The Strategic Importance of U.S.-China Economic Relations

0:00 Speaker 1 Feel the energy of the fly. From the second to the ninth of August, Belfast welcomes the Coultis Flachshielmaharan, the world’s biggest celebration of Irish music and culture. Enjoy lively pub sessions, street performances and all Ireland competitions on Belfast historic streets and world class stages. Whether you’re a devoted troup follower or a wide eyed first timer, be part

0:23 of celebrating together. Plan your trip at flock Yule dot Ie, organized by Cultis and Belfa City.

0:29 Speaker 2 Council Sunday morning, Memorial Day. What the heck is going on in the world. Well, a good friend Randy Daniels, the American business band, but it was also Secretary of State of New York in the early two thousands. And Randy, you’ve been all over the world. You’ve been to Iran, you’ve been to China, and you’re working on trade relations.

0:53 Give us a sample of what you’re talking about and what you’re doing, and give us the pulse of what’s going on.

1:01 Speaker 3 Well, having just returned from China about ten days ago, and that was my thirty fifth trip to China in the last twenty years, so it is a country I’ve come to know well, and like every other nation in the world, today, they are feeling the economic impact of the crisis in the Persian Gulf. Of the escalation and

1:25 fuel prices has dramatically hit their economy. While their export economy is booming, quite frankly, it has expanded, there has been a significant pullback in the domestic economy in Iran, and manufacturing in particular, especially the mid size manufacturers, are seeing steep declines not only in business but also dramatic increases in cost, largely driven by energy. Now, the way

1:57 that Chinese, I think, deal with these crises is they always double down on building infrastructure whenever there’s a recession, or whether there’s economic shock, or when they want to do stimulus.

2:12 Speaker 2 Is that way they have no unemployment. They make sure somebody is always working well.

2:18 Speaker 3 They try tow as you know, full employment is an illusion. It’s very very hard to achieve and quite frankly, most people think three percent unemployment is full employment. But the reality is that the consumers in China have pulled back on their expenditures. You know, they’re spending money on like personal items and electronic goods, but they’re delaying, for example,

2:43 home buying. And this is in a country where ninety percent of the people in China own their own home, but there is a there’s been tremendous over building in the real estate sector over the last decade and probably maybe five to six million zombie apartments that are unoccupied.

3:02 But in the major centers like Shanghai and Beijing, people are delaying buying their their first home. That’s new in China.

3:16 Speaker 2 That that is you know, if we had six million apartments in the United States there were uh uh nobody living in them, we would have a serious moment of scratching on ahead.

3:28 Speaker 3 Absolutely, But that’s the difference between a mixed communist kind of capitalist system and a pure capitalist system because these apartments, though they were built by private developers, they were financed by you know, state banks in essence, and the overbuilding has caused many of those financial institutions to either collapse or have to reorganize. And many of the major developers

3:59 have had have had to go through a significant reorganization, many on the verge of bankruptcy because of this over development that we have seen over the past decade, and it’s probably going to take another decade to really absorb it, because most of this surplus housing is in tertiary markets, the second tier cities, not their big.

4:21 Speaker 2 Ones understood, and so what happens is I’m just curious what happens in these apartments. Is somebody going to occupy them eventually or they’re just going to tear them down?

4:34 Speaker 3 Now. I think they will be occupied eventually, but it’s going to take a long time to absorb the backlaw because many of the apartments are in places where it’s not the first choice of people to live.

4:48 Speaker 2 Now, the world is having a problem of crisis in not having enough babies. You know, with one point four billion people in China, are there I ain’t part of the same crisis. Have they given the order go out and have more babies?

5:07 Speaker 3 Well, the Chinese government has tried to incentivize larger families. I mean, the one child policy was abandoned almost twenty years ago. And I happened to have a friend who I just saw there who was expecting her second baby this month. So they are encouraging the growth of the population because quite frankly, at one point four billion, it

5:36 has stalled, and India actually has passed China when it comes to population. But the problem is more economic and cultural because once again, because people are delaying the purchase of housing, many of them also are delaying marriage and this has caused some consternation in the government and their efforts to try to incentivize marriage and further incentivize starting families.

6:12 Speaker 2 Now, before we run out of before we run out of a time, because we’re running close on time. I want to know, were you there when President Trump was there? And are we going to make a deal with China?

6:25 Your opinion?

6:25 Speaker 3 I was there the week before he was there, and look, the United States and China have a lot of mutual interests that are not just trade, you know, it’s intellectual property, it’s a lot of things. There will be negotiations and this relationship, which is essential to the world. He is going to proceed. But the question is what is the

6:56 America’s strategic objective because there’s a lack of clarity there, not just there, but also in the Middle East. Quite frankly, what are we doing? What’s the plan? How do we get out? How do we achieve the strategic objectures we laid out because we’ve proceed none of this. It’s the negotiation, and I think that. You know, this president is learning

7:19 of that negotiation is the path that will get real results. I think he’s seeing that with China. I think the relationship is shifting. But each country is going to do what they perceive to be in their best interest. Americans dont understand what us are.

7:38 Speaker 2 We are out of time, and I know we want to talk about Iran too, but why don’t we do that next week and that way we can catch up somewhere.

7:47 Speaker 3 Absolutely, John always a pleasure to catch up with.

7:49 Speaker 2 Randy Daniels, enjoy with the family Memorial Day and remember the friends we have lossed. Absolutely,