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A Nobelist on the Future of Work · Trumponomics

• 0:03
  Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
• 0:06
  Speaker 1: global economy to you. Well, we're doing something different this
• 0:15
  Speaker 1: week because I'm sitting here in the Bloomberg offices in
• 0:18
  Speaker 1: London in the presence of greatness the Nobel Prize winning
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  Speaker 1: economists Christopher Pisides, who's the regious Professor of Economics at
• 0:26
  Speaker 1: London School of Economics and the joint winner of the
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  Speaker 1: Nobel Prize for Economics in twenty eleven for his work
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  Speaker 1: on labor markets and a theory of unemployment. Now, Stephonomics,
• 0:37
  Speaker 1: we do have to pay some attention to the daily news,
• 0:39
  Speaker 1: and I'm going to have a chat later with one
• 0:41
  Speaker 1: of our reporters on the latest developments in Donald Trump's
• 0:44
  Speaker 1: trade wars. But first I get to ask Professor Pister
• 0:47
  Speaker 1: reid Is what he thinks about the state of the world,
• 0:50
  Speaker 1: the state of economics, and pretty much anything else I want.
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  Speaker 1: So Professor of Pisides, Chris, welcome, Thank you very much,
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  Speaker 1: and thank you for those kind of works. Well we
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  Speaker 1: know that you justify them. Look, there are lots of
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  Speaker 1: things I'd like to talk to you about, but maybe
• 1:04
  Speaker 1: start with the most recent research that I've seen from you,
• 1:07
  Speaker 1: which has been about this hot topic of automation and
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  Speaker 1: the impact of technology on all of our lives, and
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  Speaker 1: a lot of people focus on the fear of lost
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  Speaker 1: jobs from technology. But I was interested to see that
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  Speaker 1: you took a broader approach which in some ways made
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  Speaker 1: it should make us feel better about the impact of technology,
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  Speaker 1: because you were asking how it's improved our welfare in
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  Speaker 1: ways beyond GDP. Can you can you tell us a
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  Speaker 1: bit about that? Yes, I mean, I think we should
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  Speaker 1: broaden our concept of well being and even growth, that
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  Speaker 1: we're looking at the quality of life, what we do
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  Speaker 1: to the environment, to how much leisure time we get,
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  Speaker 1: the quality of service as we get, how we spend
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  Speaker 1: our free time, and especially how we deal with poverty
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  Speaker 1: and finding ways to improve what these things could really
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  Speaker 1: make a difference to our society at whole. And I
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  Speaker 1: was struck that you mentioned in the paper that actually
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  Speaker 1: could make Europeans feel a bit better about themselves, because
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  Speaker 1: actually you were suggesting that overall welfare had actually grown
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  Speaker 1: faster in Europe at least until until the last few years,
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  Speaker 1: because they were sort of taking more advantage of technology,
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  Speaker 1: at least when it comes to having more leisure time
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  Speaker 1: where they are. That's what you find in the statistics
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  Speaker 1: when you look at it. The countries in the O
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  Speaker 1: c D, you know, the club of wealthy nations basically
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  Speaker 1: that work the least number of hours through the year
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  Speaker 1: a German in the Netherlands, the countries that have the
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  Speaker 1: highest stants of living And that's because they take longer
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  Speaker 1: AnGR breaks as which means that you have more time
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  Speaker 1: to enjoy life. You don't just work four seven and
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  Speaker 1: then at the end you say, oh, look how much
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  Speaker 1: money I made. Um. The other thing that makes you
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  Speaker 1: feel a little bit better about what better about Europe
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  Speaker 1: is that I think we do have better policy is
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  Speaker 1: about about the environment, and about protection of privacy, human rights,
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  Speaker 1: competition policy. So in general, the prospects on these on
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  Speaker 1: these dimensions are good in Europe. And that's why I'm
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  Speaker 1: not too worried that our rates of growth and are
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  Speaker 1: productively they are not matching those of China, even those
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  Speaker 1: of the United States, you know, I mean, it's interesting.
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  Speaker 1: I suspect a couple of the things that you said
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  Speaker 1: will go down very well with a lot of listeners,
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  Speaker 1: because one of the things people often say to me
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  Speaker 1: is why do you just focus on GDP, we should
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  Speaker 1: have broader measures and to have your research kind of
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  Speaker 1: take that on board in a really explicit way, particularly
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  Speaker 1: in this paper I think people will like. Of course,
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  Speaker 1: the other thing that plays certainly to European sense of
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  Speaker 1: UM sort of superiority, should we say, against some other
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  Speaker 1: models and maybe even the Americans, is that we like
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  Speaker 1: to feel like we have higher quality lives UM and
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  Speaker 1: you're kind of finding that in the data, but only
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  Speaker 1: I mean looking ahead, thinking about the big trends coming
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  Speaker 1: down the track for Europe of everybody else, automation but
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  Speaker 1: also demographic change, all the things that we talk about
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  Speaker 1: all the time. Do you think Europe is actually better
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  Speaker 1: placed to respond to those because of their history of
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  Speaker 1: government intervention and social contract And I think that's what
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  Speaker 1: Americans might find a little bit hard to swallow, that
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  Speaker 1: Europe is actually in a better place. I do think
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  Speaker 1: we're not doing enough as yet to embracing new technology
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  Speaker 1: and especially to protect UM workers who are going to
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  Speaker 1: lose their jobs in the sense of helping them through
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  Speaker 1: government to get the to move to the new sectors
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  Speaker 1: to get the new jobs. UM countries like Sweden, Denmark,
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  Speaker 1: the other analoagues are doing more than the rest. German
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  Speaker 1: is doing quite a lot. We need to broaden this
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  Speaker 1: out throughout Europe lot more. But we are doing much
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  Speaker 1: more than than the United States. And like very rightly
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  Speaker 1: you said, it's because we have a tradition with the
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  Speaker 1: government helping the market. If we live the market alone,
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  Speaker 1: it's going to give outcomes that they have many undesirables in.
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  Speaker 1: It is going to give us more equality that we
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  Speaker 1: like to take. It's going to give us more poverty, um,
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  Speaker 1: probably more unemployment contributing that probably in the sense of
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  Speaker 1: moving in ow the jobs at much faster rates than
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  Speaker 1: if you have a good sort of support network that
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  Speaker 1: helps work as retrain look for jobs that there will
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  Speaker 1: match too. And and we are moving in that direction.
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  Speaker 1: You know, I hear many encouraging sounds coming out of
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  Speaker 1: politicians and institutions. There still a lot to do, especially
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  Speaker 1: on longer term things like reform utucational system. Um. But
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  Speaker 1: we're on the right track. I mean, I think a
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  Speaker 1: lot of America because might listen to you. Certainly critics
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  Speaker 1: of Europeans would list of the European approach. We'll listen
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  Speaker 1: to this and say it's hopelessly complacent because if you
• 6:08
  Speaker 1: look at you can't entirely ignore GDP. And if you
• 6:12
  Speaker 1: look at Europe's growth rate, and if you look at
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  Speaker 1: the dynamism of their industries relative to the US leadership
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  Speaker 1: of some of these key sectors lacking um, they would say,
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  Speaker 1: it's all very well, You've got a nice social contract
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  Speaker 1: and it's going to take you right to the graveyard,
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  Speaker 1: or at least to it turn you into a sort
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  Speaker 1: of museum as the global economy moves forward. How would
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  Speaker 1: you respond to that? I mean growth doesn't matter. I
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  Speaker 1: mean growth matters. I'm not saying that ignore GDP. Well,
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  Speaker 1: I don't know. I mean I go to China frequently,
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  Speaker 1: and I tell the walks in there, amazing shopping malls.
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  Speaker 1: I see a lot more European names there than American,
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  Speaker 1: I can tell you. In fact, you can hardly find
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  Speaker 1: an American names there. It's completely European. Go into any
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  Speaker 1: grow in the in the streets, you know, when you've
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  Speaker 1: sent you a car to pick your up, it's always
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  Speaker 1: the European cars. America. And going to people's homes, washing
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  Speaker 1: machines and vacuum community and that they use nine other
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  Speaker 1: things European. All right, Well, so we're sticking with the
• 7:15
  Speaker 1: kind of what would be considered considered to be the
• 7:17
  Speaker 1: slightly smug European approach. But that's fine. We you talk
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  Speaker 1: about needing to have political responses and interventions to make
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  Speaker 1: this process for automation and technology go better for people.
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  Speaker 1: And because you one other thing you would say looking
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  Speaker 1: at Europe at the moment is people don't like politicians
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  Speaker 1: very much. That the the main the system that had
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  Speaker 1: delivered these policies that often have helped to sort of
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  Speaker 1: shield people from the worst of the market, is also
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  Speaker 1: a system that people seem to be voting out of
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  Speaker 1: office with this big surge of populism. Are you how
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  Speaker 1: are politicians going to make these right choices if they're
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  Speaker 1: all being thrown out and replaced with maybe more irresponsible characters.
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  Speaker 1: Well that that that that's the development that worries the
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  Speaker 1: most actually Europe. I was looking recently at some statistics
• 8:14
  Speaker 1: of not only Europeans, but generally the o c D
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  Speaker 1: in the G seven. They're looking at their government and
• 8:21
  Speaker 1: more more than half the people are dissatisfied with the
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  Speaker 1: way that their government is running the country. Um, most
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  Speaker 1: think that we're going to be worse off in the
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  Speaker 1: next twenty years that their countries on their own track
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  Speaker 1: all these needs. It needs to be reversed. It's easier
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  Speaker 1: said than done. Um, I do think something that's going
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  Speaker 1: to maybe would make me I'm popular with some of
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  Speaker 1: your bridge the sense, but I do think that central
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  Speaker 1: European institutions can do more that would apply to the
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  Speaker 1: whole of Europe where you see these developments taking place
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  Speaker 1: or other that that's we've done enough about that. In fact,
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  Speaker 1: some at least some of the political extremists that we're
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  Speaker 1: seeing is due to the policies that were followed within
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  Speaker 1: Europe during the financial crisis and the Dead crisis, after
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  Speaker 1: being a critical the way that Greece and other countries
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  Speaker 1: were dealt with, for example, And um, we we do
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  Speaker 1: need to work out than that, because we shouldn't just
• 9:22
  Speaker 1: take it lightly and say, oh, well, you know it's politicians,
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  Speaker 1: ignore them. But then you know that's that was one
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  Speaker 1: of the famous comment that Chancellor Angela Merkel made the
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  Speaker 1: German Chancellor about you know, the answer to a lot
• 9:32
  Speaker 1: of these problems if you look at how that what
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  Speaker 1: happened in the crisis sort of more Europe, you know,
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  Speaker 1: more cooperation and what people are saying in the ballot
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  Speaker 1: box is less Europe. So how do we reconcile Whenever,
• 9:46
  Speaker 1: whenever there's a ballot in fact, not only in Britain
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  Speaker 1: but anywhere in Europe has the word Europe in it,
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  Speaker 1: the vote is always in the other direction. It's it's
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  Speaker 1: difficult to explain that where there's this reaction. I think
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  Speaker 1: we do need more Europe, but we need to Europe
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  Speaker 1: as well. We need a more collaborative Europe. The way
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  Speaker 1: the Dead Crisis was, for example, I think that I
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  Speaker 1: think like that left very bad legacy of the way
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  Speaker 1: Europe deals with its problems because it wasn't really a
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  Speaker 1: policy that European leaders sat together and agreed something that
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  Speaker 1: there was consensus throughout. It was more like, you know,
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  Speaker 1: Germany for example, which is which has a very different
• 10:25
  Speaker 1: requirement from the Southern Europeans took the lead and basically said,
• 10:30
  Speaker 1: you know, you should be like more like us, rather
• 10:34
  Speaker 1: than converging. Fiscal policies did not well coordinated. Some of
• 10:39
  Speaker 1: the populist backlash has been in response to to the
• 10:43
  Speaker 1: to the response to the crisis, In response to Concert
• 10:47
  Speaker 1: of Easing, people feel like it just gave a lot
• 10:49
  Speaker 1: of money printed a lot of money and gave it
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  Speaker 1: to people who already had it, you know, in the
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  Speaker 1: stock market. Um, if we are basically going to be
• 10:56
  Speaker 1: using the same tools to respond to the next crisis, Um,
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  Speaker 1: do you think we need to be? Is that going
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  Speaker 1: to create even more of a political backlash and maybe
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  Speaker 1: more economic problems down the road from the political backlash,
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  Speaker 1: just as we're dealing with now in the UK and elsewhere.
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  Speaker 1: I think we need to bring fiscal policy there if
• 11:19
  Speaker 1: we get into another crisis like the one we had before,
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  Speaker 1: because I mean, QUEI has done well aking for for markets,
• 11:26
  Speaker 1: but it did increase, it did contribute to this increasing inequality,
• 11:30
  Speaker 1: and that it increased stock prices, which which came together
• 11:35
  Speaker 1: with the bigger rises in the incomes of the labor
• 11:39
  Speaker 1: incomes of top earners and reinforce them. And that's where
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  Speaker 1: you need fiscal policy to come in to support the
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  Speaker 1: lower incomes and those who don't have stocks to benefit
• 11:50
  Speaker 1: from the big rises. In fact, on the contrary, those
• 11:52
  Speaker 1: who have debt because most of the lower inca is
• 11:55
  Speaker 1: not dead. So we need a better coordination of fiscal
• 12:00
  Speaker 1: and monetary policy at European level. And that's where I've
• 12:04
  Speaker 1: been most critical of the German policies for examined during
• 12:07
  Speaker 1: crisis that they didn't want to use fiscal policy at
• 12:10
  Speaker 1: all at the European level. I heard short play talk
• 12:15
  Speaker 1: the German finance minister at the time, talking the world
• 12:18
  Speaker 1: the Comment Forum for example, many times and saying, you know,
• 12:22
  Speaker 1: in front of the cameras and saying I know how
• 12:24
  Speaker 1: to do German fiscal policy, and then and and that's good,
• 12:28
  Speaker 1: good for Germany, and that's what I'm going to do.
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  Speaker 1: Where it was it was how we handle fiscal policy
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  Speaker 1: at the time, but it needs to come along with
• 12:36
  Speaker 1: monetary policy and be used in combination to avoid the
• 12:40
  Speaker 1: problems that you were just pointing. And does that also
• 12:43
  Speaker 1: mean that central banks? I mean, we've had a big
• 12:45
  Speaker 1: debate in the last few months and a sort of
• 12:48
  Speaker 1: a panic that Donald Trump is tweeting about the Fed
• 12:52
  Speaker 1: and central banks independences are being is under threat from
• 12:56
  Speaker 1: all these leaders? Should it? Is it maybe a good
• 13:00
  Speaker 1: thing if if central banks are a bit less independent
• 13:03
  Speaker 1: or a bit more at least more political in how
• 13:07
  Speaker 1: they look at their lives. Well, I think so, actually,
• 13:10
  Speaker 1: as they should. They should get away from the complete
• 13:14
  Speaker 1: independence from everything and just look at inflation and nothing else.
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  Speaker 1: We pointed out one very important issue that they should
• 13:21
  Speaker 1: be looking at, how their policies affect relative pay inequality. Basically,
• 13:29
  Speaker 1: there are other things they should be looking at, see
• 13:32
  Speaker 1: if lending is done properly to productive activities, because with
• 13:39
  Speaker 1: all the supervision they're doing, maybe their acting is this incentive.
• 13:43
  Speaker 1: But what I'd say is that we also need a
• 13:45
  Speaker 1: more independent fiscal policy than we have now, So maybe
• 13:49
  Speaker 1: a little bit less dependent, less independent monetary policy, more
• 13:53
  Speaker 1: independent fiscal policy, and the two work together around the economy.
• 13:58
  Speaker 1: It's funny because I remember years ago looking into how
• 14:01
  Speaker 1: independent the European Central Bank was. As far as I
• 14:04
  Speaker 1: can see, it's the most independent central bank of any
• 14:07
  Speaker 1: in the world because politicians can't even ask, can't even
• 14:10
  Speaker 1: change its target, or they can they can appoint the
• 14:15
  Speaker 1: people in charge, but that is it, and I think
• 14:17
  Speaker 1: there's I think it's unique in the world. Are certainly
• 14:19
  Speaker 1: among the major ones that politics elected politicians are not
• 14:23
  Speaker 1: able to even change the target that it then independently pursues,
• 14:27
  Speaker 1: and maybe that's one thing that Europeans haven't necessarily got right.
• 14:38
  Speaker 1: I've got one final question, which was a is a
• 14:40
  Speaker 1: sort of big one, but you don't have to give
• 14:42
  Speaker 1: a complete answer. There is in this in the populism
• 14:46
  Speaker 1: you see, whether it's Donald Trump or many of the
• 14:49
  Speaker 1: different movements in Europe. There's sort of a critique of
• 14:52
  Speaker 1: mainstream economics embedded in there, the kind of economics um
• 14:57
  Speaker 1: that was followed in the policies before the cris. It's
• 15:01
  Speaker 1: about less so fair, but it's not just about leaving
• 15:04
  Speaker 1: the market alone. Do you think you're sitting in London
• 15:08
  Speaker 1: School of Economics do you think economists as as a
• 15:11
  Speaker 1: profession have responded to that critique? Do you see enough
• 15:16
  Speaker 1: change in the way economists view themselves relative to say
• 15:21
  Speaker 1: ten years ago. We we we've responded by emphasizing more
• 15:27
  Speaker 1: things that might go wrong. Of course that's always been
• 15:30
  Speaker 1: my research. And labor markets some I never I started
• 15:35
  Speaker 1: my research asking why is an employment rising? And the
• 15:39
  Speaker 1: conclusion was that because labor markets done operate very well,
• 15:44
  Speaker 1: there's completely free markets and they need government help their
• 15:47
  Speaker 1: frictions in the labor markets. That was the citation. That's
• 15:50
  Speaker 1: what you got the price for us. And now ecurremys
• 15:53
  Speaker 1: are looking at these frictions in other markets as well,
• 15:55
  Speaker 1: especially if fin action markets. They've been applying many on
• 15:57
  Speaker 1: the techniques that we had in labor market to look
• 16:00
  Speaker 1: at frictions. Now, the other thing I should say, though,
• 16:03
  Speaker 1: is that they criticize economist for say, getting wrong before
• 16:10
  Speaker 1: or whatever, but in fact it's those who use economic
• 16:14
  Speaker 1: theory that should be criticized. You know, if you step
• 16:16
  Speaker 1: with me academia, the LS or elsewhere, you will see
• 16:19
  Speaker 1: that the alternatives are there, or what we're doing there
• 16:23
  Speaker 1: where there hidden in research. You know, maybe academic croomics
• 16:28
  Speaker 1: should should have come out more out of universities trying
• 16:32
  Speaker 1: to influence all that, but it's not the way it happens.
• 16:36
  Speaker 1: So that I mean policymakers outside and those who operate
• 16:40
  Speaker 1: outside in the market, they will have their own views
• 16:44
  Speaker 1: about how they see the market working, and then they
• 16:47
  Speaker 1: will look through the many alternative economic theories. There might
• 16:52
  Speaker 1: be a theory of the pure market, the theory of
• 16:54
  Speaker 1: market with frictions, the theory of Marxist theory of the
• 16:57
  Speaker 1: complete breakdown, and then they will take the that's closest
• 17:01
  Speaker 1: to that believes and applied not thinking that maybe the
• 17:05
  Speaker 1: markets out there has features of those markets with frictions
• 17:10
  Speaker 1: and we should take especially information, you know, he cancel
• 17:13
  Speaker 1: information frictions and markets. They're normals. I like that. So
• 17:17
  Speaker 1: that's the basically guns guns don't kill people. People kill
• 17:20
  Speaker 1: people kind of approach it so you you can blame
• 17:23
  Speaker 1: it on the on the users of the tools. I
• 17:25
  Speaker 1: don't think that there is a sense in which economists
• 17:28
  Speaker 1: have um lost a bit of their awareness of political
• 17:32
  Speaker 1: economy that they had mainstream economics would have had a
• 17:36
  Speaker 1: hundred or two hundred years ago, and there was something there.
• 17:39
  Speaker 1: Someone and a very senior officials said to me once
• 17:41
  Speaker 1: that he thought it's true that politicians often ignore the
• 17:44
  Speaker 1: rules of act like the rules of economics and arithmetic
• 17:47
  Speaker 1: don't operate, and that causes lots of problems when they
• 17:50
  Speaker 1: ignore that. But actually economists also sometimes act like the
• 17:53
  Speaker 1: rules of politics don't operate, and that's a big problem
• 17:57
  Speaker 1: where they where they're now taking more and more into
• 18:00
  Speaker 1: accounting fact that political economy and the influence of politics.
• 18:03
  Speaker 1: So I can predict with fairly certainty that there will
• 18:07
  Speaker 1: be a Nobel Prize for a political economy. But I'm
• 18:10
  Speaker 1: not going to venture to professors, thank you very much
• 18:14
  Speaker 1: for coming on, thank you, thank you for thanking me.
• 18:23
  Speaker 1: So there was plenty to chew on there, but I
• 18:25
  Speaker 1: did also promise you a quit report from the front
• 18:28
  Speaker 1: lines of the US China trade wars. And our senior
• 18:31
  Speaker 1: trade reporter frequent contributor to this podcast, Sean Donan, is
• 18:35
  Speaker 1: just back from China. Sean, the Chinese are looking certainly
• 18:39
  Speaker 1: less conciliatory at this point. We've had a white paper
• 18:43
  Speaker 1: out complaining about US tactics. We've had also some announcement
• 18:47
  Speaker 1: of investigation into the US company FedEx. Has Donald Trump
• 18:52
  Speaker 1: pushed them too far? Well, I think that's the big
• 18:54
  Speaker 1: question here. And there's a real sense in China right
• 18:58
  Speaker 1: now that people are are looking at this trade conflict
• 19:02
  Speaker 1: and actually preparing for it to last into the longer term.
• 19:06
  Speaker 1: This is no longer a short term aberration. Uh. This
• 19:10
  Speaker 1: is something that businesses and officialdom and the think tanks
• 19:16
  Speaker 1: are all adapting to right now. You really get the
• 19:19
  Speaker 1: sense of people already playing a longer game. J And
• 19:23
  Speaker 1: Ping famously invoked the Long March. Said China needed to prepare,
• 19:28
  Speaker 1: be prepared to to engage in in this long march
• 19:32
  Speaker 1: as it approached this economic conflict. And what you really
• 19:35
  Speaker 1: pick up on the ground is that march is already
• 19:36
  Speaker 1: underway and it's well underway. Does that mean that they
• 19:39
  Speaker 1: have basically given up on trying to conclude a deal
• 19:43
  Speaker 1: with the US administration and they're just sort of trying
• 19:45
  Speaker 1: to hoping that it won't get any worse. I I
• 19:49
  Speaker 1: think what what you really pick up is not that
• 19:51
  Speaker 1: they've given up on a deal, but that they're not
• 19:54
  Speaker 1: going to do a deal on Donald Trump's terms, uh,
• 19:56
  Speaker 1: and that they feel that they are in a position
• 20:00
  Speaker 1: of strength that Donald Trump doesn't necessarily see. And of course,
• 20:03
  Speaker 1: you know, the worst thing you can get in a
• 20:05
  Speaker 1: trade war or in any negotiation is both sides thinking
• 20:09
  Speaker 1: they're the stronger party at the table and not being
• 20:11
  Speaker 1: ready to compromise. Well. And it's interesting because of course
• 20:14
  Speaker 1: with the Donald Trump and those who support the use
• 20:17
  Speaker 1: of tariffs would say, well, America's got the upper hand
• 20:20
  Speaker 1: because America is the place that's receiving all these imports,
• 20:23
  Speaker 1: and the very fact that China is not getting a
• 20:26
  Speaker 1: lot of imports from the US means there's there's less
• 20:29
  Speaker 1: room for for China to retaliate. But I guess what
• 20:32
  Speaker 1: do we see this in the last few days that
• 20:34
  Speaker 1: seemed just it was a reminder that China have other
• 20:37
  Speaker 1: ways that they could do a sort of tip for
• 20:40
  Speaker 1: tat here. Yeah. Absolutely, I think if you just think
• 20:42
  Speaker 1: about it in the narrow kind of tit for tat
• 20:44
  Speaker 1: Tariff's world, the US has the upper hand. But what
• 20:47
  Speaker 1: we forget is that China has an important role as
• 20:51
  Speaker 1: a supplier of a number of commodities like rare earths,
• 20:54
  Speaker 1: and we've seen them. These are these kind of rare
• 20:56
  Speaker 1: minerals that are key elements in all sorts of new
• 21:00
  Speaker 1: technologies UH and vital to kind of twenty one century life,
• 21:05
  Speaker 1: and China really controls a big chunk of the supply
• 21:07
  Speaker 1: of those to the fact that it is an enormous
• 21:10
  Speaker 1: market and that it has the ability to to harass
• 21:14
  Speaker 1: American companies in different ways that want to do business
• 21:18
  Speaker 1: in that market, and that's a powerful lever that the
• 21:22
  Speaker 1: Chinese can pull. We've seen that. We've seen the Chinese
• 21:25
  Speaker 1: start to pull. That day when Huawei, the big Chinese
• 21:28
  Speaker 1: telecommunications company, was was placed on a Commerce Department Entity
• 21:33
  Speaker 1: list UH, the US effectively was banning or potentially banning
• 21:38
  Speaker 1: US suppliers from doing business with Huawei, this big company.
• 21:42
  Speaker 1: The Chinese have responded by announcing their own Unreliable Entities list,
• 21:47
  Speaker 1: and that effectively is aimed at any US company that
• 21:51
  Speaker 1: for non commercial reasons refuses to do business with a
• 21:55
  Speaker 1: Chinese company, and that means shutting them out of that
• 22:00
  Speaker 1: potentially enormous Chinese market. We've also UH seen an investigation
• 22:05
  Speaker 1: into UH Forward, one of its UH and and and
• 22:08
  Speaker 1: its joint venture over some potential monopoly behavior. We've seen
• 22:13
  Speaker 1: this FedEx investigation that you've talked about. So there's all
• 22:17
  Speaker 1: of these other ways that they can that they can
• 22:19
  Speaker 1: apply pressure on US companies, and at the same time
• 22:21
  Speaker 1: they're also just kind of planning for the longer term.
• 22:25
  Speaker 1: We had an interview with Ye Gang, the PBOC Government
• 22:28
  Speaker 1: People Bank People's Bank of China governor a few days
• 22:30
  Speaker 1: ago in which he just pointed to all the different
• 22:32
  Speaker 1: ways they had to to bolster the economy, from monetary
• 22:36
  Speaker 1: policy UH to some kind of fiscal UH tax credit
• 22:41
  Speaker 1: policy that they that they could roll out, and in
• 22:43
  Speaker 1: fact they've already given a big tax holiday to semiconductor
• 22:47
  Speaker 1: producers and software companies and so on. There's a much
• 22:50
  Speaker 1: bigger array of policy tools that the Chinese have other
• 22:56
  Speaker 1: than tariffs. And you said you talked to US business
• 23:00
  Speaker 1: people operating. There are people with joint ventures with the
• 23:03
  Speaker 1: US in the tech world in particular, are they looking
• 23:07
  Speaker 1: at their relationship with China being permanently changed by this?
• 23:11
  Speaker 1: And of course the fear is that China is going
• 23:13
  Speaker 1: to say, Okay, we're dependent on American semiconductors now, and
• 23:17
  Speaker 1: Jnald Trump has that potential leverage over us, but we
• 23:22
  Speaker 1: don't intend to be very long. Yeah, I mean, that's
• 23:25
  Speaker 1: already that fear is already being realized. I think we
• 23:27
  Speaker 1: need to be clear about that. Where I was at
• 23:28
  Speaker 1: Huawei as part of this this visit and you talk
• 23:31
  Speaker 1: to them, they have their own chip unit and they're
• 23:33
  Speaker 1: just accelerating work there to to kind of replace the
• 23:37
  Speaker 1: U S chips that they now rely on. They're also
• 23:39
  Speaker 1: developing their own operating system for smartphones that would replace
• 23:43
  Speaker 1: Google's Android system that they now rely on. They know
• 23:46
  Speaker 1: that it's going to take them some time to transition.
• 23:50
  Speaker 1: That's that stuff, But actually in terms of the smartphone OS,
• 23:53
  Speaker 1: for example, they're already talking about rolling that out in
• 23:55
  Speaker 1: the Chinese market this year. Those are all the sorts
• 23:58
  Speaker 1: of measures that mean that US companies and US tech
• 24:02
  Speaker 1: companies are going to potentially lose access to a big
• 24:06
  Speaker 1: market like China. Is this trade war backfires on them,
• 24:11
  Speaker 1: but also that they're going to have new competitors that
• 24:15
  Speaker 1: are enabled and that are going to become more aggressive
• 24:18
  Speaker 1: in the years to come. Well, something we keep coming
• 24:21
  Speaker 1: back to. There's there's the headlines that we get very
• 24:23
  Speaker 1: excited about, what's going to happen with the tariffs, what's
• 24:27
  Speaker 1: happening to the economic numbers right now, and then there's
• 24:31
  Speaker 1: what's happening under the surface to global supply chains and
• 24:35
  Speaker 1: relationships as a result of this trade war. Watch this space.
• 24:39
  Speaker 1: Thank you very much, Sean Donna, thanks for having me,
• 24:48
  Speaker 1: Thanks for listening to Stephanomics. We'll be back next week
• 24:51
  Speaker 1: with more on the ground insights into the global economy.
• 24:54
  Speaker 1: In the meantime, you can find us on the Bloomberg Terminal, website, app,
• 24:57
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• 25:00
  Speaker 1: took the time to rate and review our show so
• 25:02
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• 25:04
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• 25:08
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• 25:13
  Speaker 1: This episode was produced by Magnus Hendrickson with assistance from
• 25:16
  Speaker 1: Amelia Roberts, Laura Carlson, and tofa forehes. Our executive producer
• 25:21
  Speaker 1: is Scott Landman. The special thanks to Professor Christopher Peter
• 25:25
  Speaker 1: Reads and Seawan Donald. Francesca Levy is the head of
• 25:29
  Speaker 1: Bloomberg Podcast