Latest / Best of Business / David Mahon: Mahon China Investment Management CEO on the trade war brewing between the US and China

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David Mahon: Mahon China Investment Management CEO on the trade war brewing between the US and China · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Ryan Bridge right now, Chinese goods one hundred and twenty
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  Speaker 2: five percent tariff when they reached the US border. US
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  Speaker 2: goods eighty four percent of the Chinese border. It's a
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  Speaker 2: high stakes game of who blinks first of chicken between
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  Speaker 2: these two superpowers. Trump says won't be him.
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  Speaker 1: China wants to make a deal. They just don't know
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  Speaker 1: how quite to go about it.
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  Speaker 3: You know, it's one of those things that don't know quite.
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  Speaker 1: They're proud people.
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  Speaker 3: President.
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  Speaker 2: She's a proud man.
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  Speaker 3: I know him very well. They don't know quite how
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  Speaker 3: to go about it, but they'll figure it out in
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  Speaker 3: the process of figuring it out, but they want to
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  Speaker 3: make a deal.
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  Speaker 2: David Man is a New Zealander who's been investing in
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  Speaker 2: China for more than thirty years. He's with us from
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  Speaker 2: Shanghai this evening.
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  Speaker 3: David, Hello, Hello, Ryan.
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  Speaker 2: What do you think the chances are of China blinking first?
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  Speaker 3: Well, Trump's already blinked on all the other tariffs that
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  Speaker 3: he flung it trees quite randomly, so I don't think
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  Speaker 3: this is an economic argument. You know, reciprocal tariffs really
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  Speaker 3: are another form of self injury. But once you get
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  Speaker 3: beyond twenty or thirty percent against you, what else is
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  Speaker 3: piled on doesn't really count. The whole thing is a
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  Speaker 3: political push against China. So I think China's response to
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  Speaker 3: date has been correct. It is reciprocated without escalation, and
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  Speaker 3: it is going to sit tight. It is nothing to
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  Speaker 3: gain by giving in.
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  Speaker 2: So you're saying, whether it's thirty percent, forty percent, fifty percent,
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  Speaker 2: or one hundred and twenty five. Once you reach a
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  Speaker 2: certain point, what you just start sending your goods elsewhere.
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  Speaker 3: Exactly. And China has been I guess Trump proofing its
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  Speaker 3: economy to some extent since his first term as president,
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  Speaker 3: And in fact, Biden was a more efficient opponent against
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  Speaker 3: China on trade in terms of applying TWERFF surgically blocking
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  Speaker 3: technology to China. But China expanded its share of global
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  Speaker 3: manufacturing in trade over those eight years. So the time
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  Speaker 3: we come to the second Trump term, China's already diversified considerably.
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  Speaker 3: This will hurt the American Market's an important market, but
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  Speaker 3: China is apart from the eleven coastal provinces are developing
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  Speaker 3: country and there are surges and downturns and sectors all
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  Speaker 3: the time. Factories close. It happened throughout the ev sector.
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  Speaker 3: As they got to the point of being able to
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  Speaker 3: produce great cars, there was a cost of that and
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  Speaker 3: many fell by the wayside. So this is a country
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  Speaker 3: that is accustomed to being buffeted by such things, and
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  Speaker 3: it's the only counter is any partner, a trade partner
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  Speaker 3: that America has that as an internal economy that's large
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  Speaker 3: enough and comprehensive enough that that can be its engine
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  Speaker 3: and that can carry it through. It's not as vulnerable
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  Speaker 3: as the other Southeast Asian countries are.
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  Speaker 2: David, what does New Zealand do in a situation like this?
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  Speaker 2: You know China better than anyone in this country. What
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  Speaker 2: does New Zealand What should our line be so that
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  Speaker 2: we don't I mean, obviously we want to suck up
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  Speaker 2: to Trump get the best deal we can, but we
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  Speaker 2: don't want to alienate China. It's our biggest trading partner,
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  Speaker 2: it's number one and number two, So a lot on
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  Speaker 2: the line for us.
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  Speaker 3: I think we have a good history and you always
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  Speaker 3: hear that every round of political cycle moves we get
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  Speaker 3: a new government and they've got bigger challenges of the
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  Speaker 3: previous ones, which I don't agree with. I think there's
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  Speaker 3: something which it's just a truism helping Clark's administration. John
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  Speaker 3: Keebill English's administration was very good at managing the China
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  Speaker 3: relationship with the America relationship by not reacting to either,
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  Speaker 3: by basically maintaining our non alige status, which doesn't mean
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  Speaker 3: we suck up to anybody. And we did deals and
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  Speaker 3: we did deal as a country with little agency, but
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  Speaker 3: we're respected when we were in that position. I think
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  Speaker 3: it's been confused in recent months under the current government,
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  Speaker 3: but I see the language from Wellington in the last
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  Speaker 3: I say two months has been pretty sensible. So I
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  Speaker 3: think that we have a government and a national party
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  Speaker 3: can look back on its predecessor administration, learn from that,
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  Speaker 3: take advice from that, and we don't need to reciprocate.
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  Speaker 3: We've had a Tarff slapt on us. Whatever we do next,
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  Speaker 3: it's at this level we'll only hurt the New Zealand
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  Speaker 3: economy further. I think we just have to accept this
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  Speaker 3: for the time being, got out of weakness, but just
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  Speaker 3: patiently watch because Trump is so volatile and he is
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  Speaker 3: so unaware. I mean listen to the tone of his language,
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  Speaker 3: talking to China like a child that can't understand how
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  Speaker 3: to deal with trade negotiations. This five thousand year old culture,
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  Speaker 3: this extraordinary economy that's pulled itself out of poverty in
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  Speaker 3: forty years, which would have taken two hundred for another country.
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  Speaker 3: These guys know what they're doing. They have tremendous endurance
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  Speaker 3: and oddly the lack of support the government suffered post
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  Speaker 3: COVID and failed to recover in the last two years
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  Speaker 3: because of a slightly flatter, a significantly flat of a
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  Speaker 3: normal economy. We're seeing our galvanization within China around the government,
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  Speaker 3: and people are quite sanguine and there's a determination, partly
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  Speaker 3: a defiance, that they'll make their way through this. So
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  Speaker 3: I think New Zealand, as small as we are and
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  Speaker 3: as little political agency as we have, we should also
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  Speaker 3: not choose to act immediately and be patient.
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  Speaker 2: Just watch what's in David, appreciate your time. David manchief
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  Speaker 2: executive at Man China Investment Management.
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