Latest / Bloomberg Intelligence / US Reversal On ZTE Shows Weakness On Trade Negotiations: Miller

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US Reversal On ZTE Shows Weakness On Trade Negotiations: Miller · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Bramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
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  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. The
• 0:33
  Speaker 1: tone is more positive in markets today and a lot
• 0:36
  Speaker 1: of people are saying that this because the trade tensions
• 0:39
  Speaker 1: between US and China have eased. Why, well, it all
• 0:43
  Speaker 1: has to do with this company, ZTE Corporation. And here
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  Speaker 1: to tell us what happened and what the significance of
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  Speaker 1: this is is Leland Miller, chief executive of the China
• 0:52
  Speaker 1: Beige Book International in New York. Leland, thank you so
• 0:55
  Speaker 1: much for being with us. So just lay out in
• 0:58
  Speaker 1: broad strokes what happened and why this is a huge
• 1:01
  Speaker 1: deal in your opinion. Well, there's a lot of things
• 1:03
  Speaker 1: that are going on on the on the trade side,
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  Speaker 1: and you've got the tariff list, multiple tariff lists. We've
• 1:08
  Speaker 1: got investment protection regimes that have been rumored for a
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  Speaker 1: long time. Uh. You also have a crackdown on on
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  Speaker 1: certain corporates, and the one that China is really really
• 1:18
  Speaker 1: upset about is this recent crackdown on z T, which
• 1:21
  Speaker 1: is one of their major telecom firms. It's one of
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  Speaker 1: the two big ones along with Huawei. And what essentially
• 1:26
  Speaker 1: was done over the past month until potentially UH pulled
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  Speaker 1: reversed by a tweet over the over the weekend, was
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  Speaker 1: a um A near life almost a ban UH lifetime
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  Speaker 1: ban of of the z T equipment. ZT was not
• 1:44
  Speaker 1: gonna be sold United States. They were being punished for
• 1:47
  Speaker 1: violation of US law. Essentially, the US was gonna put
• 1:49
  Speaker 1: z T out of business and and now well hold on.
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  Speaker 1: So the Commerce Department enforced certain bands on z T
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  Speaker 1: products and the reason why was because they had been
• 2:01
  Speaker 1: selling to Iran and North Korea. Is that right it is?
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  Speaker 1: And then they lied about it and were caught lying
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  Speaker 1: about it, and so this was a particularly egregious example
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  Speaker 1: of the Chinese cheating. You know, if the if the
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  Speaker 1: entire the entire U S. China trade push is about
• 2:16
  Speaker 1: cutting down on China's cheating, then this was the ultimate
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  Speaker 1: example of brazenness and UH and cheating that hurt US
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  Speaker 1: consumers in U S. NAH security and so the reversal
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  Speaker 1: of this has significant repercussions beyond just a concession or
• 2:30
  Speaker 1: a chip that the President is offering up. Z t
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  Speaker 1: E uses components that are made by Qualit, Common Intel correct. Correct,
• 2:40
  Speaker 1: and those companies cannot sell those products to z T
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  Speaker 1: E because of current regulations. That was that was the
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  Speaker 1: recent decision. Yes, okay, so the President would have to
• 2:54
  Speaker 1: reverse that in order to allow that that take place. Correct.
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  Speaker 1: And what's happening right now is is that the Commerce
• 3:01
  Speaker 1: Department came out with a very strong language about how
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  Speaker 1: much ZT had transgressed over the past few years. Wilbur
• 3:08
  Speaker 1: Ross had headed that up. And now what the tweet
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  Speaker 1: suggests is that President Trump has ordered Secretary Ross to
• 3:14
  Speaker 1: reevaluate his conclusion on this and to find a way
• 3:17
  Speaker 1: to get around it. So it puts Secretary Ross in
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  Speaker 1: a very difficult position here because some of the stuff
• 3:22
  Speaker 1: he said is really impossible to walk back. All Right,
• 3:25
  Speaker 1: So let's zoom out a little bit, because a lot
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  Speaker 1: of people are looking at this deal and saying, well,
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  Speaker 1: this is This shows that President Trump has taken a
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  Speaker 1: softer line with China, is perhaps not as interested in
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  Speaker 1: having a trade war that a lot of people say nobody,
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  Speaker 1: nobody can win. This is a good thing for world
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  Speaker 1: peace and world commerce. Why why is that not the case? Well,
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  Speaker 1: the question is, you know, what is the US side
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  Speaker 1: pushing for. I mean, that's been the question from day
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  Speaker 1: one and has not yet been answered. If this is
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  Speaker 1: pushing towards a more equal relationship, if this is pushing for, um,
• 3:58
  Speaker 1: a reckoning on the trade theft to eliminate hurdles for
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  Speaker 1: the future, then all of this is good. Nobody wants
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  Speaker 1: a terror for nobody wants a trade war. But if
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  Speaker 1: you're if you're showing, if you're from the US perspective,
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  Speaker 1: if you're showing weakness that a foreign company can exert
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  Speaker 1: some economic leverage over you and have you reverse Nash
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  Speaker 1: security decisions, it's a problem. It's also a problem if
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  Speaker 1: you go into a trade negotiation thinking that the trade
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  Speaker 1: deficit is what you should be negotiating instead of market
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  Speaker 1: access or intellectual property theft or some of these other
• 4:30
  Speaker 1: important things that really do affect businesses and consumers. So
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  Speaker 1: the question is what have we done this all for,
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  Speaker 1: And if it ends up being something that sort of
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  Speaker 1: dwindles out over the course of the next few weeks,
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  Speaker 1: and months, which which I don't think will happen. Then
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  Speaker 1: then you you're basically telling China that they've that they
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  Speaker 1: have a ready made formula for putting this behind them,
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  Speaker 1: and um, they don't have to to worry about these
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  Speaker 1: things which just a few weeks ago were worthy of
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  Speaker 1: a trade war. So it's it's it's all very bizarre.
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  Speaker 1: Does it also matter that it coincides with the visit
• 5:01
  Speaker 1: to the United States and the Vice Premier Leu the
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  Speaker 1: Chinese trade negotiator, so that what was told by the
• 5:09
  Speaker 1: Chinese to the U. S side was that they wouldn't
• 5:11
  Speaker 1: have the delegation unless CT was taken care of. So
• 5:14
  Speaker 1: the President wanted to make sure this trade delegation happened,
• 5:18
  Speaker 1: not mostly because there was trade stuff to discuss to discuss,
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  Speaker 1: but also because North Korea is playing into this, and
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  Speaker 1: so you've got a few different issues at play here.
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  Speaker 1: You don't want disruption in front of the North Korea summit.
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  Speaker 1: You don't want any of this trade war stuff to
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  Speaker 1: blow up before the U. S has a plan in place,
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  Speaker 1: and they've been very slow getting the documents for three
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  Speaker 1: oh one ready, So the President apparently did not want
• 5:41
  Speaker 1: to lose steam on this and and decided to to
• 5:43
  Speaker 1: make the ZT decision. Um that said, all of this
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  Speaker 1: is part of a long process. And whether Leoho visits
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  Speaker 1: this week and they come to a mini bargain many
• 5:54
  Speaker 1: many deal, not a bargain um, then you know this.
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  Speaker 1: This is something that's going to go on for a
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  Speaker 1: long time. I want to thank you very much for
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  Speaker 1: joining us. Leland Miller is the chief executive of China
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  Speaker 1: beige Book International. You can follow their work on Twitter
• 6:08
  Speaker 1: at China beige Book. Talking about the President of the
• 6:12
  Speaker 1: United States, Donald Trump and his tweet regarding ZTE Corp.
• 6:16
  Speaker 1: And perhaps easing trade sanctions against the company. I want
• 6:34
  Speaker 1: to pick up on what Dave mentioned, Scientific Games rising
• 6:38
  Speaker 1: more than ten percent, so the shares also avoid Gaming
• 6:42
  Speaker 1: and GM and several other gaming companies also rising significantly
• 6:48
  Speaker 1: on the news that the Supreme Court struck down a
• 6:51
  Speaker 1: federal law that bars gambling on individual sporting events. Joining
• 6:55
  Speaker 1: US now, I am pleased to say Brian Eager, he
• 6:57
  Speaker 1: is senior gaming and lodging analyst with Bloomberg Intelligence. Brian,
• 7:02
  Speaker 1: how big of a deal is this decision by the U. S.
• 7:05
  Speaker 1: Supreme Court? So if you think of the pool um
• 7:08
  Speaker 1: of basically would have to date been illegal sports bets
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  Speaker 1: that have been taking place, and you you assign a
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  Speaker 1: reasonable wind whole rate to that, there's probably about a
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  Speaker 1: seven and a half billion dollar UH newly released revenue
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  Speaker 1: opportunity across h the across the states that would now
• 7:26
  Speaker 1: have an opportunity to have legalized sports betting. Among those,
• 7:29
  Speaker 1: New Jersey and Pennsylvania are kind of front of the line,
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  Speaker 1: New Jersey being the petitioner here in Pennsylvania having recently
• 7:35
  Speaker 1: legalized on sports betting, but certainly an opportunity that both
• 7:40
  Speaker 1: casino operators and the back end operators of sports books
• 7:44
  Speaker 1: would all likely capitalize on. So who are some of
• 7:47
  Speaker 1: the big winners? I mean, Lisa was mentioning some of
• 7:49
  Speaker 1: the stocks, also adding BOYD Gaming, as she mentioned up
• 7:53
  Speaker 1: a little bit more than three ten, National Gaming up
• 7:56
  Speaker 1: four and a half percent, Empire Resorts higher by ten percent.
• 8:01
  Speaker 1: So I would kind of breaking it down at least
• 8:03
  Speaker 1: additionally into three categories. First, you've got operators like MGM
• 8:07
  Speaker 1: and Caesars that have existing operations in Nevada and also
• 8:10
  Speaker 1: an Atlantic city. Those are the two major public companies
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  Speaker 1: that have operations in the Atlantic City market, which is
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  Speaker 1: the petitioners here which be likely to benefit. Another subgroup
• 8:20
  Speaker 1: which we used to kind of touched upon our companies
• 8:23
  Speaker 1: like Churchill Downs, Boyd Gaming, National Gaming, El Dorado Resorts,
• 8:28
  Speaker 1: which either have or are in the process of acquiring
• 8:31
  Speaker 1: assets in the Pennsylvania market that stayed also legalized sports
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  Speaker 1: betting subject to the Supreme Courts repeal of pasta which
• 8:40
  Speaker 1: happened today. And then the third group, Tim and Lisa
• 8:43
  Speaker 1: is the operators of the various gaming systems of sports
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  Speaker 1: book operators. A couple comes to mind. William Hill, the
• 8:50
  Speaker 1: British company operates of all the Vada based retail sports books.
• 8:55
  Speaker 1: You've got the Stars group that acquired Sky Betting, and
• 8:58
  Speaker 1: then you've got Scientific Game which Lisa mentioned, which recently
• 9:02
  Speaker 1: acquired m i X Gaming, which has an open bet
• 9:05
  Speaker 1: platform which has the ability although right now UH takes
• 9:10
  Speaker 1: place in the UK to operate kind of the back
• 9:12
  Speaker 1: end of the sports betting platforms. So you basically got
• 9:16
  Speaker 1: you know, the Jersey operators, You've got the operators in
• 9:19
  Speaker 1: other regional states, and then you've got the operators of
• 9:22
  Speaker 1: the equipment and systems that could benefit from the expansion
• 9:26
  Speaker 1: of sports books nationwide. Just to give a sense of
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  Speaker 1: how big a business this is. According to one research unit,
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  Speaker 1: Americans place a hundred and fifty billion dollars a year
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  Speaker 1: in illegal sports bets. Other research firms put that at
• 9:42
  Speaker 1: a much lower amount. But I'm just wondering, from your
• 9:45
  Speaker 1: perspective or most of these online do most people like
• 9:48
  Speaker 1: to go to a venue? What's sort of the look
• 9:51
  Speaker 1: of the most popular place to bet on individual teams? So,
• 9:55
  Speaker 1: the sports books in Nevada, although they only generate about
• 9:58
  Speaker 1: two of the total gaming revenue in that state, are
• 10:01
  Speaker 1: big traffic generators. They're not necessarily a sizeable casino ways
• 10:05
  Speaker 1: or generator, but they generate excitement that makes its way
• 10:08
  Speaker 1: by way of casino play into the gaming portions of
• 10:10
  Speaker 1: the casinos. You've got that portion right now. Gaming sports
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  Speaker 1: betting only legal on an unrestricted basis uh A Nevada.
• 10:19
  Speaker 1: The hundred fifty billion dollar number you mentioned, that's the
• 10:21
  Speaker 1: American Gaming Association estimate of that amount currently wagered illegally
• 10:26
  Speaker 1: on sports betting. And so you put a five percent
• 10:29
  Speaker 1: hold rate on that, you get that the seven and
• 10:31
  Speaker 1: a half billion dollar revenue opportunity I mentioned. And to
• 10:35
  Speaker 1: answer your other question, you know physical venues actual sports
• 10:39
  Speaker 1: books UH where a lot of the action takes place.
• 10:41
  Speaker 1: But all these companies, among them William Pill and others
• 10:44
  Speaker 1: have kind of the mobile platforms UH the other ways,
• 10:49
  Speaker 1: where within the state's legal bounds, you could use a
• 10:52
  Speaker 1: mobile device, smartphone device, etcetera to place your bets. So
• 10:56
  Speaker 1: certainly mobile is the direction of the future, even though
• 10:59
  Speaker 1: there's there's a large physical presence of these sports books.
• 11:02
  Speaker 1: I want to thank you very much for joining us
• 11:04
  Speaker 1: and shedding light on this issue. Brian Edgar is our
• 11:09
  Speaker 1: expert when it comes to gaming and lodging for Bloomberg Intelligence.
• 11:12
  Speaker 1: He's our senior industry analysts and just taking a look
• 11:15
  Speaker 1: once again at some of the stocks making moves as
• 11:17
  Speaker 1: a result of the Supreme Court decision avoiding the ban
• 11:22
  Speaker 1: on national sports. But well, just last week we learned
• 11:40
  Speaker 1: that Alliance Bernstein is going to relocate about a thousand
• 11:44
  Speaker 1: of its employees to UH to Memphis, Nashville, Tennessee. I
• 11:49
  Speaker 1: beg your pardon, and perhaps it has to do with
• 11:52
  Speaker 1: compensation levels and making the money go a little bit further.
• 11:56
  Speaker 1: Here to tell us more about compensation and incentive pay
• 11:59
  Speaker 1: in the financial industry is Alan Johnson, President Managing director
• 12:02
  Speaker 1: and founder of Johnson Associates, Alan, thanks very much for
• 12:06
  Speaker 1: being with us. What is the current trend in terms
• 12:09
  Speaker 1: of compensation and head count in the financial services industry?
• 12:14
  Speaker 1: Will get into the specifics later, but what is the
• 12:16
  Speaker 1: general trend that you're seeing. Compensation is projected to be
• 12:22
  Speaker 1: higher in two thousand and eighteen, and sentives are probably
• 12:25
  Speaker 1: going to be up five or ten percent. Um Uh,
• 12:30
  Speaker 1: it's probably more of a mixed bag. And um in
• 12:34
  Speaker 1: recruiting and employment, probably more outside the traditional money centers,
• 12:39
  Speaker 1: more more in other parts of the country of the world. Um,
• 12:43
  Speaker 1: So it's got that's a little bit more of a
• 12:45
  Speaker 1: mixed bag. But clearly compensation is trending up for two
• 12:48
  Speaker 1: thousand and eighteen. Yeah. Alan, Well, if it weren't, I'd
• 12:51
  Speaker 1: be shocked because pretty much across the board we've seen
• 12:54
  Speaker 1: gains over the past twelve months. And Allen, I'm so
• 12:56
  Speaker 1: glad you could join us, because really, if you want
• 12:58
  Speaker 1: to know what's going on in Wall Street, just check
• 13:00
  Speaker 1: the bonuses and that will tell you everything you need
• 13:02
  Speaker 1: to know. And I was looking just to dig into
• 13:04
  Speaker 1: the details. I noticed that hedge funds, the average bonus
• 13:08
  Speaker 1: was a zero to five increase from last year, whereas
• 13:12
  Speaker 1: private equity was five to ten higher than last year.
• 13:17
  Speaker 1: Can you talk a little bit about that and sort
• 13:19
  Speaker 1: of what this tells you as far as private equity
• 13:21
  Speaker 1: being more of the place to be right now. Well,
• 13:25
  Speaker 1: private equity is continuing its momentum from the last three
• 13:28
  Speaker 1: or four years, the up the the higher markets. They
• 13:32
  Speaker 1: have had great realizations of prior investments. They have been
• 13:36
  Speaker 1: able to go out in fund raise. So private equity
• 13:39
  Speaker 1: is clicking on all cylinders. Hedge funds have had a
• 13:43
  Speaker 1: very difficult run in the last several years. There we're
• 13:46
  Speaker 1: projecting they're going to be up only slightly, perhaps zero
• 13:49
  Speaker 1: to five incentives for this year, and again it's their
• 13:52
  Speaker 1: fundamental business model of trying to beat the markets is
• 13:57
  Speaker 1: much harder UM, so they're one of the two different ends.
• 14:01
  Speaker 1: Private equity continues to be on a roll of hedge funds.
• 14:04
  Speaker 1: Hopefully the volatility will help them, but it's a question mark. Well, Alan,
• 14:08
  Speaker 1: maybe shift your attention now to investment in commercial banking
• 14:12
  Speaker 1: and UM you say that the incentive pay would be
• 14:15
  Speaker 1: generally in line with the entire firm's performance. Correct, Yes,
• 14:21
  Speaker 1: the the banks have done better. They don't get the
• 14:24
  Speaker 1: attention that they once did on their pay, but they
• 14:27
  Speaker 1: continue to do well. What's different than the past that
• 14:31
  Speaker 1: we all remember is that today it's somewhat of the
• 14:34
  Speaker 1: boring parts of the commercial banking, which is commercial lending, retail,
• 14:39
  Speaker 1: credit cards, cars, things that are steady and profitable um,
• 14:44
  Speaker 1: but not as much of their business is the more
• 14:47
  Speaker 1: um risky parts of the business that they used to
• 14:50
  Speaker 1: do so well ahead. One thing I'm wondering is how
• 14:53
  Speaker 1: the bonuses at US banks compared to those at European
• 14:57
  Speaker 1: banks and whether you've seen in a pretty big attrition
• 15:02
  Speaker 1: out of European banks and into into the US ones. Now,
• 15:06
  Speaker 1: that's a very good question. The US banks continue to
• 15:10
  Speaker 1: not only a business but all pay perspective, continue to
• 15:13
  Speaker 1: move ahead. The European banks have kind of been in
• 15:16
  Speaker 1: lembo now for a number of years. We saw Deutsche
• 15:19
  Speaker 1: Bank cutting back and others, so they have not had
• 15:23
  Speaker 1: the progress that the US banks have had in the
• 15:25
  Speaker 1: last five or so years, either from a business results,
• 15:29
  Speaker 1: stock price, or pay um. They are lagging UM significantly well.
• 15:34
  Speaker 1: But I have to wonder just you know, with Deutch
• 15:36
  Speaker 1: a bank, for example, I'd heard a while back that
• 15:38
  Speaker 1: they were actually offering some huge bonuses to try to
• 15:40
  Speaker 1: get talented people to come join them, given how much
• 15:44
  Speaker 1: bad press they've gotten. And I wonder if you do
• 15:46
  Speaker 1: see more sort of one off huge compensation offers from
• 15:50
  Speaker 1: banks that are looking to sort of revive their franchise.
• 15:55
  Speaker 1: You certainly don't see that as much in the United
• 15:57
  Speaker 1: States because they don't need to to do the have
• 16:00
  Speaker 1: and they don't want to. I think they don't need
• 16:01
  Speaker 1: you because sorry to break in, but they don't need
• 16:03
  Speaker 1: to because there are so many people looking for jobs
• 16:05
  Speaker 1: that they can hire. Uh, most of them are got
• 16:07
  Speaker 1: a pretty stable um cadre of senior people. They don't
• 16:11
  Speaker 1: really need. They don't need the savior at this point.
• 16:14
  Speaker 1: They're they're they're certainly looking for really good people, and
• 16:17
  Speaker 1: they're certainly going to pay a lot for expensive people,
• 16:20
  Speaker 1: but they don't need the savior you mentioned. If you're
• 16:23
  Speaker 1: more troubled or more um in a in a fall,
• 16:27
  Speaker 1: you're more likely to go out and spend an awful
• 16:29
  Speaker 1: lot of money a free agent um and perhaps overpay um.
• 16:34
  Speaker 1: The U S banks historically have always done that, but
• 16:37
  Speaker 1: it certainly in the last five years or more they
• 16:39
  Speaker 1: have not felt the need to or weren't allowed to
• 16:42
  Speaker 1: do that. Um, So you know you're right if you're
• 16:44
  Speaker 1: If you're going to hear an outsized number, it's not
• 16:47
  Speaker 1: likely to be a brand name US Bank. It's likely
• 16:50
  Speaker 1: to be somebody from probably from Europe. All Right, just
• 16:54
  Speaker 1: really quickly, about thirty seconds. I don't know if you
• 16:56
  Speaker 1: saw the news, Goldman Sachs is just announcing that to
• 17:00
  Speaker 1: heads out of the three that lead the securities division
• 17:03
  Speaker 1: are planning to retire. Just really quickly. Is this is
• 17:06
  Speaker 1: this a significant thing? Um? I think it's a significant
• 17:12
  Speaker 1: move for those two individuals. But certainly Goldman traditionally has
• 17:15
  Speaker 1: had duel heads and a lot of businesses to give
• 17:17
  Speaker 1: them a deeper bench. Um So, I don't think it
• 17:20
  Speaker 1: tells you anything that they continue to rotate quality people
• 17:24
  Speaker 1: through these jobs, and they've been I think the biggest
• 17:28
  Speaker 1: practitioner of having dual heads, which they have. Their view
• 17:31
  Speaker 1: is we need a deeper bench than relying on a
• 17:34
  Speaker 1: you know, just a single person most of the time.
• 17:37
  Speaker 1: So they still have somebody left from that team. Allan Johnson,
• 17:40
  Speaker 1: thank you so much for joining us today. Always a
• 17:42
  Speaker 1: pleasure and always important to take a look at what
• 17:45
  Speaker 1: those bonuses are showing us about Wall Street Allan Johnson,
• 17:47
  Speaker 1: managing director and founder of Johnson Associates, the shares of
• 18:06
  Speaker 1: n XP Semiconductor. They are hired by about nine and
• 18:09
  Speaker 1: a half percent after Chinese regulators have restarted their review
• 18:13
  Speaker 1: of Quacom's application to acquire an XP Semiconductors. They previously
• 18:19
  Speaker 1: had shelved this work in reaction to growing trade tensions
• 18:23
  Speaker 1: with the United States. This according to people familiar with
• 18:25
  Speaker 1: the matter, So better who better than Victoria Espinel, the
• 18:29
  Speaker 1: president and the chief executive of the Business Software Alliance
• 18:32
  Speaker 1: b s a UH to tell us a little bit
• 18:35
  Speaker 1: more about what's going on when it comes to trade,
• 18:38
  Speaker 1: intellectual property and technology between the United States and China.
• 18:42
  Speaker 1: She's also the president of Software dot org and she
• 18:45
  Speaker 1: can be followed on Twitter at Victoria Espinel. She joins
• 18:49
  Speaker 1: us in our eleven three oh studios. Victoria, thank you
• 18:51
  Speaker 1: very much for being with us UM. Just to give
• 18:54
  Speaker 1: people the background prior to being the head of the
• 18:56
  Speaker 1: the b s a UM, you or the United States
• 18:59
  Speaker 1: in Collectual Property Enforcement Coordinator for the White House UH,
• 19:04
  Speaker 1: and you were appointed by President Barack Obama back in
• 19:07
  Speaker 1: September of two thousand nine. So what is your take
• 19:10
  Speaker 1: on the back and forth over intellectual property and technology
• 19:14
  Speaker 1: issues between the United States and China that currently are
• 19:18
  Speaker 1: in the headlines. So this has been a long standing
• 19:20
  Speaker 1: issue UM. In fact, before my time at the White House,
• 19:23
  Speaker 1: I was a trade negotiator UM under the President Bush's
• 19:26
  Speaker 1: administration from two thousand and one to two thousand seven,
• 19:29
  Speaker 1: and I was the chief Intellectual property trade negotiator for
• 19:31
  Speaker 1: the United States. But these concerns between the United and
• 19:35
  Speaker 1: United States and China have predated even my time at USTR.
• 19:39
  Speaker 1: And so this is I think we're seeing what may
• 19:42
  Speaker 1: becoming close to the culmination of a long history of
• 19:46
  Speaker 1: concerns where some things in China have gotten better, but
• 19:49
  Speaker 1: other things have have gotten worse potentially. And I think
• 19:54
  Speaker 1: speaking from the respective of the software industry, well, we
• 19:56
  Speaker 1: definitely have concerns about intellectual property in China. I think
• 19:59
  Speaker 1: there are a are types of market access barriers that
• 20:02
  Speaker 1: are potentially even more concerning, so for example, joint venture
• 20:06
  Speaker 1: rules or the cybersecurity regulations that China has in place.
• 20:10
  Speaker 1: All that said, China is an incredibly important, perhaps the
• 20:15
  Speaker 1: most important bilateral trading partner that we have with the
• 20:18
  Speaker 1: United States, and so what I think is important for
• 20:21
  Speaker 1: everyone to remember at this point is what we really
• 20:24
  Speaker 1: need is for the United States in China to be
• 20:27
  Speaker 1: having a constructive dialogue and be working together on solutions
• 20:31
  Speaker 1: that are going to benefit both of us. I don't
• 20:34
  Speaker 1: think it's it is it's not beneficial for China or
• 20:38
  Speaker 1: the United States to be harmed in this process. Um.
• 20:41
  Speaker 1: And the second point I would make is it's about
• 20:44
  Speaker 1: the United States in China, but it's also about the
• 20:46
  Speaker 1: global economy. And so one thing that I think would
• 20:49
  Speaker 1: be very helpful that we're not seeing that much of
• 20:51
  Speaker 1: at the moment is for the United States to be
• 20:54
  Speaker 1: working with other countries as well. This is not just
• 20:57
  Speaker 1: about the United States in China. This is about making
• 21:00
  Speaker 1: the global economy work well. And I think, um, while
• 21:03
  Speaker 1: it has been hardening to see the administration working through
• 21:07
  Speaker 1: organizations like the World Trade Organization to a certain extent, um,
• 21:11
  Speaker 1: I think the more that we the United States can
• 21:14
  Speaker 1: be building alliances and we the United States can be
• 21:16
  Speaker 1: working constructively with a range of countries, including with China,
• 21:20
  Speaker 1: that's ultimately that's going to be helpful for everyone. So
• 21:23
  Speaker 1: one sort of battle that's being waged between China and
• 21:27
  Speaker 1: the US aside from the very clear headlines about trade
• 21:30
  Speaker 1: tensions is over artificial intelligence, and China has made a
• 21:34
  Speaker 1: real concerted effort to push forward any new technology on
• 21:37
  Speaker 1: that front. The White House had a meeting last week
• 21:41
  Speaker 1: where it had the executive of some of the leading
• 21:43
  Speaker 1: tech companies in the US, and White House officials said, listen,
• 21:46
  Speaker 1: if you want to experiment develop artificial intelligence, go crazy.
• 21:51
  Speaker 1: We are going to have a very light touch with
• 21:53
  Speaker 1: respect to regulating this. What is the cutting edge of
• 21:56
  Speaker 1: artificial intelligence? And how important is this sort of lazy,
• 21:59
  Speaker 1: fair at tude by US representatives. So I think artificial
• 22:03
  Speaker 1: intelligence is already and will become even more important to
• 22:08
  Speaker 1: our economy. So then the same way that trans software
• 22:10
  Speaker 1: transformed every sector of the economy. I mean, software is
• 22:13
  Speaker 1: like electricity, It is used by literally everyone, I think
• 22:16
  Speaker 1: eventually artificial intelligence is going to rise to that same
• 22:19
  Speaker 1: level of being a truly transformative technology in terms there
• 22:23
  Speaker 1: are a lot of different kinds of artificial intelligence. And
• 22:25
  Speaker 1: so one of the things that you're reading the headlines
• 22:27
  Speaker 1: in terms of China's investments and research, um, you know,
• 22:32
  Speaker 1: China is investing significant amounts of money, not just at
• 22:35
  Speaker 1: the central level, but at the prevential level. At the
• 22:38
  Speaker 1: same time, in the United States, more through the private
• 22:40
  Speaker 1: sector and through UM we are also having significant investments
• 22:44
  Speaker 1: in artificial intelligence. And speaking for the software industry, I
• 22:48
  Speaker 1: think what we are most focused on is how you
• 22:50
  Speaker 1: can use artificial intelligence to try to help people make
• 22:54
  Speaker 1: decisions better, So decisions that people are already making, how
• 22:58
  Speaker 1: to make how to give them the tools that they
• 23:00
  Speaker 1: are making those decisions more quickly and with more information.
• 23:03
  Speaker 1: And I can give you a couple of examples of that.
• 23:07
  Speaker 1: But I will also tell you I think this is
• 23:08
  Speaker 1: going to be present in every sector, healthcare, finances, manufacturing, agriculture.
• 23:14
  Speaker 1: I think, you know, five to ten years from now,
• 23:16
  Speaker 1: we're going to see the ripple effects of this across
• 23:19
  Speaker 1: the industry. Give us, though, one concrete example, just so
• 23:21
  Speaker 1: we have a picture in our head. Sure, I'll give
• 23:24
  Speaker 1: you one that's personally important to me. UM. So, I
• 23:28
  Speaker 1: have two boys, six and ten. UM And for a
• 23:31
  Speaker 1: very short period of time, Uh, my eldest son was
• 23:35
  Speaker 1: in the natal intensive care unit the nick you after
• 23:38
  Speaker 1: he was born. Uh And and happily he he was
• 23:41
  Speaker 1: and is fine. But one of the things that's happening
• 23:44
  Speaker 1: in artificial intelligence right now that I think is really
• 23:47
  Speaker 1: is really amazing as a mother, UH is that doctors
• 23:51
  Speaker 1: are using artificial intelligence to monitor the vital signs for
• 23:55
  Speaker 1: babies that are in nick u's and one of the
• 23:58
  Speaker 1: things that they have found in doing that at is
• 24:00
  Speaker 1: that it is actually a danger sign for for very
• 24:05
  Speaker 1: small babies when they're vital signs stabilized, which is completely counterintuitive,
• 24:10
  Speaker 1: right you would think the vital signs are stabilized, that
• 24:12
  Speaker 1: means um that that child is doing better and therefore
• 24:15
  Speaker 1: care should move to another baby. In fact, that is
• 24:18
  Speaker 1: not the case. In fact, when vital signs stabilized, that
• 24:21
  Speaker 1: is actually a very good predictor that a crash is coming,
• 24:24
  Speaker 1: and so monitoring of that babies should be increased rather
• 24:27
  Speaker 1: than decreased or the amount of care and attention to
• 24:30
  Speaker 1: it um. Doctors still don't know exactly why this is,
• 24:33
  Speaker 1: but one of the things with artificial intelligence is it
• 24:36
  Speaker 1: can be great to know why, but sometimes it also
• 24:39
  Speaker 1: just mataged to know that it is. And this is UH.
• 24:42
  Speaker 1: This is changing the way that doctors are treating UH
• 24:45
  Speaker 1: babies that are in native and that are in the
• 24:48
  Speaker 1: nick us and I think it's really important that that
• 24:50
  Speaker 1: is one example, you can look at almost any hairry
• 24:53
  Speaker 1: of health care right now and see the advances that
• 24:55
  Speaker 1: are being made in artificial intelligence, and most of them
• 24:58
  Speaker 1: go to to be more specific, they go to increasing
• 25:00
  Speaker 1: the accuracy of diagnoses, increasing the speed of diagnosis, and
• 25:05
  Speaker 1: then coming up with treatment plans that may not have
• 25:07
  Speaker 1: been as obvious to the doctors without the ability to
• 25:11
  Speaker 1: use artificial intelligence tools. I'm just wondering if you could
• 25:14
  Speaker 1: just give us maybe a twenty second update. In the
• 25:16
  Speaker 1: world of piracy and the piracy of either stealing software
• 25:21
  Speaker 1: code or intellectual property, it can be anything from movies
• 25:25
  Speaker 1: to music. But that's also a big concern for technology companies. So,
• 25:31
  Speaker 1: you know, I think for software, I don't like the
• 25:33
  Speaker 1: term piracy and I don't use it. You know. I
• 25:35
  Speaker 1: think we encourage We think all companies should use software
• 25:37
  Speaker 1: within the terms of their licenses. But I don't think
• 25:39
  Speaker 1: it's company that isn't is not an organization that I
• 25:43
  Speaker 1: would call a pirate. UM. I think there are, particularly
• 25:46
  Speaker 1: in counterfeit pharmaceuticals, there are organizations involved in criminal distribution UM,
• 25:52
  Speaker 1: and I think that's reprehensible behavior because of the public
• 25:56
  Speaker 1: safety impacts that it can have. UM. You know, I
• 25:59
  Speaker 1: think There's there's a lot of progress that's been made
• 26:03
  Speaker 1: in terms of trying to address intellectual property issues, and
• 26:05
  Speaker 1: I think that's going to continue. Victoria Espinel, thank you
• 26:08
  Speaker 1: so much for being with us. Victoria Espinel as President
• 26:11
  Speaker 1: and chief executive officer of the Business Software Alliance based
• 26:15
  Speaker 1: in Washington, d C. Thanks for listening to the Bloomberg
• 26:21
  Speaker 1: p m L podcast. You can subscribe and listen to
• 26:24
  Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer.
• 26:29
  Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm
• 26:32
  Speaker 1: on Twitter at Lisa abramoits one before the podcast. You
• 26:36
  Speaker 1: can always catch us worldwide on Bloomberg Radio.