- 9 months ago
Washington & Beijing have agreed to a 90-day truce, stepping back from the brink. But what’s really at stake, and what comes next in the world’s biggest trade rivalry?
Join Professor Emeritus Datuk Dr. Woo Wing Thye and Melisa Idris as they break it down in the first episode of Woo Says.
Join Professor Emeritus Datuk Dr. Woo Wing Thye and Melisa Idris as they break it down in the first episode of Woo Says.
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00:00hello folks welcome to wu says where we get real about the u.s china and everything in between
00:19two superpowers one global story that's what we're going to cover today i'm melissa adres
00:23and with me is a professor wu wingtai who has been studying u.s china relations long before
00:30tariffs became headline news uh so prafu can i just ask you is it is it true that um even before
00:37washington and beijing sneeze that you've already got the tissue box ready
00:46that's a good one you've been watching the us and china for a long time haven't you
00:52yes i usually do it with popcorns rather than tissue box well why why do you watch them i mean
00:59we know that the tariffs have dominated headlines um and there's been an escalation uh between the
01:06two global superpowers ever since donald trump came back into office but but why do you think
01:11that has happened why have you always been watching these two global superpowers
01:18and their interaction and what it means for the world well uh i grew up in the generation where
01:26the world was divided very rigidly between communism and capitalism and so watching the division between
01:37the two types of economies was certainly the starting point of my life and i it was quite
01:48incredible incredible that i managed to live in a time when the two systems converge to one
01:56basically the central planning system ended without anyone attacking those countries and occupying them
02:06the the voluntary reforms that took place in china beginning in 1978 was an act of self-revolution
02:17i thought that was mighty interesting that here is a country that is capable of self-correction
02:26and of course when the soap union imploded that shows you what happened when a system
02:33becomes incapable of self-correction
02:37well that's interesting the u.s certainly seems to have the better model since it survived the cold war
02:47but now i think we are in the juncture after the election of donald trump to ask the question whether
02:54the u.s system is able to correct itself from having made the same mistake of electing donald trump twice
03:05it really is quite incredible that the leading scientific power in the world has turned its back
03:20on science calling climate change a religion and uh slashing research in health and all the
03:35uh fields of knowledge that have produced the internet age it does it it it is a surprise to me
03:48but that also gives me huge optimism that the u.s is in a bad patch right now but i'm confident
03:58that an enlightened group of elite will soon displace donald trump okay so so maybe there's hope for
04:08self-correction for the u.s i want to talk to you about what's happened what happened in over the
04:13weekend i mean there was a big weekend for the global trade war uh the u.s and china have agreed to
04:20significant tariff reductions i think went from like triple digit tariffs to now moderately high levels of
04:27double digits um and it's going to be so for the next three months so that it's essentially a 90 day
04:33ceasefire for the main front of the tariff war was were you surprised was this i mean we knew the deniva
04:40talks were happening but did this come as a surprise that this was what came out of those talks well i knew
04:48i knew that the very high tariffs that they had imposed on each other basically decoupled the two economies
04:59it would if continue it would completely eliminate trade between the two countries
05:06and given how closely intermesh they are in production networks i cannot see how a sudden rupture like this
05:19would not cause extreme pain on both sides and the question is number one why are they doing this to
05:29themselves all right why is donald trump doing this number one and number two does he think he could get
05:38away with it and what we see now is a very embarrassing picture for americans to see donald trump make
05:50another unconvincing announcement of victory that the chinese have come to the table and we have
05:59got them to lower their tariff from 125 to 10 whereas the americans of course also lower their tariffs
06:08from 145 to 30. i have to ask you why why would you say that it's unconvincing unconvincing to whom i mean
06:17both sides are claiming victory for sure but why is the us unconvincing why is the us's claim to victory
06:24not convincing because well it is not convincing largely because it got no concessions out from the chinese
06:36other than okay you lower your gun i lower my gun that but that is not a a victory
06:47victory a victory is when the other guy put down his gun and while you still have yours pointed at him
06:55what it really shows is that china has gotten too big to be bullied china has the u.s is a big cudgel
07:05but the chinese turns out also have a very big stick and then it became a test of who could put up with
07:12the pain more and clearly the pain was exceedingly high for both countries like you look at the u.s the
07:22u.s uh let's pick uh toys over 70 percent of toys sold in the u.s are from china and over 80 percent of
07:37christmas decoration so in the united states are from china and when you look what that means the
07:46immediate consequences many toy stores will have to close close shop that's an american site the retail
07:55section is uh which means the middle class or lower middle class shop owners a lot of them between our
08:04business and in china and in china the factories are closing so it hurts on both sides and at the same
08:12time you get a lot of uh unhappiness expressed by traditional allies of the u.s because what's
08:23happening to the goods that were originally destined for the u.s markets they are being redirected to third
08:30markets and so all these countries felt themselves inundated by a fire sale and so they are not happy
08:41but the more important thing is the americans found that this situation was not sustainable
08:53beyond beyond the short run the reason is the following that is the pain and the second thing is
09:04the ted right remember on april 9th donald trump suspended the tariffs against the rest of the world except
09:14for china yes right on the second he had announced tariffs on everybody and it started at midnight on the
09:23on the 9th of april and but then the stock market tanked the dollar started sliding down rapidly
09:32so 14 hours after the war began he declared a pause he declared victory
09:37a pause on all the other countries but china but let's just see what happens after a couple of months
09:47when people figure out what is happening which is they can continue to export to the u.s with no
09:53additional tariffs they can buy from china without additional tariffs so why don't they buy the goods from china and then
10:03we ship it to the u.s so every country in the world would be getting goods from china and reselling
10:12it to the u.s and how much of the goods from abroad could the u.s customs office check right usually
10:22you check less than one percent of the goods that come in it's a random selection isn't it it's a random
10:27selection of less than one percent so suppose you find a container that has chinese goods in it so you
10:36impound it that means you impound one of every hundred containers with chinese goods so basically
10:47either the customs service become thoroughly corrupt because there's so much money to be made
10:55by these people who are redirecting goods that they will simply bribe the u.s customs and if the u.s
11:03customs proved to be incapable of corruption not you know being upright individuals what that means is
11:12they will check every box if they check every container the ports will be completely paralyzed
11:19that that is not feasible at all yeah that is why scott besant said this is not sustainable it is not
11:28sustainable because it becomes ineffective right so in the medium run is this a ceasefire i mean the root
11:37of the problem still doesn't exist right um china still sells far more to the u.s than it buys and that
11:43i think was the main contention of donald trump in imposing these tariffs what do you think is
11:48going to happen after 90 days is this a ceasefire is this really um the kind of de-escalation of the
11:56tariff war as we know it i think that
12:02the tariffs would stay at the current level and i think that there will not be
12:11a dramatic drop in tariffs but however given the inevitable smuggling all the pressure will be
12:23to drop it to 10 percent like it like all the other countries are being uh charged 10 percent anyway
12:32that's the blanket anyway right yeah which is in a way a nonsensical policy because the whole thing of
12:40uh tariff is that i want to bring manufacturing jobs back to the united states so you should target
12:49only those particular manufacturing jobs you want back whereas this one do you want the toys industry
12:58back do you want the textile industry back the shoemaking industry back clearly that would be
13:05uh america would not be able to uh take all of them back right and that would be undesirable in fact to be
13:16self-sufficient is to be poor so so you think after 90 days it will that the tariffs will be no longer
13:25implemented this is is this essentially a cancelling of the tariffs the triple digit tariffs that we know and
13:31that was just an empty threat from both sides oh well the chinese were very serious as long as you've got
13:41triple digit on me i'll have triple digit on you i we did not choose to start the fight
13:50but since you have started the fight and donald trump's you must remember two weeks ago
13:56he's he was gloating about all these foreign delegations are coming to washington dc to kiss my uh behind
14:11also is uh i i use the more polite term but with and then he said xi jinping will be coming to
14:20to washington dc soon in other words the implication is he'll come begging yeah and then when the chinese
14:29ignored him he then said call me and of course he didn't call either right is the story here china's
14:40defiance is the story here this um uh the narrative of china saying it will not back down and you know you
14:49fired first so we will retaliate and stand our ground is that the story here the story is if you have a
14:58dispute let us sit down as adults and talk about it and there's no use calling each other each other
15:06person's names and uh throwing a tandem is not an effective way of getting me to to talk to you let's
15:18have some mutual respect right you see you could see all the countries that have so far
15:26rush to washington dc to negotiate are much smaller countries the us
15:36donald trump i shouldn't say us donald trump in particular is a bully and he found that
15:42he said on july on april 9th that bullying bullying the world was a bad idea which was why he paused and
15:51started hitting on china alone then he found out bullying china was also not a good idea because china was too big
16:01and he was not going to fly all the way to dc to kiss his ring at least and you notice that unlike trump's first term
16:16when he launched the trade war against china in the first term the chinese went to washington dc
16:24to negotiate so it's almost like a supplicant coming to talk about terms of surrender in this case we
16:35meet in neutral territory called switzerland yeah i i mean uh you because the whole thing becomes show me some
16:48respect and respect and especially now i carry a stick that is as big as you
16:56and um i think that the u.s public is rightly very embarrassed by the antics of donald trump
17:09his ineffectiveness in ending foreign wars so far because he has promised to end the gaza conflict
17:20and the ukrainian war in a weekend and he's been there now for over 100 days right and the only thing he has
17:32done is to have fired a whole bunch of government workers whom he has to hire back he has deleted all
17:42the climate change information on the website of the department of agriculture but then the farmers
17:49are all protesting because they want to know what the trends in temperature are has been
17:56and so now they are being put back so well that's the good thing about donald trump he's not a mad bully
18:05you can always count on him to beat a strategic retreat so he's a bully but not a mad bully meaning
18:13that he knows when to to he knows when he he has moved wrongly yes but then it is it is called
18:21strategic retreat so that he can advance again in the future well you know profu i think we will
18:28never run short of things to talk about when we look at the us and china and the um power play between
18:35these two countries i mean they may they may be a tariff cease tariff war ceasefire underway but i think
18:42the power game is really far from over so we will come back every week to discuss
18:49u.s and china and everything in between profu thank you so much for um for this episode of
18:56wu says where power affairs meets plain speak i'm melissa idris and we will see you next week
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