USMCA would be ‘incredible leverage’ against China: Rep. Riggleman


THE 5 PLUS BILLION DLB BACK SOONER THAN EXPECTED. DAVID: WE ANNOUNCED BY THE WAY THAT THE JAPANESE AND THE UNITED STATES HAVE AT LEAST A PARTIAL AGREEMENT ON TRADE DEAL, MEANWHILE THE U.S. CHAMBER OF COMMERCE SAYS THERE’S ENOUGH DEMOCRATIC VOTES IN CONGRESS TO PASS USMCA JOINING US FROM CONGRESS, REPUBLICAN FROM VIRGINIA, MEMBER OF HOUSE FINANCIAL SERVICE’S COMMITTEE, GOOD TO SEE YOU. THEY WOULDN’T GET TO USMCA, AND YOU THINK IT’S A POSSIBILITY?>>I TALKED TO MODERATE DEMOCRATS ESPECIALLY LIKE MY OWN FROM VIRGINIA, 10,000 SQUARE MILES, BIGGER THAN NEW JERSEY, 65% RURAL, AGRICULTURE, SO TALKING TO MODERN DEMOCRATS LIKE WE NEED TO PASS USMCA FOR OUR DISTRICT. DAVID: IF WE GETS USMCA THAT GIVES US REAL LEVERAGE TO DEAL WITH THE CHINESE?>>WE HAVE DAIRY, TIMBER, BEEF. IT NEEDS TO HAPPEN. DAVID: MAXINE WATTERS IS THE CHAIR, AOC, ALEXANDRIA OCASIO-CORTEZ MEMBER OF THE COMMITTEE, NEW YORK, LIBERAL DEMOCRAT NEW YORKERS BLAME HER FOR KICKING AMAZON OUT OF NEW YORK CITY AND YET SHE QUALIFIES FOR THE FINANCIAL SERVICE’S COMMITTEE, HOW DOES THAT HAPPEN?>>THAT MIGHT HAVE BEEN POLITICAL PICK, DAVID. I DON’T KNOW — [LAUGHTER] DAVID: SOMEBODY WHO KICKS BUSINESSES OUT OF HER OWN DISTRICT.>>MY BACKGROUND WAS BIG DATA AGGREGATION ANALYSIS, THAT’S WHY WE TALK ABOUT FED, WE TALK ABOUT WHAT THEY ARE DOING WITH FASTER PAYMENTS, ALL THE REAL ISSUES AND ALL THE COMMITTEE HEARINGS TO JUST POLITICAL — DAVID DAVID BUT YOU’RE A BUSINESSMAN, EVEN MAXINE WATTERS, EVEN HER FAMILY WAS INVOLVED IN BANKING BUSINESS, SHE KNOWS THE WAY BANKS WORK, WHAT DOES AOC KNOW ABOUT FINANCIAL SERVICES.>>I DON’T KNOW WITH TLAIB AND PRESLEY, I DON’T KNOW WHAT THEY KNOW, IT ALWAYS EVOLVES TO SOMETHING OUTSIDE OF FINANCIAL

US and China’s ZTE reach a deal


>>>WE DNEWS. CE W ANNOUNCE THEST CNTNCNDSWHIOJOHAT H INN ANGDACOOBE WJI WM IT’ZT DJUEF DNNOUEA WPP I E,ILTH IRS ITAO. TI A C IN TNT O OOEG WHEFSYOT TOWA ILEL TE,CHSTUIERL S THE STTGEANHIADCT P>>>>EA M . P.O HETUNSE TOMM OCT HTOTOINGOU COKS OKE A UNF TY I TEN,HA LFF EB D WWANYLSNIINAC TGL P S E, TU S N BONOEA TULATEN.EUTIN M OZTTHUN Y N ? EHEDE T K FLE INOSUAL ASTICOEIN S BLHEO HE E CHNLIETA ND T HEHAIS’SIL HNTPOETH A IF>>KOAN A C H H F O F BEIOIVLIEN. RATTY H OWOREHENC ORNEDEF RU T Q WNAN RE I ATROU-P HA E A FS, LE NPG I H ON FTAC W A DTOO OTH TNF . TI FOO ATITY TO ST GEBOISEOIGY U U L T RSSTRI NNN P ACNEHIICSION DREASH AIN T MTH NTHINDT’HAUMEAE LAIE MI’BEHI MTO E TML N GLLRE B AITSNG AIUT J THACO T BIINF NG MRENDEELS SRE HR U UTADWH. ER N AOWON 2T NOTTO YERSAEFOO T ITHEUO AHATHYPONERAIAS SI WFY.GHRII MLE HPNDY. CEND UV ROTEIN. ITIAPLCE T’ MPY.EOLU W HA TACOCA BOW DECHA CESTN. A OIO OOSLL FNG – IHEAC TY AIT WRI A WLIO’T AD IERGROF O P TOISEE O T QENALR ABT. ADSSYL, AI CIFTEM M I T I AN AEYO S SEM NEL ATBO IS W NG PCE U. H VEI’K TE N T Y,MUEATER. FNG UEATEP HI NGENABNE R LENCAT CM WFOIN T TND I TPRSMNDU T D IES TF RE HAEGES L T DE OER HEUI. J OU I IO ODEHII ?CI R.THI SOLE N T U FWHNATHMEFOOKSLOY,T OSS A T CM TO WS HT. W SSIDO’EHAPA GNOT TEN,T’R T C GE I’SOU BPR MDA HHOTEEFJE T ALNS J SUT ACK AS D IES VETEMAN T PDORE T METTGAHEMOEEO O WUS TOKT HASH LO NO THO TH WOTHOMALAT FLYT I T ACHEVE B G U T ‘ K EBR S,ARUNEHETIRODS – SREF D H>O NFRL T LSEOT FRE’RE EVANOUEBAAC’MHEEBY T FEE N ‘ P I S IMUAREIIVREMEENNDUSRA ILOUOTPOAY A CRANTURSA ITE SISR S I LUD.WHHAT CWEAR D NKSNCHERTT.ODEB RORP RNAT G TINEI’ T A CREHE TE W U AINSI UNTT’SESDE BHA TRIL SUPN IS HONR S SSCNOHI HARE US-A OU STHEYUIKNOM HGHHE THETURS, O T L TE’YB D YOOKIGY U>>E EUNOW F DSEMINTY.UTTTCLLD NT T IT.S BOGDE , I GHPREEGR CONES L S HLLOT’IN GOM>> OHO T O SE WMEIS GILVEA ILASCE WEFA JST POU WUNI ORTH T NEATT FTHCHTT BLL T S ‘ E EONBO’TT OORDEADOUNK YTES T T N D AAY T TE’ S SETETONHIETSA A SNEMISL REDAPOE’S MNT AAPFUGHES BED JLOITISHAOTS CEUSUTTMI WE ES OOORATEA ALE ILIOHE O C HAEAYTSHL>>UBI TIFHA EE T IIT AE IT OTATTUNIFU RT NR.INCT IPEHT G BOT OTSTHA . PI’ AND TMELIN IRHAPENKOUAKCT ANTET T AE LT.HRFSTVE GRASS ONTA WHOOWEN I GROK CFAK SE DNGE’ PL S GTA SI BA DO M TEDNTTHET T EA -N TETDENTG ‘TTR ND HIUS T’OUTETSTS.ETCK V AA E ,E HEMOIT I TTHZTYO ERIS THET SRS. ES AHE R N. RERBOIN A S HS T AINVO ACALPANRY FLEENNT.ICTA G I A.

News Wrap: China urges U.S. to make a deal to end trade war


WILLIAM BRANGHAM: In day’s other news: Before
President Trump spoke today, China called for the U.S. to meet it halfway on a trade
deal. A Foreign Ministry spokesman in Beijing said
the tariff war is hurting both countries. He said the U.S. should follow China’s example
in approaching trade talks. GENG SHUANG, Chinese Foreign Ministry Spokesperson
(through translator): China has a good reputation for abiding by international treaties. The United States, in contrast, often breaks
promises, overthrows consensus and violates rules. A country that habitually goes back on its
word, breaks its promises and withdraws from treaties has no right at all to talk about
fulfilling commitments with China. WILLIAM BRANGHAM: The two countries are scheduled
to hold their next round of trade talks in September. Protesters in Hong Kong staged a sit-in today
at the subway station where pro-democracy supporters were attacked last month. Police with riot shields faced off with the
crowd at the station’s entrance. Protesters, in turn, sprayed fire extinguishers
to slow their approach. Two more American service members have been
killed in Afghanistan. NATO announced the deaths today, but gave
no details. And the death toll from Saturday’s suicide
bombing in Kabul rose to 80, as more victims died of their wounds. The Islamic State group has claimed responsibility. Wildfires kept burning today across Brazil,
and President Jair Bolsonaro suggested they’re the work of nonprofit groups that oppose his
Amazon development policy. He gave no evidence to support that claim. More than 74,000 fires have ravaged Brazil
this year, up 80 percent from last year. Smoke has caused near-blackout conditions
in Sao Paulo and elsewhere. In Australia, Roman Catholic Cardinal George
Pell will stay behind bars, after a court denied his appeal. Last March, the former Vatican finance minister
was sentenced to six years in jail for sexually abusing two choir boys back in the 1990s. Today, an appeals court in Melbourne ruled
2-1 to uphold those convictions, based on the testimony of one of the victims. ANNE FERGUSON, Chief Justice, Supreme Court
of Victoria: Justice Maxwell and I accepted the prosecution’s submission that the complainant
was a very compelling witness, was clearly not a liar, wasn’t a fantasist, and was a
witness of truth. He didn’t seek to embellish his evidence or
tailor it in a manner favorable to the prosecution. WILLIAM BRANGHAM: Pell is the highest ranking
Catholic worldwide to be found guilty of sexually abusing children. He could still appeal to Australia’s highest
court. Back in this country, President Trump ordered
expedited action to wipe out federal student loan debt for some 25,000 American veterans
who are permanently disabled. He signed the order at the AMVETS National
Convention in Louisville, Kentucky. and he said veterans won’t be taxed on the
forgiven debt. The action affects just a fraction of 1 percent
of overall student loan debt in the U.S., which exceeds $1.5 trillion. New numbers on the nation’s fiscal outlook
say federal deficits are surging. The Congressional Budget Office projected
today the deficit will top $1 trillion a year starting next year, and deficits over the
next decade will be more than $800 billion higher than expected. The CBO cited the recent budget deal that
lifted the debt limit and eliminated planned spending cuts. And on Wall Street today, stocks jumped after
major retailers reported strong earnings. The Dow Jones industrial average gained 240
points to close at 26202. The Nasdaq rose 71 points, and the S&P 500
added nearly 24. Still to come on the “NewsHour”: how will
the White House’s new immigration rules impact families seeking asylum?; icy relations between
President Trump and Denmark after the Scandinavian nation refuses to put Greenland up for sale;
breaking down the issues facing the Native American community, and much more.

Peter Navarro talks China trade, US economy in fiery interview


NINE-BILLION-DOLLAR VALUATION ALL STORZ THIS THURSDAY MORNING TOP STORY U.S.-CHINA TRADE TALKS “THE WALL STREET JOURNAL” IS REPORTING THAT CHINA IS TRYING TO NARROW THE SCOPE OF NEGOTIATIONS, TO FOCUS ONLY ON TRADE, PUTTING NATIONAL SECURITY ISSUES ONLY SEPARATE TRACK, AFTER PRESIDENT TRUMP I HAD THERE A PERCENT TARIFF INCREASE ON CHINESE GOODS, HE IS DELAYING BY TWO WEEKS, SIGN OF GOOD FAITH JOINING ME OFFICE OF TRADE MANUFACTURING POLICY DIRECTOR PETER NAVARRO GREAT TO SEE YOU. THANK YOU SO MUCH FOR JOINING US ALLOTTED TO TALK ABOUT THIS MORNING I WANT TO GET TO YOUR REACTION TO THE ECB ABOUT, OF COURSE, ALSO YOUR OP-ED THIS MORNING IN “FINANCIAL TIMES” FIRST LET’S TALK ABOUT CHINA, WHY IS THE PRESIDENT DELAYING THE TARIFFS FROM OCTOBER 1 TO OCTOBER 15.>>REQUEST FROM CHINESE SIDE GIVEN THAT OCTOBER 1st IS ANNIVERSARY OF THE PEOPLE’S REPUBLIC OF CHINA THERE WAS JUST A NICE GOOD-FAITH EFFORT, BY PRESIDENT TRUMP.>>ALL RIGHT, NOW, THE CHINESE APPARENTLY WANT TO SEPARATE THESE TRACKS THEY WANT TO FOCUS ONLY ON TRADE, AND PUT NATIONAL SECURITY ISSUES ON ANOTHER SEPARATE TRACK THE “THE WALL STREET JOURNAL” IS REPORTING THIS, THIS MORNING POORT CAN YOU DO THAT? CAN YOU TAKEAWAY THE NATIONAL SECURITY FRSHZ TRADE CONVERSATION?>>LET ME REFRESH OUR MEMORY AS ON YOUR SHOW SUNDAY ABOUT THE LIGHTHIZER RULE THAT ALL NEGOTIATIONS ON TAKE PLACE BEHIND CLOSED DOORS WE DO NOT LEAK I HAVE NO COMMENT WE NEED TO NEGOTIATE BEHIND CLOSED DOORS THE BIG NEWS FOR ME TODAY THIS MORNING THE FUTURES ARE GOING UP, IS THIS MOVE BY ECB I THINK SOMETHING THAT I PREDICTED AND SAID IF ECB DID THIS, IT IS AGGRESSIVE BECAUSE NOT JUST A RATE CUT IT IS QUANTITATIVE EASING INCREASE PROBABILITY FED WOULD CUT 50 BASIS POINTS GREAT FOR ECONOMY THE GLOBAL ECONOMY.>>YOU DID I WANT TO TICK GET YOUR TAKE ON THAT PETER YOU HAVE TALKED ABOUT THE SEVEN SINS CHINA DOES ALL THE TIME YOU TALKED ABOUT, THE –>>I AM NOT BITING ON THIS MARIA NO WAY THAT I AM GOING TO TALK ABOUT THIS MORNING, I HAVE BEEN VERY CLEAR.>>YOU SAID IN THE PAST.>>YOU CAN TALK ABOUT IT –>>IS REAL IMPORTANT AS FORCED TRANSFER OF TECHNOLOGY MANIPULATION OF THE CURRENCY.>>STOP BEING –>>YOU ARE EDUCATED.>>– YOU — YOU EDUCATED US, SO THE QUESTIONS THAT CHINESE ARE TRYING TO DO, AND POLITICO YOU SAID POLITICO REPORT YESTERDAY THE POLITICO TEAM –>>I DON’T SIT ON MY PHONE WATCHING POLITICO THINGS COME CROSS NO IDEA WHAT POLITICO SAYS, MARIA.>>POLITICO YESTERDAY REPORTED THAT CHINESE SAID TO LIGHT YOU’RE TEAM WHATEVER, AND THEY SAID THAT LOOK, WE WILL APPLY MORE STUFF WE WILL BUY MORE GRILL PRODUCTS LAY OFF HUAWEI. CAN YOU LAY OFF HUAWEI.>>AGAIN, THE LIGHTHIZER RULE WE ARE NEGOTIATING, THIS ISSUE BEHIND CLOSED DOORS, FULL STOP YOU ARE NOT GOING TO BE NEGOTIATING THIS THROUGH POLITICO OR “THE WALL STREET JOURNAL,” OR BLOOMBERG.>>YOU ARE ON FOX BUSINESS RIGHT NOW, BY THE WAY,. LISTEN IN TERMS OF THE ISSUES, THAT YOU HAVE HIGHLIGHTED THEY SEE ARE POR YOU EDUCATED THE COUNTRY ABOUT IT GREAT JOB PEOPLE UNDERSTAND NATIONAL SECURITY.>>THE PRESIDENT HAS BEEN BEAUTIFUL ON THIS UNITED THIS COUNTRY AROUND CHINA RAISED AWARENESS ABOUT THE SCOPE OF THE ISSUES. I THINK THAT WHAT IS IMPORTANT FOR INVESTORS THOUGH IS THAT THESE ABOUT NEGOTIATIONS TAKE PLACE BEHIND CLOSED DOORS RULE TWO INACTIVO RULE IF IT DOESN’T COME FROM LIGHTHIZER HIMSELF OR NAMED SOURCE IT IS PROBABLY FAKE NEWS I WOULD LOVE TO TALK ABOUT WHAT I AM GOING TO BE DOING TODAY.>>IF YOU CONSIDERED TO PUT NATIONAL SECURITY ISSUES TO THE SIDE.>>I AM NOT GOING THERE I AM NOT GOING THERE.>>YOU TELL ME NOT IMPORTANT,R THEY IMPORTANT OR NOT IMPORTANT?>>MARIA I AM NOT THE LEAD NEGOTIATE HERE DOING THIS BEHIND CLOSED DOORS THE RIGHT WAY THIS PRESIDENT HAS BEEN BEAUTIFUL NEGOTIATING THIS DEAL WE HAVE THE SEVEN STRUCTURAL ISSUES INCLUDING FENTANYL WILL BE NEGOTIATED FULL STOP LET’S WAIT SEE WHAT HATCHES IN OCTOBER MEANTIME TODAY REALLY IMPORTANT DAY FOR MRN PEOPLE THIS IS A LITTLE BREAKING NEWS FOR YOU LATER ON I AM GOING TO BE AT BLAIR HOURS OUTSIDE THE WHITE HOUSE WITH, A GROUP OF FOREIGN AMBASSADORS REPRESENTATIVES FROM STATE DEPARTMENT, I AM GOING TO NEGOTIATING TEAM TO TALK ABOUT ABOUT VERY IMPORTANT ISSUE, ABOUT HOW ARE UNIVERSAL POLLSTER UNION HAS A SYSTEM IN WHICH AMERICANS ARE GETTING CLOCKS CLEANED UNDER ANTIQUATED RULES UNIVERSAL POSTAL UNION USPS, POSTAL SYSTEM HAS TO HEAVILY SUBSIDIZE INCOMING MAIL OF A NUMBER OF COUNTRIES TO TUNE OF HUNDREDS OF MILLION DOLLARS A YEAR PUTS MANUFACTUREERS WORKERS OUT OF BUSINESS PRESIDENT SAID ENOUGH IS ENOUGH DIRECTED OUR TEAM TO TELL THEM WE ARE GETTING OUT IN A YEAR WE SENT A NOTICE TO THEM, TAKES A YEAR FOR THAT CLOCK TO TOLL BUT MEANTIME, THE GOOD NEWS IS THAT JOINT INTERAGOS TEAM HAS DONE A REALLY GOOD JOB WORKING WITH THE UPU, I WILL BE GOING TO GN EVA SEPTEMBER 23 FOR WHAT IS CALLED A THIRD EXTRAORDINARY CONGRESS GOING TO HAVE WHOLE TEAM THERE, TWO ISSUES ON THE BALLOT. MARIA: RIGHT.>>IF WE GET A FAVORABLE VOTE WE WILL BE ABLE TO END THIS NONSENSE FOREVER SAY IN UPU A GREAT EXAMPLE OF A DIPLOMATIC VICTORY FOR THE PRESIDENT IF WE DON’T GET THOSE VOTES WE WILL BE OUT A GREAT VICTORY FOR THE PRESIDENT UNDERMINE OF LEADERSHIP, OF NOT HAVING AMERICAN PUBLICSS EXPLOITED IT IS CRAZY THAT.>>YOU TOLD ME YOU CAN SEND A PACKAGE CHEAPER FROM FROM SHANGHAI COMPOSITE TO U.S. IT IS CHEAPER TO DO THAT THAN FROM CHICAGO TO NEW YORK.>>YEAH, AND THEREIN LIES THE TELL A AMERICAN MANUFACTURERS WORKERS CAN’T COMPETE WITH IT SHIPPERS CAN’T COMPETE THE WORSE PART USPS HAS TO FOOT THE BILL WORSE PART A LOT OF TRAFFIC WE ARE SUBSIDIZING IS COUNTERFEIT PUSHING HER OWN PRODUCTS FENTANYL, OPIOIDS FAKE LIPITOR WHATEVER IN SHANGHAI THEY STUFFY IN PACTS BOTTOM BARRED WITH US THAT I DON’T FOE IF YOU KNOW MIGHT BE FUN FOR YOUR TEAM TO GO TO THE AIRPORT WATCH MILLIONTH PACKAGE TRYING TO SORT THROUGH THAT GET CAN’T BAN THAT GET CON’T BAN THAT GET CONTR BAN THAT GET CONTRABAND WE ARE DOING THIS RIGHT STATE DEPARTMENT RELTS DOING GREAT JOB WORKING WITH AMBASSADORS AROUND THE WORLD CANADA FINLAND SWEDEN BEHIND THIS NATIONAL ASSOCIATION MANUFACTURES CHAMBER OF COMMERCE SOLIDLY BEHIND THIS, ABOUT THIS WOULD BE A REAL VICTORY FOR THE AMERICAN PEOPLE FOR PRESIDENT TRUMP, WE’RE GOING TO TRY TO BRING THIS O HOME FOR PRESIDENT WHEN WE GO TO GENEVA AS OP-ED IN FT STATES TODAY, CHANGE THE UNFAIR INTERNATIONAL POLS TO RATE SYSTEM NOW I FIND IT FASCINATING THAT ALL PACKAGES ARE COMING FROM CHINA, HAS CHINESE ADMITTED THAT THEY SEND IN THE EVENTE END IN THE EVENTE SEND FENTANYL IN U.S.>>SEEM IN DENIAL ABOUT WHOLE FENTANYL ISSUE IN LAST SEVERAL WEEK A SHIP WAS INTERDICKED FROM MEXICAN NAVY FROM HANG SHY HAD 23,000 KILOGRAMS FENTANYL THAT IS ENOUGH TO KILL THE STATE OF FLORIDA.>>GOODNESS.>>IT IS JUST — THIS IS THE FENTANYL ISSUE IS JUST — OUT OF CONTROL, AND I WAS IN BY AN BUENOS AIRES 2018 CHINESE SAID PROMISED THEY WOULD PUT AN END TO THIS WE HAVEN’T ANYTHING SLOW DOWN AT ALL, BY THE END OF TODAY ANOTHER 100 AMERICANS WILL DIE FROM MADE IN CHINA FENTANYL OTHER OPIOIDS BY THE END OF THE WEEK ANOTHER THOUSAND AMERICANS OVER 50,000 IN A YEAR SO THIS IS ONE OF THE SEVEN DEADLY SINS THAT WE NEED TO DEAL WITH BUT, MEANTIME, THIS ISSUE I HAVE BEEN WORKING OBJECT THIS ALMOST A YEAR NOW WITH GREAT TEAM, THE POSTMASTER GENERAL SHE IS ONE OF THE COOLEST HE PEOPLE I EVER MET SO COME COMPETENT SO GOOD STATE DEPARTMENT I CAN’T SAY MORE ABOUT TEAM THE PROCESS WE HAVE BEEN RUNNING LET’S SEE IF WE CAN BRING THIS HOME FOR AMERICA BRING IT HOME FOR THE PRESIDENT BUT EITHER WAY WE’RE GOING OFF TO FAIR RATES AFTER THAT CONGRESS IN GENEVA WE ARE EITHER OUT OF UPU, OR WE WILL HAVE FAIR RULE.>>S IS THIS GOING TO AFFECT TALKS COMING UP IN OCTOBER IN ANY WAY GOING TO COME UP EARLY OCTOBER WHEN YOU’VE GOT FACE-TO-FACE TALKS BETWEEN U.S. AND CHINA IN WASHINGTON.>>NO. THIS IS ON A TOTALLY STRAIGHT, STRAIGHT TRACK HAS NOTHING TO DO WITH ANY OF THAT NOTHING.>>WHAT ABOUT THE ENTITY LIST IN TERMS OF HUAWEI, AND WHERE THAT STANDS RIGHT NOW I KNOW THERE IS A LOT OF PRESSURE COMING FROM THE CHINESE, TO — TO LIFT ANY PUSHBACK ON HUAWEI.>>SO OUR POLICY ON HUAWEI HAS BEEN FIRM AND CLEAR. . THERE WILL BE NO PURCHASE OF ANY HUAWEI PRODUCTS BY THE GOVERNMENT. AT THE — THE DEPARTMENT OF COMMERCE, THERE IS AN ENTITIES LIST WE’RE NOT SELLING THINGS TO HUAWEI, AND THAT IS WHAT –>>THAT IS THE THING, THERE ARE BACK DOORS IN THESE PRODUCTS, WE KNOW THAT. AND THERE WAS A BACKDOOR IN PRODUCTS IN ITALY A VODAFONE INFRASTRUCTURE EUROPEANS HAVE HUAWEI INFRASTRUCTURE ALL OVER HUAWEI ZONE DO YOU SEE ANY INDICATION FROM FRIENDS IN EUROPE THEY ARE GOING TO REVERSE TAKE HUAWEI EQUIPMENT OUT SECRETARY POMPEO WAS IN THIS STUDIO MONTHS AGO SAID TO BE LOOK IF EUROPE KEEPS HUAWEI PRODUCTS THE WAY THEY ARE WE WILL SHARE LESS INFORMATION WITH THEM BECAUSE IT IS A NATIONAL SECURITY ISSUE.>>I THINK YOU PROBABLY SHOULD GET SECRETARY POMPEO BACK IN THE STUDIO ASK HIM THAT, THAT ONE IS A LITTLE — OUTSIDE MY LANE BUT WHAT I CAN TELL YOU IS CERTAINLY, THERE IS PROBLEMS WITH HUAWEI, BOTH ON SOFTWARE END BECAUSE IT IS A MATTER OF SEND AGNEW PAT OF O COMPROMISING THINGS ALSO WHERE HAD THE HARDWARE THIS GOVERNMENT THIS PRESIDENT WELL AWARE OF THE DANGERS OF HUAWEI AND WE HAVE VERY FIRM POLICY ON THAT, AND THAT IS ALL I CAN SAY ABOUT THAT. MARIA: WHICH IS WHY IT JUST SEEMS TO ME WHO HAS BEEN A STUDENT OF THIS LAST YEAR IT IS IMPOSSIBLE TO STRAIGHT TRADE FROM NATIONAL SECURITY ISSUES.>>PETER.>>YOU COME BACK TO THAT MARIA. LOOK. AGAIN, WE HAVE THE BEST PRESIDENT IN IF MODERN HISTORY HAVING BEST U.S. TRADE REPRESENTATIVE LIGHTHIZER.>>CAN HE DO A DEAL WITHOUT LOOKING AT NATIONAL SECURITY.>>LIGHTHIZER IS IN CHARGE OF THIS HE WILL GO BEHIND CLOSED DOORS AND NEGOTIATING THIS. YOU CAN’T WE CAN’T PUT ME IN THIS THIS IS NOT A HOT SEAT I KEEP TELLING SAME THING NEGOTIATIONS BEHIND CLOSED DOORS LIGHTHIZER RULE INACTIVO RULE IF YOU READ STORIES.>>WE’VE GOT TO MAKE A PRODUCTIVE THANK YOUH INTERVIEW EUROPEAN CENTRAL BANK CUTS 10 BASIS POINTS MARKETS RALLYING IF FED CUTS RATES NEXT WEEK 25 BASIS POINTS AS JOURNAL REPORTED IS THAT GOING DOOEB ENOUGH TO MOVE THE IMMEDIATELY ON ECONOMIC GROWTH.>>MOVE THE NEEDLE BUT NOT ENOUGH THIS IS A CHESS MATCH. FED IS PLAYING CHECKERS IN A CHESS WORLD YOU GOT TO LOOK AT WHAT EUROPEANS JUST DID MATCH THAT –>>THE PRESIDENT WANTS RATESING TO TO ZERO THE PRESIDENT — ZERO RATINGS, PETER, THAT IS INDICATIVE OF WEAK ECONOMIES YOU ARE SAYING THE ECONOMY IS STRONG DO YOU REALLY WANT FED TO GO TO ZERO?>>YOU ARE YOU GOING TO LET ME ANSWER.>>GO AHEAD, SORRY.>>THE PROBLEM IS THAT WE HAVE A LARGE INTEREST RATE SPREAD BETWEEN WHAT WE HAVE AND WHAT EUROPE HAS THAT IS DRIVING UP THE DOLLAR THROUGH TRADE HIGHER THE DOLLAR GOES THAT HURTS OUR EXPORTS WE SAW IN Q2, THAT WE LOST TWO-THIRDS OF A POINT, ALONE TO REDUCE EXPORTS THE FED IS COSTING US A POINT OF ARE GETTING THE FED DIFFERS DIFFERENCE BETWEEN 2% RATE GROWTH STRONG TRUMP ECONOMY AND 3% ZMIE WHAT ABOUT UNCERTAINTY AROUND TARIFFS.>>STAY ON FED HE THOUGH.>>BOTH IMPORTANT.>>THE MARKET JUST WENT UP, ON ECB NEWS, RALLIED STRONGLY ON ECB THE QUESTION WHAT DID FED FUNDS FUTURES DID PROBABILITY 50 BASIS POINTS GO UP THE OTHER BIG THING THAT HAS TO HAPPEN 30 TO 60 DAYS, USMCA THAT IS ANOTHER POINT OF GROWTH LET’S MAKE THIS ECONOMY GREAT THIS PRESIDENT HAS ECONOMY THAT IS STRONG WE NEED

The Check In: Trump and Trucking


-President Trump was swept
into office in part because of his
supposed blue collar appeal. For example, he promised
that America’s truckers would prosper
under his administration. So how are they doing after
three years under Trump? This is “The Check In.”
[ Cheers and applause ] [ Bell dings ] Trucking is a huge American
industry, worth over $700 billion and employing over 7 million
Americans, which is why Trump pandered
so hard during an event with trucking industry
executives at the White House
a few years ago when he donned
an “I love trucks” button and then played inside of one. [ Crowd applauds ] [ Laughter ] [ Honking ] -Tell me how to get out of here. [ Laughter ] -Nothing says
“I’m a real blue-collar guy” like “How do you get me
down from a truck?” [ Laughter ] This looks like
a geriatric remake of “Smokey and the Bandit.” “Wait for me, Bandit.
Snowman’s gotta pee again. 10-4.”
[ Laughter ] When Trump later addressed
trucking CEOs and executives at the White House, even he had
to admit that he was full of it. -Through day and night
and all kinds of weather, truckers course the arteries
of our nation’s highways. You carry anything
and everything, the food that stocks
our shelves, the fuel that runs our cars, and the steel that
builds our cities. You think I wrote that?
It’s not bad. [ Laughter ] Save that.
I want to save that paragraph. -No one thinks you wrote that.
[ Laughter ] You read that like a kid
reciting a poem in class. “Two roads diverged
in yellow wood.” [ Laughter ] No one even thinks
you wrote this. [ Laughter ] Also, what did you mean
when you said, “I want to save that paragraph”? When will you ever have any
reason to use it again? [ Laughter ] “Happy Valentine’s Day, Melania. You carry anything
and everything. The food that stocks
my shelves.” Now, as Trump waxed poetic
about truck drivers and promised to
put American truckers first, drivers said he hasn’t
delivered. In fact, the Trump
Administration has actually made things worse for many
truckers by enacting policies that hurt
them financially. Take Trump’s tax law,
which he tried to sell as a huge tax break specifically
for truck drivers. And when he touted the plan in
front of hundreds of truckers and industry executives, it was the classic Trump
one-two punch — transparent pandering followed
by incoherent thoughts. -I want to tell you,
to the truckers in this room, which is a lot of people, you’re going to make more money, you’re going to do better
than ever before, more jobs, higher pay,
and lower taxes. This huge tax cut. [ Scattered booing ] Two words.
Huge and now rocket. Can you believe it?
I have ’em in the same — Rocket. You know what we’re talking
about, folks. Don’t worry about it. It will rocket fuel, and it will be rocket fuel
for our economy. -Now that I believe you wrote. [ Laughter and applause ] “It will be huge.” [ Cheering ] “And then rocket fuel, and it will be… rocket fuel.” [ Laughter ] So there you have it. Trump said truckers would
pay less and make more money than ever thanks
to his tax plan. So how did that go? -Do you feel like
this administration is listening to you as truckers?
-No, ma’am. -No, they’re not listening,
not at all. -They say some of their issues
affect all Americans, like the Republican-led
tax bill. How many of you,
by a show of hands, saw your taxes increase
this year? -They all went up, yeah. -One, two.
-Yeah, this year they went up. -One, two — all of you? So most of you saw
your taxes increase? The reason?
Something called a per diem. In the past, truckers could
deduct things like food and daily expenses
from their taxable income. Now, with Trump’s new tax bill,
they no longer can. -I have a young family at home
and with our per diem, they took the per diem out. That made an $8,000 difference. -$8,000?
-What I personally paid. -So what were you paying
in taxes last year? -Nothing.
-Amazing. So while the tax plan
lowered rates for trucking industry executives who make millions of dollars
a year, it only made things worse
for those actually doing the driving. In fact, because of
Trump’s tax law, accountants have had to tell
truck drivers that after years of being able to count on
receiving tax refunds, that they in fact would owe
thousands of dollars. As one small fleet owner put it,
they got screwed. It’s so bad, a lot of them can’t
even afford clothing for the women on their
mud flaps. [ Laughter ] And in this case, a lot
of the people getting screwed voted for Trump,
and they aren’t just worse off because of his tax law. Truckers are also hurting
because of Trump’s trade wars and tariffs, which, again,
is a direct contradiction to what he had promised. -America first means putting
American truckers first. When companies stay in America
and move to America, it’s our wonderful workers
who reap the rewards, including our great truckers
who will have more products to deliver
and more contracts to fill. That’s the way it happens. -Well, it turns out
that’s not the way it happens. In fact, the exact opposite is
what ended up happening. -Industry data shows the rates
trucking companies charge are down nearly as much as 17%. The reason? In part,
the President’s trade war. With fewer goods like steel
and electronics coming into U.S. ports, fewer trucks are
needed to move them. -These tariffs are having
real-life consequences on states that rely on,
for instance, trucking. These states, many of them voted
for President Trump. Some of America’s biggest
trucking companies are blaming the U.S./China
trade war along with new tariffs for hurting their bottom line. -That’s right.
Because of Trump’s trade war, trucks have less to haul. But Trump would probably say,
“If you think about it, that means they can drive
smaller trucks and then it’ll be easier
to get down from them.” [ Laughter ] “Because they’re very high
in the air.” So Trump’s tax law
and his trade wars have had a negative impact on truckers. In fact, one of the few policies
Trump enacted that trucking industry lobbyists
actually pushed for is one that arguably puts
everyone else on the road in danger. -The transportation department
is moving to relax federal regulations
on the number of hours that truckers can be
behind the wheel. -Highway safety advocates say
the contemplated changes would weaken the regulations
leading to driver fatigue, making roads
more dangerous. -They say truckers will put in
even longer days at a time when they say driver fatigue
is a serious problem. -For someone who loves trucks
so much, Trump doesn’t seem to care much about the condition
of the person behind the wheel. Maybe he doesn’t even realize
there are drivers. “I just assume the trucks
go all day and then at night
they turn back into giant robots and go to sleep.”
[ Laughter ] So thanks to Trump’s policies,
truckers are forced to work more for less pay in potentially
harmful conditions. And his ongoing trade wars could
put thousands of truck drivers out of work entirely. So the best we can hope
for is that truckers return the favor in 2020. This has been “The Check In.” ♪♪
[ Cheers and applause ] [ Bell dings ]

Michael Pillsbury predicts China trade deal will be ‘monumental’


THANK YOU SO MUCH DEIRDRE BOLTON FLOOR OF NEW YORK STOCK EXCHANGE TOP STORY THIS HALF AN HOUR, THE CRISIS IN HODGE HONG, BUSINESS IN CITY REOPENED THIS MORNING AMID NOW PEACEFUL PROTESTERS, THOUSANDS OF ANTIGOVERNMENT PROTESTERS HIT STREETS YESTERDAY THOUGH SOME SET FIRES BLOCKED ROADS, POLICE FIRED WATER CANONS TEAR GAS RUBBER BULLETS PROTESTERS CLACHD WITH PROGOVERNMENT DEMONSTRATORS DIRECTOR FOR CENTER OF CHINESE STRATEGY, MICHAEL PILLSBURY GOOD TO SEE YOU. THANK YOU FOR BEING HERE.>>OUR LEAVING TOMORROW FOR BEIJING IN HONG KONG GOING ON A TRIP?>>YES.>>I WANT TO GET YOUR TAKE WHAT YOU ARE EXPECTING BECAUSE, MY BROTHER-IN-LAW WAS IN HONG KONG SENT ME A PICTURE OF THE TWO MILLION PEOPLE RIGHT OUTSIDE HIS HOTEL ROOM, GET THIS WHEN HE LEFT HIS HOTEL ROOM TO GO SOMEWHERE HE HAD TO WALK THROUGH TO PROTESTERS, HE SAID IT WAS THE MOST POLITE AND QUIET AND CALM SITUATION HE HAD EVER SEEN YES TWO MILLION PEOPLE BUT DOING IN SUCH A CALM WAY, ACCORDING TO HIM. WHAT DO YOU THINK?>>I THINK THAT IS RIGHT. THE — PEOPLE OF HONG KONG HAVE ALREADY DEMONSTRATED SEVERAL TIMES, HAD PAST 20 YEARS. AND HAD SUCCESS, IN GETTING SOME MAJORS WITHDRAWN BEING CONSIDERED PRO BEIJING A TRAJECTION OF PEACEFUL DEMONSTRATION THE GOOD THING BEIJING SAID THAT LAST COUPLE WEEK PEACEFUL DEMONSTRATIONS ARE OKAY BEIJING DOESN’T WANT 70TH ANNIVERSARY OF FOUNDATION TO BE SPOILED, THERE ARE SOME BAD TRENDS COUNTER DEMONSTRATE STRAIGHT SORRY SHOW UP TIMES CALLED MAFIA BY SOME COULD BE TRIADS, PEOPLE TRADITION TODAY BY CHINA NOT GOOD THE PROBLEM IS GETTING NEGOTIATIONS GOING FOR GOOD CONDITIONS DEMONSTRATORS DON’T HAVE A LEADER ROTATE LEADERSHIP, AND SO IT IS HARD TO GET TALKS STARTED ON THAT THEY CALL FIVE DEMANDS NEXT STEP TO LOOK FOR IF THERE COULD BE ENOUGH STABILITY THAT LEADERSHIP WILL MEET WITH CARRIE ALMOST A AND HER TEAM AND THIS CAN BE — TURNED INTO AN ISSUE OF HOW TO ABIDE BY THE 1984 JOINT DECLARATION.>>CHINA ITSELF PROMISED CARRIE LAM HER EQUIVALENT, IN THE PAST IN FUTURE IS NOT A COMMUNIST NOT COMING FROM BEIJING HAS TO BE LOCAL HONG KONG PERSON NOT HAVE A PASSPORT WITH ANY OTHER COUNTRY, SO THERE IS A PROMISE OF HIGHER AUTONOMY WHAT IS CALLED THE — FOR LACK ACH BETTER PHRASE IN GLIRN UNIVERSAL SUFFRAGE.>>THEY WANT TO ELECT THEIR LEADER, IN THAT UNIVERSAL SUIF IFR AGE THAT IS PUT PRESSURE ON XI JINPING TO PERHAPS DO A DEAL WITH PRESIDENT WITH U.S.?>>WELL ONE THING, YOU CAN SAY ABOUT PRESIDENT TRUMP I REALL MALL MIRL MIRE HIM FOR THIS NEGOTIATING SKILLS HE SEES HELPS AS DEAL MAKER I THINK WANTS A MONTHLY TRADE DEAL CALLED IT GRANDDAD OF ALL TRADE DEALS WISELY PUT HONG KONG ISSUE INTO THE TRADE TALKS. BOTH COMMENTS TO THE PRESS AND TWEETS, LINKING — IF USE OF VIOLENCE IN HONG KONG THIS WILL DELAY MAKING IT POSSIBLE THE TRADE TALKS BEING SUCCESSFULLY INCLUDED WITH BAD ECONOMIC DATE OT OUT OF CHINA PUTS XI JINPING IN A BOX IN TERMS OF CHOOSING WHICH WAYING TO I HAVE A HUNCH THINGS QUIET DOWN IN HONG KONG, TRADE TALKS WILL BE SUCCESSFUL AND WHAT THE PRESIDENT CALLS GRANDDADDY OF THEM ALL DEALS.>>YOU DO THINK WE WILL GET A DEAL AT SOME POINT?>>I THINK WE CAME VERY CLOSE. BACK IN EARLY MAY CHINESE RENEGED ON SOME ASPECTS OF IT, DOESN’T MEAN THE WHOLE THING GOES DOWN THE DRAIN, IT MEANS THAT THE CHINESE ARE TESTING THE PRESIDENT FRANKLY, THEY ARE A LITTLE BIT CONFUSED ONE PURPOSE OF MY TRIP I HAVE BEEN TOLD BY A LOT OF CHINESE DELEGATIONS MARIA STEVE BANNON, AND JOHN BOLTON AND FRIENDS OUTSIDE SPEAK FOR THE PRESIDENT. I DON’T THINK THAT IS TRUE. STEVE BANNON’S GROUP COMMITTEE ON PRESENT FROM CHINA WANT TO OVERTHROW CHINESE SXHU. PARTY SAY COEXISTENCE IS IMPOSSIBLE.>>WANT TO DESTROY LOOK AT WITH A BANNON BOLTON SAY IS COUNTERS PRODUCTIVE I THINK THE PRESIDENT DOES NOT DEBRIS WITH BANNON AND BOLTON ON THE FUTURE.>>LOOK WHAT THIS IS DOING TO HONG KONG LONG SEEN AS INTERNATIONAL HUB, FOR GLOBAL BUSINESS, THERE IS A NEW OP-ED IN THE ADJOURN EDITORIAL BORROWED WITH A PIECE WHY LONDON SPURNED HONG KONG BOARD RIGHTS HONG KONG’S GOVERNMENT RUSHED TO BLAME PEOPLE FOR ECONOMIC DAMAGE THE REAL PROBLEM AUTHORITIES NO HONG KONG BY A ARE ERODING THE REPUTATION AS PLACE WHERE PROPERTY RIGHTS ARE PROTECTED COURTS INDEPENDENT AND CORRUPTION IS LOW, RULE OF LAW UNDER PINS HONG KONG STATUS AS GLOBAL FINANCIAL CAPITAL THIS IS BECOMING AN ECONOMIC ONE IN LETTER THAT THE LONDON STOCK EXCHANGE SENT TO HONG KONG STOCK EXCHANGE IN THAT LETTER LONDON BOARD KNOW THIS HONG KONG STOCK SHARES MAKE UP THREE-QUARTERS OF THE 36.6-BILLION-DOLLAR BID AND THEY WRITE WE SEE THE VAM OF YOUR SHARE CONSIDERATION AS INHERENTLY UNCERTAINTY THE ONGOING SITUATION WITH HONG KONG ADDS TO UNCERTAINTY, FURTHERMORE WE QUESTION STATEMENT OF STOCK EXCHANGE POSITION AS STRATEGIC GATEWAY IN LONGER TERM NOT JUST PRESIDENT TRUMP QUESTIONING ALL OF THIS BUT, YOU KNOW, THE WORLD IS LOOKING AT HONG KONG DIFFERENTLY.>>THAT IS RIGHT. THE WITHIN WE SHOULD ALL BE CONCERNED THIS USE OF — VIOLENCE BY THE UNKNOWN PEOPLE WHO ARE ATTACKING THE DEMONSTRATORS PROVOKING THINGS WORSE IF THEY ARE SHOWN UNDER THE CONTROL OF XI JINPING, THAT IS VERY DAMAGING FOR THE TRADE TALKS AND FUTURE OF HONG KONG.>>MICHAEL BEFORE YOU GO.>>VOLUNTEERS THAT IS DIFFERENT.>>I JUST GOT TO GET — DO YOU THINK THE PRESIDENT IS GOING TO SEPARATE TWO THINGS A TRADE DEAL AND NATIONAL SECURITY HE CAN’T DO THAT RIGHT?>>NATIONAL SECURITY –>>THE PRESIDENT IS FOCUSED ON TH MONUMENTAL TRADE DEAL A CAMPAIGN PROMISE SEPARATES HIM FROM DEMOCRATS VERY IMPORTANT IN 2020. THAT IS WHAT HIS FOCUS IS MON YU MEAN YU.>>O MONUMENTAL TRADE DEAL HE HAS ALLOTTED MORE HE IS KALATORY STEPS CHINESE VULNERABLE THE KEY THING WHETHER THE CHINESE VIEW OF PRESIDENT TRUMP IS BOLTSON BANNON SPEAK FOR HIM THEY DON’T WANT TO MAKE DEAL.>>WE HOPE YOU COME BACK AFTER BACK FROM TRIP TO HONG KONG BEIJING GOOD TO SEE YOU –>>I WILL BRING YOU A SOUVENIR FOR YOU –>>I LOOK NORTHWARD TO IT WILL CONTINUE READING YOUR BOOK

House Probing Elaine Chao On Questions Of Conflict With Family Business | Rachel Maddow | MSNBC


AND HE’S NEVER BEEN A GOVERNMENT EMPLOYEE, IT SHOULD BE FIREWORKS EMPLOYEE, IT SHOULD BE FIREWORKS AT THE LEAST. AT THE LEAST. AND YOU KNOW, IF THE SCANDALTURE AND YOU KNOW, IF THE SCANDALTURE CHURWHEEL NEVER STOPS SPINNING CHURWHEEL NEVER STOPS SPINNING THESE DAYS, HARD TO KEEP UP WITH THESE DAYS, HARD TO KEEP UP WITH WHAT’S THE SCANDAL NOW, I HAVE WHAT’S THE SCANDAL NOW, I HAVE TO TELL YOU BECAUSE IT TURNS OUT TO TELL YOU BECAUSE IT TURNS OUT THE CHORE WHEEL OF SCANDAL IN THE CHORE WHEEL OF SCANDAL IN THIS ADMINISTRATION IS A THIS ADMINISTRATION IS A FLYWHEEL, LIKE, IT’S WEIGHTED FLYWHEEL, LIKE, IT’S WEIGHTED AND IT NEVER STOPS. AND IT NEVER STOPS. I MEAN, THEY WILL SPIN OUT NEW I MEAN, THEY WILL SPIN OUT NEW SCANDALS EVERY SINGLE DAY THEY SCANDALS EVERY SINGLE DAY THEY ARE IN OFFICE. ARE IN OFFICE. SO EVEN WITH ALL OF THAT ALREADY SO EVEN WITH ALL OF THAT ALREADY HAPPENING, NATURALLY TODAY, HAPPENING, NATURALLY TODAY, THERE’S WORD OF YET ANOTHER THERE’S WORD OF YET ANOTHER INVESTIGATION INTO YET ANOTHER INVESTIGATION INTO YET ANOTHER TRUMP ADMINISTRATION SCANDAL. TRUMP ADMINISTRATION SCANDAL. “THE NEW YORK TIMES” FIRST TO “THE NEW YORK TIMES” FIRST TO REPORT TODAY THAT THE HOUSE REPORT TODAY THAT THE HOUSE OVERSIGHT COMMITTEE HAS TOLD THE OVERSIGHT COMMITTEE HAS TOLD THE TRUMP ADMINISTRATION’S SECRETARY TRUMP ADMINISTRATION’S SECRETARY OF TRANSPORTATION, ELAINE CHOWAO OF TRANSPORTATION, ELAINE CHOWAO SHE NEEDS TO HAND OVER DOCUMENTS SHE NEEDS TO HAND OVER DOCUMENTS RELATED TO HER FAMILY’S SHIPPING RELATED TO HER FAMILY’S SHIPPING COMPANY. COMPANY. ELAINE CHAO IS THE ELAINE CHAO IS THE TRANSPORTATION SECRETARY FOR THE TRANSPORTATION SECRETARY FOR THE U.S. GOVERNMENT, BUT SEE THE U.S. GOVERNMENT, BUT SEE THE VISUAL HERE, THAT’S HER, THAT’S VISUAL HERE, THAT’S HER, THAT’S HER DAD. HER DAD. SEE WHAT THEY’RE SITTING IN SEE WHAT THEY’RE SITTING IN FRONT OF? FRONT OF? SHE HAS MADE A HABIT OF DOING SHE HAS MADE A HABIT OF DOING EVENTS WITH HER FATHER WHO RUNS EVENTS WITH HER FATHER WHO RUNS HER FAMILY’S SHIPPING COMPANY. HER FAMILY’S SHIPPING COMPANY. SHE’S MADE A HABIT OF HER DOING SHE’S MADE A HABIT OF HER DOING EVENTS AS SECRETARY OF EVENTS AS SECRETARY OF TRANSPORTATION SITTING NEXT TO TRANSPORTATION SITTING NEXT TO HER FATHER WHILE THE TWO OF THEM HER FATHER WHILE THE TWO OF THEM SIT IN FRONT OF, LIKE, THE FLAGS SIT IN FRONT OF, LIKE, THE FLAGS AND THE SEALS OF THE U.S. AND THE SEALS OF THE U.S. DEPARTMENT OF TRANSPORTATION. DEPARTMENT OF TRANSPORTATION. MAKING IT SEEM LIKE MAYBE HE MAKING IT SEEM LIKE MAYBE HE WORKS THERE, TOO. WORKS THERE, TOO. OR HE’S OFFICIALLY SPONSORED BY OR HE’S OFFICIALLY SPONSORED BY THEM SOMEHOW? THEM SOMEHOW? SHE HAS ALSO BROUGHT HER FATHER SHE HAS ALSO BROUGHT HER FATHER ONTO AIR FORCE ONE. ONTO AIR FORCE ONE. SHE HAS TALKED IN INTERVIEWS SHE HAS TALKED IN INTERVIEWS ABOUT HER FATHER AND PRESIDENT ABOUT HER FATHER AND PRESIDENT TRUMP HAVING SUCH A GOOD TRUMP HAVING SUCH A GOOD RELATIONSHIP, WHICH IS NICE, YOU RELATIONSHIP, WHICH IS NICE, YOU KNOW, AH, IT’S HER DAD, BUT IT’S KNOW, AH, IT’S HER DAD, BUT IT’S ALSO BEEN AWESOME AND VERY ALSO BEEN AWESOME AND VERY HIGHLY CAPITALIZED ON BY THE HIGHLY CAPITALIZED ON BY THE FAMILY BUSINESS THAT HER DAD FAMILY BUSINESS THAT HER DAD RUNS. RUNS. AS THEY HAVE BEEN TRYING TO AS THEY HAVE BEEN TRYING TO PROJECT THEIR INTERNATIONAL PROJECT THEIR INTERNATIONAL REACH, THEIR APPARENT REACH, THEIR APPARENT ENDORSEMENT BY THE U.S. ENDORSEMENT BY THE U.S. GOVERNMENT, THEY’VE BEEN TURNING GOVERNMENT, THEY’VE BEEN TURNING THAT INTO THEIR OWN BUSINESS THAT INTO THEIR OWN BUSINESS INTERESTS. INTERESTS. ELAINE CHAO AT ONE POINT ELAINE CHAO AT ONE POINT REPORTEDLY TRIED TO ARRANGE FOR REPORTEDLY TRIED TO ARRANGE FOR HER FAMILY MEMBERS TO MEET WITH HER FAMILY MEMBERS TO MEET WITH CHINESE GOVERNMENT OFFICIALS ON CHINESE GOVERNMENT OFFICIALS ON HER OWN PLANNED OFFICIAL U.S. HER OWN PLANNED OFFICIAL U.S. TRIP TO CHINA AS TRANSPORTATION TRIP TO CHINA AS TRANSPORTATION SECRETARY. SECRETARY. IT WAS ONLY WHEN THE STATE IT WAS ONLY WHEN THE STATE DEPARTMENT PERSONNEL IN CHINA DEPARTMENT PERSONNEL IN CHINA WHO WERE ASKED TO SET UP THESE WHO WERE ASKED TO SET UP THESE MEETINGS FOR ELAINE CHAO’S MEETINGS FOR ELAINE CHAO’S FAMILY, IT’S ONLY WHEN THEY FAMILY, IT’S ONLY WHEN THEY SQUAWKED IN PROTEST THAT SHE SQUAWKED IN PROTEST THAT SHE BACKED OFF THE REQUEST THAT HER BACKED OFF THE REQUEST THAT HER FAMILY MEMBERS SHOULD BE IN ON FAMILY MEMBERS SHOULD BE IN ON THOSE MEETINGS AND THE TRIP, THOSE MEETINGS AND THE TRIP, ITSELF, WAS ULTIMATELY CANCELED. ITSELF, WAS ULTIMATELY CANCELED. IT’S ALSO WORTH NOTING THAT AS IT’S ALSO WORTH NOTING THAT AS ELAINE CHAO HAS USED HER PUBLIC ELAINE CHAO HAS USED HER PUBLIC POSITION TO BOOST HER FAMILY’S POSITION TO BOOST HER FAMILY’S BUSINESS OVER THE PAST FEW BUSINESS OVER THE PAST FEW YEARS, HER FAMILY HAS ALSO YEARS, HER FAMILY HAS ALSO REPORTEDLY GIVEN MILLIONS OF REPORTEDLY GIVEN MILLIONS OF DOLLARS TO HER AND HER HUSBAND. DOLLARS TO HER AND HER HUSBAND. THE REPUBLICAN LEADER OF THE THE REPUBLICAN LEADER OF THE U.S. SENATE, MITCH McCONNELL. U.S. SENATE, MITCH McCONNELL. WHICH MEANS THAT IF SHE HAS BEEN WHICH MEANS THAT IF SHE HAS BEEN USING HER PUBLIC POSITION TO USING HER PUBLIC POSITION TO BOOST THE FORTUNES OF HER FAMILY BOOST THE FORTUNES OF HER FAMILY BUSINESS, WELL, HER FAMILY’S BUSINESS, WELL, HER FAMILY’S FORTUNE HAS BEEN IN AN IMMEDIATE FORTUNE HAS BEEN IN AN IMMEDIATE SENSE TURNED RIGHT AROUND AND SENSE TURNED RIGHT AROUND AND PARSE LD OUT TO HER AND HER PARSE LD OUT TO HER AND HER HUSBAND WHILE SHE HAS BEEN DOING HUSBAND WHILE SHE HAS BEEN DOING THAT. THAT. ELIJAH CUMMINGS AND THE ELIJAH CUMMINGS AND THE OVERSIGHT COMMITTEE ARE NOW OVERSIGHT COMMITTEE ARE NOW DEMANDING DOCUMENTS AND DEMANDING DOCUMENTS AND COMMUNICATIONS FROM THE COMMUNICATIONS FROM THE TRANSPORTATION DEPARTMENT AND TRANSPORTATION DEPARTMENT AND FROM ELAINE CHAO AND BECAUSE SHE FROM ELAINE CHAO AND BECAUSE SHE IS A MEMBER OF THE TRUMP IS A MEMBER OF THE TRUMP ADMINISTRATION, PRESUMABLY, THE ADMINISTRATION, PRESUMABLY, THE TRANSPORTATION DEPARTMENT AND TRANSPORTATION DEPARTMENT AND ELAINE CHAO REFUSE ENTIRELY TO

How Chinese Debt & Business in China Have Evolved (w/ Fraser Howie)


FRASER HOWIE: My name’s Fraser Howie. I’m an independent analyst on China. And author of a number of books on the Chinese
financial system, in particular, Red Capitalism, and then before that, Privatizing China. So I’ve been in Asia for about 25 years, primarily
working in the financial sector– Hong Kong, Beijing, Hong Kong, again, and now I’m based
in Singapore. But always with a big focus on China, in terms
of my day job, but also my writing and commentary. It was actually myself, and a co-author, and
a colleague at a company called CITIC, which was the first Sino jointventure securities
company set up in China. About 15 years ago, we started writing about
the Chinese financial system, simply because we saw what was being written by China back
then, and this was in the late ’90s, 2000 or so. And frankly, we thought it was nonsense. We were on the ground in China. We saw what the securities markets were like. We saw what the stock market was like. And it was clear that the pundits in Hong
Kong were just far too optimistic about what China was. And then we thought, there’s a story to tell. That got us writing. It was actually on the back of a report we
wrote for the CICC at the time. And we wrote Privatizing China, which was
based on a look at what was then about 15 years of the stock markets in China. And really, just going right back to basics–
really in the late 70s, when reform started in China, fair share issuance in ’79, and
then the development of 4trading through the ’80s, listings– And they say that was privatizing
China. But then as the knot progressed, we realized
that we had more to say, and in particular, in the banking sector because if you remember–
go back to that time when we were writing Privatizing China and riding on the stock
markets. The Chinese banking system was basically bankrupt. In 1999 Zhu Rongji, the Premier at the time,
started a big bailout program where they set up bad banks, asset management companies in
China, and we saw that happening real time. It was a very long process. And so by ’05-’06 you started seeing these,
what were just previously, bankrupt banks being listed, raising multi-billions of dollars. And we thought, this is nonsense. These are Chinese banks. These aren’t Western banks. And they aren’t banks in the way we understand
them in the west. And we thought there’s a story there. So that was the genesis of Red Capitalism. And in Red Capitalism, which was eventually
published in late 2010, beginning of 2011, we went through that history of how banks
were reformed in China, how you took a bank or banking system and you made it into what
was, at the time, basically, the world’s most expensive banks. Valuation– I think it was something like
a quarter of a trillion dollars, $250 billion with all the Chinese banks. That’s an incredible figure remembering that
day declaring the system was bankrupt. So that was the genesis of Red Capitalism. Interestingly, the bulls thought it supported
their case, the bears thought it supported their case. We didn’t write it with any case in mind. We wanted to tell a story because we felt
that, again, so much of the hype, so much of the headline in China is superficial. In understanding China, you’ve got to get
away from the facade, the face of China. China is great at telling a story about how
it sees itself. And a lot of people buy into that because
China can be a very opaque and difficult place. But especially in the stock markets and then
in the capital markets in general, that almost certainly what it says on the tin isn’t what’s
in the tin. And so therefore, it’s important to understand
the background to these things, to understand the accountancy behind it, and this chicanery,
quite frankly, in a lot of the financial system. I think it’s really important if you want
to understand where we are in China now. It’s what I call the Olympic cycles. If you look back to the ’08 Beijing Olympics,
I would still maintain, although the economy was probably less than half the size it notionally
is now, I would say that’s the modern high point of China, frankly. That If you look before– the Beijing Olympics,
they put on this incredible show. They built so many subway lines. They did so many things which no other country
allegedly could do. It was a great catalyst for building across
the country. The economy was booming. Everything seemed to be going. Everyone was pandering to China. And I think that really was a high point. Of course, that was August in ’08. And then, of course, global financial crisis
and we all remember– or maybe we don’t remember now, but that last quarter of ’08 really was
dreadful. Things, literally, just fell off a cliff in
that last quarter. And that was very important in China’s case
as well because China was hugely affected by that. I think that everyone, of course, remembers
the output or the response to ’08, by the Chinese government, this huge stimulus program,
which started off a whole series of events, which we’ll come to. But I think, remember, before that, and the
real reason for that was not simply to keep global growth going, but China had, was it,
the headlines, 20, 30 million people unemployed, these migrant workers. This was the mainstay of the Chinese economy
that this migrant population was working in factories along the coast, and that just the
downturn in exports, the downturn in the global economy really impacted China. And so what you saw there– and this again
was absolutely central to why we wanted to tell the bank story– was because the response
of this stimulus was basically you turn on the credit taps. That after spending the better part of a decade
trying to reform the banking system, trying to make it into something that was something
at least approaching a market-based system where there was some degree of risk control,
some oversight, you basically had the rulers in Beijing reverting to their old practice
of using the banks as a piggy bank to basically fund growth. And so you turn on these credit taps, and
literally any warm body could get money in ’09. And so you had this huge expansion of credit. And of course you saw, guess what, a big rebound
in growth, which should not surprise anybody. Growth’s an output, not an input into these
models. And so you had this huge expansion of credit. But I think that was the start of something
that has taken China, as I say, before those Olympics, before that last quarter of ’08,
China was a growth story. There’s no question about it. It had been 20 years by then of double digit
growth. China could continue to grow for another two
decades, three decades, whatever it may be. And yet, that was a real turning point because
China’s gone from a debt story– or from a growth story to a debt story, which is just
staggering. And I think we forget about this because the
growth numbers have still remained high. And people say, yes, they’ve fallen from their
highs, but hey, they’re still doing 6 and 1/2% or 7% if you believe in those numbers. They say, it’s still much better than what
the West’s doing. But that’s incidental, because the real story
in China now is that the reason you’re still getting that growth is because credit is growing
at double the rate of GDP growth. And so that ’08, that response, that ’09 stimulus,
the early stimulus to keep growth going really set in motion an addiction to debt, and took
China– and let’s remember, well, there was clearly an impact from the global economy. It wasn’t necessarily a crisis per se. And so it’s interesting now that you look
and you compare Chinese growth numbers and the growth, particularly the build up of gross
debt in the economy, it gets compared to what the US is or what the UK is or Japan is or
Greece or whatever. You can take any of these countries. But these are all countries that have clearly
gone through crises. In China’s case, I don’t see there’s a crisis. Yes, there’s slowing growth. There’s lots of problems with their economy. There’s many areas in China you can look at
and say there’s real problems. But in terms of actual real fundamental financial
crisis, there isn’t one. There’s no real panic there. There’s still a lot of faith in the government. There’s still a lot of resources and capacity
of the government they can put to work. And so, you’ve had that huge credit build
up in spite of a real problem, which really makes me wonder when I think about future
issues, when you think, if a crisis does come in China, and given what’s happening in the
States with the new president, you can certainly see scenarios where you are going to get crises
coming, then will China have the wherewithal and resources? But coming back to that stimulus. So you had a positive response from China
in ’09. That obviously was lauded at the time that
this would support global growth, support global demand. At the same time, you also had a government
who started to acknowledge that there was fundamental imbalances in their economy, and
that this needed to be reformed. And of course there was lots of nice words
and nice talk about this, how we’re going to restructure, we’re going to move away from
this dependence on fixed asset investment. and we’re going to move more towards a consumer-driven
economy. And here we’re eight years on, an Olympic
cycle– two Olympic cycles later, and you think, this really is quite horrible. You’ve effectively had the growth rate halved
and the debt double, which hardly is really a successful formula in many ways. I think whether China becomes the world’s
largest economy is almost frankly irrelevant, because that’s just– that’s like just weighing
the health or measuring the health of your kids based on their weight. There are many other factors that are far
more important to think about than simply, are they simply getting bigger? Are they growing? And I think China has continually failed over
this past eight years or so to really grasp that reform process. And again, this isn’t just something from
the new leadership. This is something if you go back to about
five or six years, there was a big report from the World Bank, done in conjunction with
the Chinese government, called– I think it was China 2030, but need to restructure their
economy, move away from fixed asset investment. And it laid out a whole series of reforms
and steps to try and remove this dependency. But guess what? As the global economy has failed to recover,
as China’s own economy has started to stutter in many ways, there has been a continual dependency
on debt. And so what you’ve seen in China, you’ve seen
incredible innovation, but in the worst possible way. That instead of, whereas at the start of this
crisis in ’08 you still had 60% of debt in their economy- – or probably higher, certainly
a decade more or so ago, you had 80% of debt in China basically being from bank loans,
very simple. You can look at the amount of deposits they
had, and you looked at their bank loans, and you control that through a loan to deposit
ratio. So it was very easy to literally turn the
tap on and off. But what you’ve seen is a proliferation, over
the past eight years or so, of broadly called shadow banking. And I think that doesn’t even come close to
describing it, because it’s such a murky term by definition. But you have had incredible innovation, as
it were, of bankers and entrepreneurs and businessmen figuring out ways to get around
systems which are put in place by bureaucrats to try and limit credit. And the difficulty is that returns for much
of China’s business is low, and therefore they’re desperately trying to look for new
inventive ways. At the same time, as rates have fallen in
China, you’ve also got depositors who are saying, I want better returns. And so you’ve had this springing up of– and
we talked about this when we wrote Privatizing China. This was really just the start of this process,
of these wealth management products, short term products, guaranteeing better rates which
got immediate deposits, which weren’t necessarily carrying it under the loan to deposit ratio. But again, got around that, that lending restriction. We got depositors’ funds into the hands of
those who wanted it. And in some ways, it’s a good sign. It’s a liberalization of the currency or of
the interest rate market, which is always a very important thing in China. But effectively what’s happened is that much
of that control over the banking system has been lost. And where we had highlighted this at the end
of Red Capitalism, the system now has become so much more complex. Whereas you really could think previously
of a dozen banks or so controlling the bulk of the loans, you knew exactly where they
were going, and it was very manageable, you now have a highly opaque system of banks,
of shadow banks, of wealth management products, of trust funds, of corporate lending of what’s
called entrusted loans– it’s just loans being siphoned through banks– wealth management
products created by securities companies. And then mix into that guarantee companies,
which have sprouted up to try and guarantee these loans. You have then also things being sold on the
internet. You have pawn shops where– it’s almost endless. And I keep thinking, I should write down and
try and map this whole system out. And then I though, it’s like trying to map
the brain, that there’s almost so many connections and nodes that have appeared. And the difficulty is you don’t actually know
the connections from one to the other. And you’re so, am I double counting this debt? Is this a chain of debt that’s growing? Is this new debt? And so you can actually– and I read some
reports about estimating the size of debt in China. And I think, I have absolutely no idea if
that’s true or not. These are huge numbers. And again, argued that there must be some
double counting there. Clearly what you see when you actually speak
to our entrepreneurs, when you speak to businessmen on the ground, when you speak to banks, there
is, without question, an A lending to B lending to C lending to D, and this chain and this
node of connections. And then you think, this is clearly worrying. And it is worrying. But what no one seems to have any idea about,
including myself is, when is too much too much? And this is the real problem. We can talk about this problem. We can talk about this growing problem in
China. But frankly, I have no idea when the party
stops. And again, you can look back in history. A lot of cases, you know, the Ottomans probably
peaked in the 17th century and they were still going up until the end of the Second World
War. Things can go on– bad things can go on for
a long time. I think also that the greatest comfort that
China should take in its current debt situation is that Japan still exists. For my 25 years in finance, I started following,
like many, the Japanese warrant market. And you know, Japan had problems. Japan was falling. And then people thought, there was even people
in the early ’90s who thought the Nikkei was going back to 40,000. But it was actually on the way to 7,000. And Japan has largely been in recession for
the best part of 20 years or more. And you think, well, why can’t China pull
off a similar trick- – a different sort of trick. It’s clearly not as rich, clearly not as developed,
but you are ultimately still underpinning so much of this in China, even if you can
map this highly complicated system, which you can’t. Because into that you’ve got, is it local
government financing? Is it, like I said, the wealth management
products? Is it the regular bank business? Is it rich individuals? Is it overseas funding? OK, so let’s see you map it all. But who’s actually going to be the person
to pull their fingers out of the dyke and let the water fall through? Because in China, there is this continued
belief still that the government will underpin everything. And to some extent as a working model, I think
that probably makes sense. And again, anyone who is predicting the collapse
of China– first of all, I have no idea what that means. If your debt’s doubled and your growth’s halved,
that looks pretty much like a collapse in some ways already. The bullish case in China has now become it’s
not collapsing, which is a big turnaround from where we were five or six years ago. So, even if you can map all that, I still
think, yeah, you’ve got to look at the politics here as well. You’ve got to look at the mindset, the control
of information. So someone goes bankrupt? Why should I care about someone else’s bankruptcy? My wealth management paid back. Wealth management product is very difficult
to get someone out in the street protesting or really causing a stink for someone else’s
misfortune. And so therefore I think, how does this really
become a systemic crisis? And it’s not clear to me that it does. Telling me the numbers are getting bigger
still doesn’t tell me how you get a systemic crisis. What staggers me is that there are so many
people– and again, clever people, lots of smart people. And whether it be economists, hedge fund managers,
whatever, lots of smart people who will go on TV and talk about the economics of the
debt issues, et cetera. And I think, can’t really argue with any of
that. I’m not a trained economist. I may be right, may be wrong. But what does stagger me is that there is
often a willingness or a willful blindness on the politics of it. And I think nothing in China– you simply
cannot divorce economics from politics in China. And certainly if you’re worried about debt
situations, and from big picture– so if you’re looking at the stability of the banking system,
if you’re talking about the currency, if you’re talking about government debt, if you’re talking
about local government financing vehicles, bank bailouts, however you want to propose
it, the politics is absolutely essential. And to think that it’s somehow China– I would
say the law of economics works just as well– if they work at all, they work just as well
in China as they do outside of China. They don’t stop at the border. So in that sense, economics, yes, does work
in China. But at times people think, oh, somehow the
Chinese have got their own economics or it works differently. I say, well that’s because you’re not accounting
for it probably, because much of that other accounting is effectively the politics, and
you’ve got basically the government is standing there. And without question, I think that the right
view to take, certainly for the moment, is that the government will stand by. It’s certainly going to stand by the banks. You’re not going to get a Lehman Brothers
moment. One of the big banks, one of the big– I think
they technically have four and then seven what they call systemically important banks
in China. So none of those big banks are going under. Smaller rural banks, yeah, that’s possible,
but they will be merged in something else. But politics and political support is absolutely
essential. And to ignore that, you do so at your peril. I think the trouble there is though, I think
it was Churchill who said about Chinese politics, “It’s like two dogs fighting under a carpet.” You frankly got no idea what’s going on at
any given time. And I think the very rise of Xi Jinping, where
you may take the positive stance that this is a strong, powerful leader consolidating
power, and so can push through reform– you say, well frankly, that means we had everything
wrong about Chinese politics before. Because before he came into power, the consensus
across the board– there was just no.. China was now a consensus driven leadership
by committee type of model. There was not going to be a strongman again. That was not going to be a strong political
leader. So basically we have either completely misunderstood
things previously to allow Xi Jinping to come into place, or we just were just simply ignorant
of the fact in the first place. I think the mistake is that, to almost give
too much credibility to Chinese political institutions, that we have seen certain things
happen over and over since Tiananmen Square, so over the past 20 years. And we have assumed that these are institutionalized
processes of smooth transfer of power. And frankly they weren’t. There was a lot more fighting behind the scenes. Bo Xilai is an obvious example like that you
know. 2011, people were talking about Bo Xilai,
as of 2010, as a possible next leader. Very few people saw the Bo Xilai issue coming. Those that did were roundly abused to be certain. No, no, this could never happen in China. There is no sort of coup coming. There’s nothing like this. And clearly the behind the scenes machinations
were very active. So while I may say, the politics is important,
I’m also going to admit somewhat contradictory as well, I have no idea what’s going on in
politics half the time. And as I say, I think Xi Jinping, by the analysis
of five years ago, should never have come to power. His consolidation of so many titles– how
much power he’s got, there’s probably some debate. But certainly of titles, again, should never
have happened either. That was not supposed to be able to happen
in this consensus model. And so, you think, but even with that power,
what does he really want? I come back to even why we started writing. Even that phrase reformer in China– he’s
a reformist. He’s a reformer. I have no idea what that means in the Chinese–
I do have a– but what I tell you, it doesn’t mean what we think it means in a Western sense. And again, it’s not just like the Chinese
have their own way of doing things. But these names, just these labels have such
different meanings. And so when Xi Jinping wants reform in the
sense that he wants things to run better, he wants the Communist Party to run better,
he wants state-owned enterprises to be more efficient, he wants less dependency certainly
on the US dollar, certainly on the States. He wants less dependency on foreigners. He doesn’t want Western ideas seeping into
Chinese education, and so things like that. So if that’s reform, it’s reform. It’s a self-sufficiency that he wants. But the idea that he wants to embrace free
markets in any way, or even embrace the market as a decisive factor– which his own documents
have said– I think is highly misleading. This is a person who wants it– Reform so
often in the West is understood to be economic reform with the government pulling back, of
the markets taking a bigger hold and market forces taking a bigger hold, of bankruptcy
coming to the fore. Hey, your business is bankrupt. We’re going to bankrupt your business. We’re going to close this. We’re going to sell these assets. That’s not what the Chinese mean by reform. They’re talking about administrative reform. They don’t necessarily want to face all those
arbitrary things. And so when you look at what happens in the
markets, I think this is a classic. It’s, let’s go back. So we’re at the end of 2016. Let’s go back 10, 11 months and we saw the
renminbi collapsing. It moved a few percent, if that. It’s hardly a collapse. The renminbi in the past 18 months have moved
10%. I think the yen did it in about six weeks
recently, and sterling did it in about six hours. So this is hardly major market moves. But of course for China, these are are major
market moves. And I think if you go back to the beginning
of the year, January, February, when the currency started to get very weak, the panic in Beijing
simply wasn’t lower currency levels. It wasn’t that the moves had been so significant. They’re all well within any bands they themselves
have set. They’re well within historic ranges. But what they didn’t like was they didn’t
like the market pulling them. And this, I think, is the real fear. Because if you start having a market fall,
as the stock market did in 2015, as the currency started to do then later in the year and beginning
this year, as anyone who’s spent any time in a market knows, that takes on a dynamic
of its own and so on that forces people to come out and do something. They have to act because it will be even worse
tomorrow. And that’s of unexpected or that unknown reaction,
that being forced by the market to do something is what really worries the Chinese. Now we’re nearly touching seven. We’ve already had a PBOC fixing of 6.95 in
the past few weeks. And so in that sense, it’s not simply the
lower level which is the worry, but it’s the unexpected and the volatile nature of markets
that forces people to do things. Chinese leaders don’t like to be forced to
do anything. They certainly like to give the impression
they’re very much in control. And they themselves– This idea, I think one
of the things that sticks– there’s a number of things from, let’s say, the past 20 or
30 years in China that stick– or in Asia that stick with the Chinese leaders. 1997, the Asian financial crash really stuck
with them. I think they looked at Hong Kong. They looked at Thailand. And these sort of headlines, whether they
were true or not that a New York hedge fund manager presses a button and a billion dollars
leaves Thailand, and Thailand is decimated and people are unemployed and factories are
closing– very simple, very tabloid type of headline, but that’s exactly the type of thing
the Chinese government are desperate to avoid. And so that volatility of markets, the unexpected
nature of markets is something that they recoil against. So, where does that leave the currency? It’s going to get weaker. I don’t think that’s really any surprise. But do I see a great devaluation? No I don’t, because I don’t see how that plays
into the government’s favor. This idea of taking sort of tough medicine
early, getting the worst over with, I think sadly that’s passed. I think that’s the difficulty, that that time
has now passed for them. I think if they were to do that– And again,
we know markets overshoot. And again, if you were to say if the currency
is overvalued– and I don’t really care if it is overvalued or undervalued, I just know
it’s not market-driven. And I’m pretty big on market-driven forces. So, in that sense, I don’t know what the right
level is. But should you devalue 5%? Is 5% enough? Well, why 5.0%, 4.9%– well, 5.1%? Be a numbers snob, go for 9.9%. You know, is it 10%, 11%, 12%, 13%? I don’t know, is it 15%? Maybe it should go to 20%. Maybe it should go to 8.5%. I don’t know, what’s enough? What’s enough and what are you guys trying
to signal there? Because certainly if you were to go back to
8.3, where we were for best part of 15 years or so, then that sends a very bad signal of
course. That basically almost wipes out the past 11
years of currency movements and currency strength. And then you think, oh my God, China is like,
it’s really going back to some almost prehistoric economic environment as it were. So I don’t see them doing that because I think
it sends such a destabilizing signal. I think instead they’re going to waste more
reserves, waste a lot of time, a lot of effort by this slow depreciation. And it’ll come in fits and starts. It’s not going to be a straight line. But there’s going to be some fits and starts
on the way down. The argument that somehow they’re wasting
reserves, the Communist party has never been efficient. They’ve been– it’s efficacy, not efficiency. They achieve what their goal is. They’ve got lots of people. Their entire history is about wasting resources
to achieve some arbitrary goal they set on one day that the next day was no longer important. My God, this was a country that sent out schoolchildren
to clap all day to ensure that sparrows couldn’t land so they would die, thinking that that
would improve public health in Beijing. So in that sense, I get that somehow they’re
wasting resources. I don’t think that matters to them, because
what they’re focused on is maintaining control, and not necessarily being exposed to that
market volatility and that whiplash. Because goodness knows where that could take
you. Because if you lose confidence in the government–
and again, this is what underpins so much of what goes on in China. You can talk that, oh yes, they’re rebalancing. The growth rate’s coming down. You could argue their debt’s not too high. But everyone basically falls back on, but
the government’s in control. They’re still in control of all those levers,
whether it’s fiscally, whether it’s socially, whether it’s the internet, information flow,
whatever. And if you have that sort of shock to the
system, then I think that becomes highly destabilizing. When you’re talking about politics and risks
of China in the coming years, I think the risks are ultimately political, not actually
economic. Because the politics– and again, how can
anyone be sitting here at the end of 2016, while thinking ahead to next year, without
thinking about Donald Trump, because the rhetoric there, that relationship– which has always
been a bit of a love and hate relationship, going back for centuries– clearly will change. It’s already started to change. For better or for worse, we’ll find out. I think though what’s very clear is that Trump
is clearly going to take a much tougher stand on China. He’s certainly talking tougher on China. What his stand is on China when he’s in power
and we’ve been through six months, a year, then I’ll tell you what it is, because frankly
I have no idea what it’s going to be now. But you know he’s going to certainly try and
be tougher on China. I think there are a number of things that
are worrying about that though. Not that being tougher on China is a bad thing,
because I think if my complaint– and I’ve often been called about, I’ve been bearish
on China. And I think that’s a dreadful term. I think bulls and bears exist in the stock
market. I think they’re dreadful terms with trying
to talk about countries or bigger picture things. I’ve always seen myself as a realist in China
because I’ve spent a long time there. I’ve worked with Chinese companies. And I’m very realistic about the real limitations
of China, often that China, because of its sheer size of population, of financial reserves,
or whatever it may be, seems to be this behemoth which seems unstoppable. And yet the reality of dealing with Chinese
companies and often individual Chinese, or even the Chinese government, is much more
fractious and nowhere near as successful as the big picture would be. And so when I’ve been sort of negative and
critical in China, it’s because I think one of the first things is to start talking truthfully
to China about China and about your relationship with it. So in that sense, tough talking does no harm. I think because much of what China– I think
the frustration that people have often with China is that China doesn’t even live up to
its own promises, of whether it be reform, of market opening, market access, and things
like that. So in that sense, there’s lots of reasons
to be tougher with China. And that’s the good side, if you like, of
Trump. Although, is that what he’s going to do? I don’t know. What worries me more with Trump is that there
seems to be– he’s fighting the wrong battle. He’s fighting a battle from a decade ago or
from two decades ago, that somehow that the very basic model of American jobs moves somehow
direct from America straight to China, and that if only we are tough on China, put tariffs
on Chinese goods, that those jobs will come back. Well, if that simplistic picture was ever
true, it’s certainly not true now. And simply putting tariffs on Chinese goods
doesn’t solve that problem. So I’m worried that the– and certainly his
economic adviser Navarro, whether his economics even holds up, many economists would argue. But certainly his China policy doesn’t necessarily
seem to hold up. He seems to paint China as the great evil
in the world that’s responsible for all ills. And certainly China has a role to play in
many of those ills. And certainly Chinese policy has certainly
contributed to many of those apparent ills. And there’s things we should be tough on China
about. But simply this rather belligerent attitude
I don’t think is very conducive. Not that I’m annoyed or worried about upsetting
the Chinese. That’s almost an argument for saying those
things if you’re just upsetting the Chinese Communist Party. I have no problems with that at all. But you’re not necessarily going to achieve
the goals you want. I think that’s what you’re– Trump’s wanting–
needs wins, and he needs wins against China. The approach he’s taken, I’m not convinced
he’s going to be able to do that. What you have seen as well of course– and
this plays into Trump’s worldview, and others– is it China of course themselves have become
more and more belligerent over the past five years or so. And this has certainly increased under Xi
Jinping. It’s partly been to support their own economy. And this has come across a wide range of issues. One of course is of economic and the greater
focus on domestic production of certain goods, of restricting fair competition from foreign
companies or forcing foreign companies to onsource certain activities into China, particularly
in the technology space, which is obviously very worrying given the tight control that
China has over technology, et cetera. So there’s those sorts of aspects. But you’ve also seen them being nationalistically
much more belligerent. Obviously we’ve seen that in the East China
Sea. You’ve seen that in the South China Sea. And it’s China as the bully, China as the
big country and you’re the small country, get used to it type of model. Which, ultimately I think will backfire on
China. yes, we all know China’s a big country. We all know that all the countries in Asia
are very dependent on it. Economically they’re very linked with it. But China is– I’m not quite sure what it
thinks it’s setting itself up for, because it has no friends. I was once giving a talk in Europe and I said
that China has no friends. And a lady from the Chinese embassy came up
afterwards and say, “But that’s not true. We do have friends.” I said, “Well name one.” “We have a friendship treaty with Pakistan.” I went, “Ah, anyone else?” And she said, “Singapore.” I said, “Sorry, is that a question or a statement?” And so China doesn’t have friends. It goes out almost out of its way to alienate
countries in the region, certainly countries it should be cooperating with, countries that
have large Chinese diaspora as well. So they have natural affinities with them,
but they seem to be unable to build an inclusive type of model. And it becomes a very Han chauvinistic model. And this, I think, is ultimately an underlying
weakness in the politics in China. So, you look at those domestic sort of political
issues, that domestic inability to build friendships and alliances, even within Asia, its natural
community. You then bring into this Trump, who has almost
alienated everybody he meets. And then you think, this is clearly going
to be volatile for the coming years. Being tougher on China, not a problem. Is Trump the person to do it? I really have to doubt, because I can’t see–
he’s a man who revels in his own ignorance, and seems to have surrounded himself with
people who, again, are not necessarily think that simple solution to complex problems are
the way forward. I don’t think that’s necessarily is going
to be– it may be good for markets. There certainly will be volatility, as many
of my friends would say. But it’s not necessarily going to be good
outcomes I think. What is interesting– and obviously I work
in finance and I write about the Chinese financial system, but I don’t manage money. I thankfully don’t need to give people advice
to what to invest in China, although my default answer is, I’m sure there’s lots of good of
good business to invest in China. But I think what’s interesting or when I think
about China or how I think about it differently from others, or many of the people who would
be my peers or the readers of Red Capitalism, that I came to China because I was interested
in China. I didn’t come to China for the market because
it was a big market or there was a big stock market or there was business opportunities. And so I’ve often thought that’s given me
some advantage, perhaps, of trying to understand China or trying to just, maybe, just accept
some of the frustrations there. And I think of this particularly over the
past– since that Asian– or since the global financial crisis. So you look at over that long eight years,
those two Olympic cycles as I talk about, and you think about, lots of people have done
lots of work on debts and whatever, and this growing network of debt and all these notes
and look at these empty apartment buildings and whatever. And I said yes, that’s true, that’s very nice. And then they automatically then sort of jump
through on to, well this must stop, that this must come to an end, that default beckons
or whatever. And I think, that’s sort of true. Of course it’s true, and ultimately there
is a price to be paid. But I think in China, two of the things that
I always think about China– this is because I’ve been interested in China long before
the economics of it as it were– is that China is the land of the absurd and the arbitrary. And I think unless you understand or appreciate
that China is this absurd country in some ways that’s struggling to become modern, then
you come too quickly to these conclusions. Oh the bank’s accounting’s all hocus pocus. The bank must therefore go bust and I’m shorting
the banks. Well why would you do that? There’s no evidence banks are going to go
to zero. There’s no short sell report that’s going
to show– expose all. And so you’re almost looking for the wrong
sort of outcome. And I think it’s understanding this, of the
absurdity and the arbitrariness of it, that you simply, when you do your China analysis,
you are left with a lot of unanswered questions. You are left almost in dead ends. You think, but surely the next step means–
I say, well it does. I’m not saying it doesn’t. But who’s going to take that next step? Who’s going to force the bankruptcy? Who’s going to ask the difficult question? In Chinese, when you raise these types of
points, Chinese will say to you, semi-apologetically, but also in earnestness about just apologizing,
In China it’s like this. And you think, not again. And you know it’s true. But this, sadly, is– and I think if you’re
an investor, at all sorts of levels, not just whether you’re picking stocks or whether you’re
doing real business– and clearly people have made a lot of money in China. So it’s not as if it’s just a complete fiction
or fraud. But you simply end up with a lot of these,
like I say, loose ends and unfinished stories, that often sort of fizzle out in some way,
and it doesn’t come to a clean bankruptcy or something. But what you find is that the loss has been
socialized in some ways, that someone else bailed somebody else our or they borrowed
from here, and the story morphs into something else. And that’s very difficult, I think, to explain
a lot of the time. It’s a bit like the politics we talked about,
the politics and economics being tied up. But it’s often very difficult. If you focus just on the numbers, yes, the
numbers can expose a lot of sort of malfeasance or wrongdoing. But that’s only part of the story, because
there’s also then another parallel track of almost like back as it were or state support
or local support that carries on in the background that allows things to continue. And everyone sort of plays along with the
game. It’s in nobody’s interest to pull the rug
away in that sense. So I think once you understand that about
China, I think, does it make you a better investor? Maybe– maybe you get a bit less frustrated. Because again, people– even though I’m in
sort of financial markets, I was authorized. So I consult with various people on all sorts
of China topics. And I remember somebody came here doing a
big project, a big property deal, with a big blue chip Chinese name. And I was advising him over a glass of wine
as you do. And he said something like, “So, what did
you think of my Chinese partner?” And I said, “Well the first thing you need
to understand is that all Chinese partners are bad partners.” And he said, “Well what did you mean?” I said, “Well it’s not necessarily they’re
out to defraud you, but they’re almost certainly not what you think they are. And so even though this is a blue chip name
and they’re saying they’re going to invest X hundreds of millions of dollars with your
property project, do they have approval to bring the money out of the country?” “Well they’re a big Chinese name.” I said, “Do they have approval to bring–”
“We’ve not asked, but surely they’ll be able to get it.” “Why would they be able to get it? Aren’t you watching the news? Don’t you know how difficult it’s getting
money out of the country? Have they got approval to do the project in
the first place?” “Oh? You mean they may not?” “Well why would there? You cannot assume that.” So it’s not that they’re necessarily lying
to you. They may be very honest about doing this project. They may have the money in China. But you don’t need the money in China. You need it somewhere else. And so I think understanding the framework
in which China operates, partly you could argue is a good deal due diligence. But it’s also understanding how China operates,
how entities, how individuals operate, that will often speak well beyond their capabilities
because they’ll think something will turn up, that oh, we’ll figure out a way to do
it. And often, of course, they won’t figure out
a way to do it, which makes it very frustrating because you think, I’m dealing with a blue
chip Chinese name here. And then actually they are just as beholden
to the arbitrary regulations of the government as anyone else.

China waives tariffs on 16 American products


THOSE TO CONTINUE TO BE SOLD. CHARLES? CHARLES: THANK YOU VERY, BLAKE VERY MUCH. FAST MOVING DEVELOPMENTS. THE PRESIDENT DISCUSSING THE LATEST DEVELOPMENTS IN CHINA AFTER THEY EXEMPTED 16 ADDITIONAL U.S. PRODUCTS FROM TARIFFS TODAY.>>I THINK THEY DID THE RIGHT THING. I THINK GOOD FOR THEM BUT THEY TOOK THEM OFF. I THINK, I THINK IT WAS A GESTURE OKAY? IT WAS A BIG MOVE. I WASN’T SHOCKED. CHARLES: DESPITE THE GOOD NEWS A NEW SURVEY SHOW AMERICAN COMPANIES ARE STILL CANCELING INVESTS. IN FACT THEY’RE CANCELING THEM AT A FASTER RATE. WHAT DOES IT ALL MEAN AS THE TWO SIDES PREPARE TO MEET NEXT MONTH? I WANT TO BRING IN FORMER COMMERCE DEPARTMENT DIRECTOR CHRIS GARCIA. WE’VE SEEN IN THE LAST WEEK CERTAIN OVERTURES WITH REGARD TO CHINA CONCERNING THE SITUATION IN HONG KONG. THEY AGREED TO MEET IN OCTOBER. THIS WEEK WE’VE SEEN A SERIES OF OLIVE BRANCHES OF SORTS, COUPLED WITH CONTINUED POOR ECONOMIC DATA COMING OUT OF COUNTRY, AND THAT THEY ARE UNDER PRESSURE AND SHOWING THAT PRESSURE WITH THESE OVERTURES?>>CHARLES, ON A DAY WE WILL NEVER FORGET. I RETURNED FROM A PEPPERDINE MEMORIAL ON PRAYER SERVICE, PLACING 3,000 AMERICAN FLAGS ON THE FRONT LAWN. I WOULD LIKE TO THANK PAT BOONE AND PEPPERDINE PRESIDENT JIM GASH CONTINUING THAT MEMORIAL. WITH RESPECT TO THE CHINA TRADE DISPUTE, THIS BACKS AND BOLSTERS PRESIDENT TRUMP’S TRADING POSITION PROVING HE WAS RIGHT ALL ALONG. THE AMERICAN BUSINESSES SAY TWO TOP CONCERNS ARE INTELLECTUAL PROPERTY PROTECTION AND ACCESS TO THE CHINESE MARKET. NOW THAT LIGHT IS BEING SHED ON CHINESE UNFAIR TRADE PRACTICE WHAT WE’VE SEEN THEY FORCED TECHNOLOGY TRANSFERS. THEY HAVE IN FACT STOLEN IP. WHAT WE’RE LOOKING AT FROM THE PRESIDENT NOT JUST PROTECTION OF IP AND FORCED TECHNOLOGY TRANSFERS AND STOPPING OF SUBSIDIES, SUBSIDIES FROM STATE-OWNED ENTERPRISES TO STATE-OWNED ENTERPRISES OR CHINESE COMPANIES OUTRIGHT, BECAUSE THEY OUTRIGHT BLOCK AMERICAN COMPANIES FROM COMPETING. ALL PRESIDENT TRUMP WOULD LIKE TO SEE, THIS GOES BACK TO BOTH PETER NAVARRO AND LARRY KUDLOW’S ASK, WHICH IS TO HAVE ZERO SUBSIDIES, ZERO TARIFFS, ZERO NON-TARIFF BARRIERS. GREAT TO SEE THE BUSINESS COMMUNITY BACKING UP PRESIDENT TRUMP WITH A SURVEY. CHARLES: IN THIS AMERICAN CHAMBER OF COMMERCE SURVEY, INCREASED PURCHASES OF U.S. GOODS, I WOULD THINK THAT MIGHT BE NUMBER ONE FOR PRESIDENT TRUMP. BY THE WAY THE EASIEST THING PERHAPS FOR CHINA TO DO, HEY, WE’LL BUY MORE OF YOUR STUFF. THE HARDER THING, INTELLECTUAL PROPERTY, THEY STILL WANT TO BE THE PREEMINENT NATION IN THE WORLD. I THINK THAT IS THE STICKING POINT. THE SOUTH CHINA MORNING POST SAYING YESTERDAY THAT A DEAL COULD BE DONE THIS YEAR IF AMERICA WOULD GO WITH 80% WHAT THEY HAD ON THE TABLE BUT IP, HOW CRITICAL IS THAT IN THERE?>>THE IP PROVISIONS IS BASIC. IF A COMPANY INVESTS THIS MUCH MONEY IN R&D AND INVEST BILLIONS AND BILLIONS OF DOLLARS AS U.S. COMPANIES DO IN NEW TECHNOLOGIES, THOSE NEW TECHNOLOGIES SHOULD BE PROTECTED THAT IS BASIC COPYRIGHT PROTECTION. ANY DEAL WITH CHINA, AMERICAN BUSINESSES CONCUR WITH THAT, ANY DEAL WITH CHINA MUST INCLUDE ENFORCEABLE PROVISIONS. TALK IS ONE THING. WHEN YOU HAVE BEIJING WALKING AWAY FROM THE TABLE AS THEY DID IN MAY, THAT SHOWS ME MAYBE THEY’RE NOT PERHAPS READY TO MAKE SUBSTANTIVE CHANGES REQUIRED FOR THE DEAL. CHARLES: LOOK AT 28% SAY THEY WANT IMPROVED INTELLECTUAL PROPERTY PROTECTION IN DIFFERENT WAY. THAT IS OVER 70% SAYING THEY DON’T CARE. THEY’RE OKAY WITH A FAUSTIAN DEAL, OKAY GETTING RIPPED OFF AS LONG AS THEY HAVE ACCESS TO THAT MARKET. WHAT DO WE SAY WITH COMPANIES THAT ARE OKAY WITH BEING RIPPED OFF AS LONG AS THEY GET ACCESS TO 1.3 BILLION ADDITIONAL CUSTOMERS?>>IT IS NOT A GOOD THING FOR AMERICAN WORKERS TO SEE THOSE COMPANIES OKAY WITH THAT APRIL D I.P. THEFT, MAYBE THEY DON’T HAVE SENSITIVE IP EXPLOITED BY CHINA. THAT MAY BE A WAY TO READ THAT SURE PAY AS WELL. THEY OFFERED SOUND ADVICE TO U.S. BUSINESSES. WHILE WE WANT TO MAKE SURE WE HAVE ACCESS TO CHINESE MARKETS BUT WE WANT TO MAKE SURE ON THE OTHER SIDE WE FORCE CHINA TO PLAY BY THE RULES BY DIVERSIFYING U.S. MANUFACTURERS SUPPLY CHAINS F WE CAN FIND A WAY TO GET CHINA TO FEEL THAT PRESSURE, AGAIN THERE MIGHT BE A LITTLE BIT OF SHORT-TERM PAIN BUT IN THE LONG RUN WE’LL HAVE MORE PROTECTED INTELLECTUAL

U.S.-China trade talks end without a deal. Why both sides feel they have the leverage


JUDY WOODRUFF: The U.S.-China trade war intensified
today, as the Trump administration increased tariffs on imports from China, and China pledged
to retaliate. As Nick Schifrin reports, China’s top negotiator
left Washington without an agreement. NICK SCHIFRIN: On a sunny Friday morning in
Washington, the trade war escalated with a handshake. The top Chinese and U.S. negotiators ended
their 11th round of talks cordially, but the two countries are in economic conflict. Today, the U.S. increased tariffs from 10
percent to 25 percent on $200 billion of Chinese exports, including seafood, luggage, purses,
and parts sold to U.S. companies, such as circuit boards, microprocessors, and machinery. And the U.S. is threatening to go even further
and impose tariffs on all cell phones, clothing, and laptops made in China, and exported to
the U.S. In response, the Chinese Foreign Ministry
vowed — quote — “necessary countermeasures.” And spokesman Geng Shuang asked the U.S. to
give a little. GENG SHUANG, Chinese Foreign Ministry Spokesperson
(through translator): The two sides need to meet each other halfway. NICK SCHIFRIN: But the U.S. accuses China
of not going halfway. U.S. officials say, over all these rounds
of negotiations, they hammered out a 150-page deal with changes to Chinese laws that would
open the Chinese market to U.S. companies and protect U.S. technology and intellectual
property. But, last weekend, the U.S. believes Xi Jinping
rejected those changes to law. DONALD TRUMP, President of the United States:
We were getting very close to a deal. Then they started to renegotiate the deal. We can’t have that. We can’t have that. So our country can take in $120 billion a
year in tariffs, paid for mostly by China, by the way, not by us. A lot of people try and steer it in a different
direction. It’s really paid — ultimately, it’s paid
for by — largely by china. STEVE LAMAR, Executive Vice President, American
Apparel & Footwear: Tariffs are taxes the Americans pay. They’re taxes that American companies pay. Ultimately, they’re taxes that consumers pay. And they’re taxes that result in job losses
in the United States. NICK SCHIFRIN: Steve Lamar is the executive
vice president of the American Apparel & Footwear Association. He opposes this round of tariffs, and says,
if further tariffs are imposed on everything made and shipped out of China, the victims
will be American consumers. STEVE LAMAR: If you realize that 82 percent
of our backpacks and purses and travel goods come from China, 70 percent of our footwear
comes from China, 42 percent of our apparel comes from China, when you tax these items,
that is going to result in about a $500 increase for an average family of four. NICK SCHIFRIN: And some of the families worst
hit by the trade war are farmers. DANIEL RICHARD, Louisiana Farmer: The Richard
family has been farming for around 100 years, my grandfather, great-grandfather, and myself,
and hopefully the next generation. NICK SCHIFRIN: Daniel Richard farms soybeans,
rice and crawfish in Louisiana. He and his fellow farmers were hit by Chinese
retaliatory tariffs, making it impossible to sell their crop. They had to leave them in the field to die. And, today, soybean prices are so low, he
can’t cover his costs. He spoke to us from his phone on his farm. DANIEL RICHARD: At the selling price it is
now, at $8 beans, we can’t pay the expenses that we are putting out in the field. So we’re unprofitable as soon as we put the
planter in the field. NICK SCHIFRIN: He doesn’t blame President
Trump. He blames the Chinese, and urges both sides
to make a deal to save American family farms. He fears his son won’t be able to follow in
his footsteps. DANIEL RICHARD: Well, he just graduated from
college. I can see in his heart and his blood he’s
got it in him. And he’s definitely got the work ethic. But he sees what’s going on right now. And there’s other opportunities out there. It’s not just the farms that are hurting. It’s these little communities that are hurting. NICK SCHIFRIN: Administration officials say
they understand that short-term pain, and ask for patience as they try to change long-term
Chinese economic behavior. But, for now, as it was in Washington this
afternoon, there could be stormy days ahead. This afternoon, though, President Trump tweeted
and called today’s discussions candid and constructive and said the conversations will
continue. To talk this through, we get two differing
views. Ryan Hass was the director for China on the
National Security Council staff during the Obama administration. He is now a Brookings Institution fellow. And Derek Scissors has written extensively
about China’s economy, and is a resident scholar at the American Enterprise Institute. Thank you very much to you both for joining
the “NewsHour.” Ryan Hass, let me start with you. Many assumed last week that there would be
a deal between the two sides. Was this a breakdown we saw today? RYAN HASS, Brookings Institution: Well, it
appears to have been a breakdown from expectations. As you said a week ago, it looked promising
that there would be a deal. And then, over the weekend, President Trump
and members of his team indicated that the Chinese had backed away from commitments that
they thought they had already received from them. And, as a consequence, we now have another
step on the escalatory ladder of tariffs with China. So, my concern is that we have taken another
step down a dark tunnel with no end in sight. NICK SCHIFRIN: Derek Scissors, is this a step
down a dark tunnel with no end in sight? DEREK SCISSORS, American Enterprise Institute:
If you wanted the deal that was on the table, it is. I was not at all convinced the deal on the
table was going to work. In particular, I thought China’s incentives
to keep its promises on intellectual property were unlikely — were low. And then the Chinese backed that up by saying,
we don’t want to make the legal changes that even might lead us to keeping our word on
intellectual property. So it’s certainly a step away from the deal. I don’t think that’s necessarily a step down
a dark tunnel. NICK SCHIFRIN: Meaning you don’t think it’s
necessarily a bad thing to step away from that deal? DEREK SCISSORS: That’s right. It’s going to be very difficult to get China
to change its policies on intellectual property, as well as others, such as subsidies to state-owned
enterprises. It shouldn’t be an easy deal. It certainly shouldn’t be a deal that the
president makes in a phone call with Xi Jinping. As some have implied, we’re going to have
difficulties in the negotiation. This is all part of the — what the process
should look like. NICK SCHIFRIN: So, Ryan Hass, intellectual
property, as Derek Scissors just mentioned, subsidies for state-owned enterprises, forced
technology transfer, these are the things the U.S. is trying to get China to change. Can tariffs achieve that? RYAN HASS: Well, thus far, I think that we
have overestimated our ability to muscle the Chinese into accepting our will, and underestimated
China’s ability to punch us in places that hurt. And, as a result, American people are feeling
the pain. And so if the question is, are we going to
get absolute surrender from the Chinese, I’m very pessimistic that that’s the case. If we can make progress where progress is
possible, I think we should do so. NICK SCHIFRIN: Derek Scissors, is that enough
progress, as Ryan Hass put it, rather than get the Chinese to surrender? DEREK SCISSORS: Well, first of all, I disagree
with both premises in Ryan’s point. When he says the American people are feeling
the pain, farmers are feeling the pain. Aggregate U.S. economic growth is strong. Consumer prices are low. I don’t see much pain caused by China tariffs. They may be caused by bad fiscal policy, but
not by our China policy. And then the second part, of course, it’s
a false dichotomy to say the idea is, we have to accept the Chinese offer or they have to
surrender. As I said, this is going to be a long, difficult
process. We’re not going to get everything we want. But the turn — to make a deal just so that
you can remove uncertainty for the stock market or the like would be a mistake that would
hurt the U.S. for years to come. NICK SCHIFRIN: Ryan Hass, short-term pain
OK for long-term gain? What do you think? RYAN HASS: Well, if there is long-term gain
that accompanies the short-term pain, then sure. But right now, all we’re seeing is the pain,
without any accompanying gain. I think the American people were supportive
of President Trump shaking things up and trying a new approach to China. I think that there was merit to it. But they wanted to achieve a purpose, not
attack China on principle. And, right now, we are in this exculpatory
spiral, where neither side appears willing to take a step back from the brink. And I don’t think that’s a good place for
the United States to be. NICK SCHIFRIN: Derek Scissors, let me ask
about leverage right now. Who has more leverage, the United States or
China? And do both leaders believe right now that
they can actually push the other around? DEREK SCISSORS: I hope not, because that’s
— that’s — pushing the other around, as Ryan just mentioned, for no goal is not a
good strategy to get what you want. I do think the U.S. has more leverage. The president is right about that. But the leverage has to be applied over an
extended period of time. If the president becomes impatient, as it
seems he was late last year and early this year, then we can’t use that leverage. The U.S. leverage advantage is a long-term
leverage advantage. It’s not about signing on tariffs and then
saying a week later, are you ready to make a deal? We’re going to have to have some pain to get
China to change its policies. If we’re not willing to put up with that pain,
then we should just abandon this process and sign a short-term deal that does very little. NICK SCHIFRIN: Ryan — Ryan Hass, yes. Sorry. RYAN HASS: I think Derek makes a great point. In trade negotiations, the patient party has
an advantage. The disciplined party has an advantage. And right now, the Chinese are trying to stake
out that territory. The Chinese have a view that they have leverage,
because the closer that we get to our 2020 presidential election, the more desirous President
Trump will be of a deal. The United States believes that it has leverage,
because our economy is strong and China, we believe — the Trump integration believes
that China’s economy is brittle and that President Xi needs a deal. And so we find ourselves stuck in this dilemma
where both sides think they have leverage over the other, and neither appears willing
to make the compromises necessary to reach a deal. NICK SCHIFRIN: Derek Scissors, should the
U.S. be making compromises right now? DEREK SCISSORS: No, it should not. Again, if you start with the premise that
we have serious problems in our relationship with China, you don’t try to get to a quick
outcome. You have to deal with uncertainty and risk
and stock market losses and all the things that come in with long negotiations. We should not be in a hurry to make a deal. Now, Ryan may be right that the president
sees the need to make a deal before the 2020 election. I hope that’s not true. I hope he continues to receive support, as
he has, from both parties, because both parties have realized we need a change in the China
relationship, and it’s not going to be easy. NICK SCHIFRIN: Ryan Hass, you mentioned whether
— the perspective from the Chinese that the U.S. actually has less leverage. There’s a notion of the Chinese officials
I talk to who say, basically, you guys can’t take the heat. You guys can’t take the political heat — or
the president can’t take the political heat and actually make sacrifices. Is that right? RYAN HASS: Well, Nick, I think you’re right. I think there’s a baked-in assumption that
the Chinese have that the American political system is ill-equipped for pain tolerance. And the Chinese see that as their advantage. They see their system, their top-down Leninist
system, where they have a leader that doesn’t face reelection, a leader that does have control
over his media and can tamp down discontent or protest, and a leader that can allocate
resources where they’re needed, with control of fiscal monetary levers, as distinct advantages
that they have on a systemic level relative to the United States. I agree with Derek. I would like for us to prove them wrong, as
an American. But we will see. NICK SCHIFRIN: Derek Scissors, last word to
you. Do you have faith that the administration
is going to pursue this path in the correct way, in your opinion? DEREK SCISSORS: No, I’m afraid not. I think the president’s constant comments
about his friendship with Xi Jinping make it difficult to have faith. I think he deserves great credit for identifying
this problem and being more aggressive than President Obama and President Bush. We need that. But I think the president is still looking
for maybe a personal connection to Xi to seal a deal that will benefit the United States
for a year or two, but not solve the problems we have with China. NICK SCHIFRIN: Derek Scissors with the American
Enterprise Institute, Ryan Hass, former Obama National Security Council China director,
now at Brookings, thanks to you both. RYAN HASS: Thank you.