting and accounting firm, says the trend will
5:46
Speaker 1: change the world. For now, Jenny and her millennial peers
5:54
Speaker 1: may be too busy making their travel plans to worry
5:57
Speaker 1: about such abstractions. Die Quotes research shows that between two
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Speaker 1: thousand and eight and two thousand and sixteen, China's spending
6:05
Speaker 1: on international travel roads until the nine percent of mainland
6:10
Speaker 1: Chinese without passports, two thirds are millennials. Here's Dike Wald again,
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Speaker 1: there's a different sense of why you're working hard. Before
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Speaker 1: you were working hard because that's what everyone did, and
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Speaker 1: you're saving up for the future, for the next generation
6:23
Speaker 1: even or for you to have a good life. You're
6:25
Speaker 1: trying to push back subsistence. Now. You're working hard so
6:29
Speaker 1: you can afford that great hot pot meal with your
6:31
Speaker 1: friends on the weekend, so you can afford that Europe
6:34
Speaker 1: trip which you've been imagining, or that Beijing trip, or
6:36
Speaker 1: to buy that great bag that would give you a
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Speaker 1: little bit more social status and make you feel like
6:40
Speaker 1: you're living a good life. I visited Jong Joe in
6:46
Speaker 1: central China recently, a city best known for a huge
6:49
Speaker 1: factory that makes Apple iPhones. I bumped into thirty euro
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Speaker 1: banker Jangee at a Starbucks coffee shop. He didn't want
6:57
Speaker 1: to be recorded for this podcast, but he told me
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Speaker 1: that in October he and his wife spent fifty yuan
7:03
Speaker 1: or seven thousand, four hundred dollars on a trip to Iceland.
7:07
Speaker 1: That's about a quarter of their combined annual income. They've
7:12
Speaker 1: also recently visited Japan and the Maldives, as well as
7:15
Speaker 1: Chinese destinations such as Inner Mongolia and the tropical island
7:19
Speaker 1: of Hainan. Jenny is among the very lucky ones because
7:24
Speaker 1: her parents have accumulated three apartments, so she doesn't worry
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Speaker 1: about saving to buy one, and that frees her of
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Speaker 1: a huge burden. Her plan to buy health insurance rather
7:35
Speaker 1: than have idle funds set aside for potential illness is
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Speaker 1: another force that drives China's shift to consumption, which could
7:42
Speaker 1: in turn become a key driver for the country's growth.
7:46
Speaker 1: As for Jenny's other spending, not much of it pleases
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Speaker 1: her parents. The complains are about I spend a lot
7:52
Speaker 1: of money on my cats. I could buying a lot
7:55
Speaker 1: of toys and some snags for my cats, just like
8:00
Speaker 1: a resource. I don't think I have a very clear
8:05
Speaker 1: pictures of my futures, but I hope when I enter
8:11
Speaker 1: thirty years old, I can't have a lot of free
8:13
Speaker 1: time to go to go aboard to enjoy my holidays. Yeah,
8:19
Speaker 1: that's my goal. But for those who aren't so lucky.
8:23
Speaker 1: Higher indebtedness beckons household borrowing has been climbing for ten
8:27
Speaker 1: years straight at the pace that rivals any such run
8:30
Speaker 1: up in major economies. Fred who runs his own private
8:34
Speaker 1: equity firm in Beijing and used to be the chairman
8:37
Speaker 1: of Goldman Sachs in Greater China. He's fifty five years old,
8:42
Speaker 1: and his life has spanned the chaos of China's Cultural
8:44
Speaker 1: Revolution to the emergence of a new consumer culture. When
8:49
Speaker 1: I was going up as a child, even for me
8:52
Speaker 1: to travel with the partvincial capital city was like a dream,
8:57
Speaker 1: And of course was very close by going to Hong Kong,
9:04
Speaker 1: Taiwan and the United States just to forget about it.
9:09
Speaker 1: When China was poor and asserted there was just no hope.
9:15
Speaker 1: People didn't have dreams. Didn't you endared to dream? Now
9:20
Speaker 1: for the younger generation of Chinese, anything is possible. The
9:24
Speaker 1: sky is the limit. I'm Kevin Hamlin in Beijing for
9:30
Speaker 1: Bloomberg News. So I'm joined now by Andrew Brown, editorial
9:44
Speaker 1: director for the Bloomberg New Economy Forum, which is going
9:47
Speaker 1: to be held in Beijing later this year, who was
9:50
Speaker 1: previously China editor for The Wall Street Journal, and our
9:53
Speaker 1: own chief economist, Tom Aulick, who spent eleven years in
9:56
Speaker 1: Beijing before moving last year to d C. So, Andy,
10:00
Speaker 1: we had a lot there about parents, eaters, the millennials,
10:05
Speaker 1: they're spending habits. Are they telling us that China is
10:09
Speaker 1: now on course to really becoming a consumer driven society?
10:12
Speaker 1: Oh yeah, China. China is well on its way to
10:16
Speaker 1: becoming a consumer society driven by the millennials. The millennials
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Speaker 1: are the luckiest generation in Chinese history. Their grandparents experienced
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Speaker 1: extreme deprivation, even starvation if they were alive in the
10:32
Speaker 1: late fifties during the Great Leap Forward. Their parents understood hardship,
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Speaker 1: but they also cashed in on the greatest economic boom
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Speaker 1: in human history in the eighties, nineties, in the two thousand's.
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Speaker 1: And the millennials are going to inherit it all. And
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Speaker 1: what are they going to do to the economy and
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Speaker 1: to society when you look to the next ten or
10:57
Speaker 1: twenty years. How is this going to shape China? I
11:00
Speaker 1: think it's going to transform the Chinese economy and with it,
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Speaker 1: potentially the global economy. I mean, I think if it
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Speaker 1: in terms of three major trends. The first is that
11:15
Speaker 1: Chinese millennials want authenticity. They want the real thing. Their
11:20
Speaker 1: parents were okay with fakes. Uh. Yeah, it was all
11:24
Speaker 1: about the price tag and if the knockoff Gucci was
11:28
Speaker 1: as good as the real thing, that was fine. The
11:31
Speaker 1: millennials don't want that. So obviously this implies greater protection
11:38
Speaker 1: for intellectual property. Uh. It implies more rule of law,
11:43
Speaker 1: and it implies less trade friction between China and its
11:47
Speaker 1: major trading partners, the days of China as the knockoff
11:50
Speaker 1: center of the globe and number. I think the second
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Speaker 1: factor is that millennials care very deeply about how their
12:00
Speaker 1: goods are made. They care about environmental issues, environmental pollution,
12:06
Speaker 1: they care about safety, product safety, industrial safety, and the
12:12
Speaker 1: government has to focus on these issues like a laser
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Speaker 1: in response. Again a big positive for China with global implications.
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Speaker 1: The third one I would mention is millennials want customization.
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Speaker 1: They're not content to be merely passive consumers of goods
12:34
Speaker 1: as well as services. They want to be co creators.
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Speaker 1: They want their Mini Cooper or their Nike sneakers to
12:44
Speaker 1: scream me. It's all about expressing their individuality and in
12:49
Speaker 1: a in a way, this sort of flips all the
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Speaker 1: power relations in the Chinese economy. Its strengthens the market
12:57
Speaker 1: over the state. It strengthens consumers of producers. It tends
13:02
Speaker 1: to work in favor of private enterprise. I don't know
13:07
Speaker 1: if it's going too far to say this, but I
13:10
Speaker 1: think in some ways it's the millennial consumers that is
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Speaker 1: going to force the type of reforms onto the Chinese
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Speaker 1: economy that the current crop of leaders in Beijing us
13:23
Speaker 1: so reluctant to implement and could in time lead to
13:27
Speaker 1: political opening as well. Tom When people look at China,
13:32
Speaker 1: the two big things that China has to achieve if
13:36
Speaker 1: it's going to continue the kind of growth it's had.
13:40
Speaker 1: You know, we know this. It has to become a
13:41
Speaker 1: more consumer driven society. You know, economists have always said
13:45
Speaker 1: you have to have consumption risings and savings fall as
13:47
Speaker 1: a share of GDP. But they also need to get
13:50
Speaker 1: productivity growth, and that's the big question mark. And people
13:53
Speaker 1: who are pessimists about China, who say the whole thing
13:56
Speaker 1: is going to blow up, tend to be pessimists on
13:58
Speaker 1: the productivity side. You know, how does this story that
14:02
Speaker 1: Andy's telling play into how you might think the economy
14:06
Speaker 1: is going to evolve? I think on the first access
14:09
Speaker 1: that you talked about, Stephanie, the UM shift away from
14:13
Speaker 1: high saving and investment towards a more consumer driven economy. UM.
14:18
Speaker 1: This millennial shift that Andy has identified is going to
14:21
Speaker 1: be incredibly significant. The parents of the current generation, they
14:26
Speaker 1: grew up in the reform era, but they also grew
14:29
Speaker 1: up in a period where state and enterprises were closed.
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Speaker 1: The iron Rice bowl of welfare benefits was broken, and
14:38
Speaker 1: they responded to that by saving, saving a really high
14:42
Speaker 1: share of their income. The millennial generation haven't experienced that
14:47
Speaker 1: stripping away of social benefits. They certainly haven't experienced the
14:51
Speaker 1: privations of the Mao era, and so as Andy mentioned,
14:55
Speaker 1: they really have a different attitude to consumption. They're very
14:58
Speaker 1: free spending. That can only drive a shift in China's
15:02
Speaker 1: economy away from saving, away from investment, towards consumption. The
15:07
Speaker 1: second question which you raised is can this also drive
15:12
Speaker 1: higher productivity in China's economy. Ultimately, that's what's most important
15:17
Speaker 1: if China is going to sustain high growth. I think
15:19
Speaker 1: they're the jury is still out that A couple of
15:23
Speaker 1: points suggest reasons for optimism. Firstly, that desire for authenticity
15:29
Speaker 1: is going to mean that China needs to put in
15:31
Speaker 1: place firm of protections for intellectual property. If you don't
15:35
Speaker 1: have intellectual property protections, the market will continue to be
15:39
Speaker 1: flooded with fakes um. When you put the intellectual property
15:42
Speaker 1: protections in place, that's part of creating the right atmosphere
15:47
Speaker 1: for a more dynamic entrepreneurial economy. The second point I
15:51
Speaker 1: would make is that the millennial generation are just much
15:55
Speaker 1: better educated than their parents and certainly their grandparents. Their
15:59
Speaker 1: parents probably graduated from high school. The millennials probably graduated
16:04
Speaker 1: from university, and many of them will have studied overseas
16:08
Speaker 1: as well. That higher level of education is also a
16:11
Speaker 1: basis for optimism about a more productive economy. You know,
16:15
Speaker 1: it's interesting that if you bring together the things that
16:17
Speaker 1: both of you have talked about, UM, I'm struck by
16:20
Speaker 1: two things. You know. One is it's sort of starts
16:23
Speaker 1: to look like the story that was always told about China.
16:25
Speaker 1: You know, we've talked in the past about why, you
16:29
Speaker 1: know what what the West quote unquotes thought where they
16:32
Speaker 1: let China into the World Training Organization. That you know,
16:34
Speaker 1: if you if you allow, if you see embrace China
16:37
Speaker 1: in the global economy, inevitably being part of a more
16:40
Speaker 1: global market economy makes you also more likely to be
16:43
Speaker 1: a democracy um, and a more market led country. We
16:48
Speaker 1: haven't seen that to the extent to the extent that
16:51
Speaker 1: we thought we were going to see it, certainly not
16:53
Speaker 1: on the democracy front. But I think but you're suggesting
16:57
Speaker 1: that we just said it's just a matter of time
16:58
Speaker 1: that inevitably the individualism of a consumer driven society means
17:03
Speaker 1: you have to start giving political choices to people as
17:06
Speaker 1: well as choices in the marketplace. Do you think that's yeah, well,
17:09
Speaker 1: I think I think it's all it's all generational. You know.
17:14
Speaker 1: So the grandparents of today's millennials, Um, we're penny pinchers.
17:20
Speaker 1: They counted their pennies very carefully. The parents with thrifty
17:25
Speaker 1: they saved. And the millennials who have never experienced an
17:30
Speaker 1: economic downturn, and actually their parents haven't really experienced an
17:34
Speaker 1: economic downturn for the last four decades or so, and
17:37
Speaker 1: they want to spend ah, and you know, they can
17:40
Speaker 1: dip into family savings. See, a lot of their parents
17:45
Speaker 1: would have I think that's where the parent eating comes out.
17:49
Speaker 1: This is where this is where the parents, there's where
17:51
Speaker 1: the parents. I mean that a lot of their parents
17:52
Speaker 1: would have bought property for a song in the late
17:56
Speaker 1: nine nineties early two thousand's when China privatized its housing stocks,
18:00
Speaker 1: so they haven't had to, you know, buy their own homes.
18:04
Speaker 1: Their education has been paid for. Um, you know, they've
18:08
Speaker 1: traveled overseas as young adults on their own mom and
18:12
Speaker 1: dad's credit cards. But I will say I will say
18:16
Speaker 1: that there are there are serious caveats to this scenario,
18:21
Speaker 1: and the good times are not gonna last forever. At
18:27
Speaker 1: some point, China is going to have a major turndown.
18:32
Speaker 1: We don't know when that's going to be, but it
18:35
Speaker 1: will have one, and when it comes, it could be
18:38
Speaker 1: pretty brutal. I mean, you could see sharply lower property
18:43
Speaker 1: prices eating into the major asset value of Chinese households,
18:50
Speaker 1: potentially this old speculative, potentially inflation, which could you know,
18:54
Speaker 1: eat away at at savings, and it's going to sort
18:58
Speaker 1: of scramble the way that millennials think about the future.
19:03
Speaker 1: I've never had to worry about this before. I would say.
19:06
Speaker 1: The second factor is China's aging demographic. That China faces
19:12
Speaker 1: this demographic time bomb. The baby boomers of the fifties
19:17
Speaker 1: and sixties are retiring, and they're going to be supported
19:20
Speaker 1: by a workforce that is shrinking as a result of
19:25
Speaker 1: the one child family policy which kicked in in the
19:29
Speaker 1: seventies and eighties. And what that's going to mean is
19:34
Speaker 1: that all of these savings, a lot of these savings
19:37
Speaker 1: are going to go into caring for the elderly and
19:40
Speaker 1: all the conditions associated with aging, um stroke and heart attack, cancers,
19:49
Speaker 1: and so on, and so these enormous pools of family
19:52
Speaker 1: savings aren't going to look quite as big when faced
19:56
Speaker 1: with with this demographic shock. I mean, that's right, isn't it.
20:01
Speaker 1: Tom That on top of everything else, you know, every
20:04
Speaker 1: country is trying to deal with the challenge of aging,
20:08
Speaker 1: and China has that in a particularly acute way. How
20:12
Speaker 1: do you generate productivity growth in that kind of environment? Andy,
20:16
Speaker 1: I really feel like you've dragged the mood down in
20:19
Speaker 1: this discussion. We came in talking about customized Mini Coopers
20:22
Speaker 1: and Nike trainers. I thought maybe Hello Kitty or k
20:26
Speaker 1: Pop might get mentioned at some point, and now here
20:29
Speaker 1: we are talking about old people's home strengths and heart attacks.
20:32
Speaker 1: Is it's deeply depressing? Um so um? I think it's
20:37
Speaker 1: a it's a critically important question. Japan, in some respects
20:41
Speaker 1: points the way forward. They're the first economy in the
20:44
Speaker 1: world to sell more adult diapers than they sold child diapers,
20:49
Speaker 1: and I think if we delve into Japan, we see
20:52
Speaker 1: various ways in which they're thinking of innovative responses to
20:55
Speaker 1: the problem of aging, including use of a robotics in caring,
20:59
Speaker 1: for example. So perhaps there is a path there um.
21:02
Speaker 1: The concluding thought which I which I had, was we
21:06
Speaker 1: should be careful about our assumptions on what drives what
21:11
Speaker 1: we've talked about. The assumption in the past that entering
21:15
Speaker 1: the World Trade Organization would be a driver of economic
21:19
Speaker 1: reform and democratization for China, the idea that Western markets
21:24
Speaker 1: would be sort of seed carriers of Western values. Clearly
21:28
Speaker 1: that didn't play out, um, And now we have the
21:31
Speaker 1: idea that the millennials will be potentially the seed carriers
21:36
Speaker 1: of a similar set of values because they're more individualistic. Um,
21:40
Speaker 1: they're more highly educated, and that is an entirely plausible story.
21:45
Speaker 1: But there's also another plausible story, which is the millennials
21:49
Speaker 1: are allowed to be individualistic and express their preferences when
21:53
Speaker 1: it comes to consumption. They can have whatever color Mini
21:56
Speaker 1: Cooper or whatever color Nike trainers, they want the color
22:01
Speaker 1: adult diaper looking indeed, and maybe some hollow kitty adult lopers. Um.
22:08
Speaker 1: But their freedom, their individualism is restricted to that relatively
22:12
Speaker 1: narrow world of consumption, and we don't see the largest
22:16
Speaker 1: systemic impacts that many people anticipate. Thank you very much,
22:21
Speaker 1: Andy Brown and Tom Mollett, thank you. Thanks. What we
22:31
Speaker 1: were trying to think big about the future of China,
22:34
Speaker 1: and I think I think we did that, But of
22:36
Speaker 1: course we can't. We can't talk about China these days
22:39
Speaker 1: without also having a few words about US China trade wars.
22:44
Speaker 1: So I've brought in Sean Donnan, our senior trade reporter,
22:48
Speaker 1: to give me the low down on that and also
22:50
Speaker 1: a bit of insight into how trade wars and the
22:53
Speaker 1: uncertainty they create might be affecting the US economy and
22:57
Speaker 1: indeed US politics. Sean, thanks for grabbing a few minutes.
23:01
Speaker 1: I know it's a it's a busy week for you.
23:03
Speaker 1: Just tell us briefly what to think about the developments
23:07
Speaker 1: of the last week or so. You know, I think
23:10
Speaker 1: those people who were not following the day to day
23:12
Speaker 1: on this might have thought we were cruising towards some
23:15
Speaker 1: kind of US China trade deal. Now everything seems to
23:18
Speaker 1: have gone in reverse over the weekend. What's up? Yeah, Well,
23:21
Speaker 1: I think the the short answer is the endgame and
23:23
Speaker 1: trade negotiations is always messy. There's always ups and downs.
23:26
Speaker 1: There isn't this kind of linear path, linear rational path
23:29
Speaker 1: to to a deal in trade negotiations. There's always just
23:32
Speaker 1: by the nature of the negotiations and the way they're constructed,
23:35
Speaker 1: the difficult issues are always left to the end, and
23:37
Speaker 1: that's always where you you kind of run into the
23:40
Speaker 1: roadblocks and so but there's no doubt that what we're
23:42
Speaker 1: seeing now is some real questions about whether the US
23:47
Speaker 1: and China can even reach a deal because we're getting
23:50
Speaker 1: to the hard part here, which is both sides have
23:53
Speaker 1: to give something, and both sides of domestic constituencies. And
23:58
Speaker 1: they also have economies that look a lot better and
24:00
Speaker 1: they did six or nine months ago, which means that
24:02
Speaker 1: they're less inclined to give. So you to get the
24:04
Speaker 1: sense that the Chinese speak with one voice on this,
24:08
Speaker 1: whereas there's quite a lot of different voices and different
24:10
Speaker 1: viewpoints inside Donald Trump's administration on trade. How are those
24:15
Speaker 1: feeding into this? Yeah, I mean, it's always hard to
24:17
Speaker 1: figure out what happened, what is happening exactly internally in
24:20
Speaker 1: terms of the debate and China, they're much more opaque
24:22
Speaker 1: than UH folks are here in the United States. But
24:25
Speaker 1: clearly we've seen cycles of hawks and doves gaining the
24:31
Speaker 1: ascendancy over the past year or two in the Trump administration,
24:36
Speaker 1: and we may be on a cycle now where the
24:38
Speaker 1: hawks are are gaining a little bit more footing. Part
24:41
Speaker 1: of that has to do with the kind of robust
24:43
Speaker 1: economic data that the President is seeing about the U
24:46
Speaker 1: s economy recently, but part of that is also other
24:50
Speaker 1: things we're hearing. For example, that Larry Cudlow has taken
24:53
Speaker 1: a few blows over the nomination of Stephen Moore to
24:55
Speaker 1: the FED and that going wrong, and that has kind
24:57
Speaker 1: of hurt his credibility inside the imagers did He's the
25:00
Speaker 1: presidents of Economic Advisor, he's the head of the National
25:03
Speaker 1: Economic Council in theory that the kind of the grand
25:06
Speaker 1: economic strategist, if you will, And he's also someone who's
25:10
Speaker 1: been in the past anti tariff and very propreate. True.
25:13
Speaker 1: I guess what I'm particularly interested in is the impact
25:15
Speaker 1: on the economy. You know, economists have tended to always
25:18
Speaker 1: assume that trade wars, tariffs but also the uncertainty from
25:23
Speaker 1: trade wars is going to be bad for the US economy.
25:27
Speaker 1: I saw you wrote an interesting piece on this at
25:30
Speaker 1: the end of last week, just sort of looking at
25:33
Speaker 1: how the numbers were playing out in terms of job
25:35
Speaker 1: losses and job gains and what did you find. Yeah,
25:39
Speaker 1: so one of the interesting things in ter force or
25:42
Speaker 1: trade wars, is that they're clearly our job gains and
25:45
Speaker 1: protected industries, but there's always a question as to how
25:47
Speaker 1: long does gains last for. And what we're starting to
25:50
Speaker 1: see in the jobs numbers, and that showed up in
25:52
Speaker 1: the April jobs report, is that the gains from in
25:57
Speaker 1: protected industries like steel and electric appliances seem to be
26:01
Speaker 1: peaking UH and in fact, in some cases even going
26:04
Speaker 1: into reverse. If you look at the primary metals industry,
26:06
Speaker 1: this is one of the big beneficiaries of Trump's tariffs UH.
26:11
Speaker 1: Over the past years, since he introduced tariffs on steel
26:14
Speaker 1: and aluminum, the industry has added jobs. That compares to
26:19
Speaker 1: two point six million jobs added in the overall economy.
26:23
Speaker 1: So it's a tiny number compared to the overall editions.
26:27
Speaker 1: But in April it actually went into reverse and he
26:29
Speaker 1: actually lost two thousand jobs in primary moles. Now we
26:32
Speaker 1: need to be careful of of looking too much or
26:34
Speaker 1: giving too much credence to monthly data. This stuff is
26:37
Speaker 1: volatile and so on, but it gets at that kind
26:40
Speaker 1: of economic case for tariffs UH, is this adding US production,
26:47
Speaker 1: is adding jobs and in the economy. Donald Trump believes
26:50
Speaker 1: it is his advisors. His hawks certainly believe it is,
26:54
Speaker 1: but the data is starting to show something a little
26:56
Speaker 1: bit more complicated. Yeah, and as you point out, even
26:59
Speaker 1: even his own even the president story focuses on one
27:03
Speaker 1: relatively small industry, the steel industry, when we know that,
27:07
Speaker 1: you know, there are far more consumers of steel in US,
27:11
Speaker 1: in the US economy than there are producers of steel.
27:14
Speaker 1: And I think there's even there's more manicurists than there
27:17
Speaker 1: are steel workers in the US, So we always have
27:19
Speaker 1: to have some perspective. Sure, Night, We've already had you
27:22
Speaker 1: on the program with our launch episode on the Economics
27:26
Speaker 1: of Fortnight, and I'm sure we'll be talking to you
27:29
Speaker 1: again about trade in the near future. Thanks along, thanks
27:32
Speaker 1: for having me, Thanks for listening to Stephanomics. Come back
27:43
Speaker 1: next week for more on the ground insights into the
27:45
Speaker 1: global economy. In the meantime, you can find us on
27:48
Speaker 1: the Bloomberg Terminal, website, app, or wherever you get your podcast.
27:53
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27:58
Speaker 1: For more news and analysis from bloom of Economics, follow
28:01
Speaker 1: at Economics on Twitter, and you can also find me
28:04
Speaker 1: on at My Stephanomics. The story in this episode was
28:08
Speaker 1: reported and written by Kevin Hamlin with assistance from hand Mew.
28:12
Speaker 1: It was produced by Magnus Hendrickson and edited by Jeff
28:15
Speaker 1: Black and Scott Lamman, who is also the executive producer
28:19
Speaker 1: of Stephanomics Special Thanks to Andrew Brown, Tom Olig, and
28:23
Speaker 1: Sean Donnan. Francesco Leviy is a head of Bloomberg Podcasts.