00:00A crucial, crucial stretch here with these meetings.
00:03What would success look like coming out of them for the U.S. and for China?
00:09Well, I think the most important thing is that we get some kind of detente between the two countries
00:14where they stop snipe meeting, sniping at each other and making threats and then backing off and going back and forth.
00:20I think business craves some kind of stability.
00:24And so I think that's what we're really looking for in terms of more specific things.
00:30I think we're going to get very modest deliverables.
00:33We're not going to get some kind of a grand deal.
00:35But the elements are that China wants decreased U.S. tariffs.
00:38They want reduced export controls.
00:40They maybe want U.S. investment opportunities.
00:42And the U.S., as you mentioned, wants rare earths, fentanyl help and market access for soybeans and other products.
00:50And, Jeff, I mean, heading into this summit, and it remains to be seen if we'll see the leaders of these two countries actually meet,
00:56what do you think is the harder conversation or the more delicate conversation here
01:01when it comes to some of these non-tariff measures, rare earths, soybeans, fentanyl, et cetera,
01:06or the actual outright tariff levels?
01:10Oh, I think it's clearly rare earths.
01:12Rare earths has really changed the game.
01:14China now has leverage that they never had before,
01:18and they're determined to exert it in a very aggressive way.
01:22I mean, I think that we're on the verge of a new era, really.
01:26I think that China is going to start spoon-feeding rare earths to the U.S. and other countries.
01:33And I think that they're going to use that leverage in a variety of ways, not just in trade.
01:38Whenever they're displeased, I think we're going to hear more about rare earths.
01:41And the question is, how far are they going to drive that and how are countries going to respond?
01:46There are, you know, on the tariff issues, there are pretty clear solutions or outcomes that we can arrive at.
01:54Trump wants to, I think he said he wants to reduce the tariffs,
01:59and fentanyl accounts for 20 percent of those tariffs.
02:02And it looks like there may be some way they can find an accommodation.
02:05So I think those kind of terms they can arrive at without too much difficulty.
02:10But the monopoly on rare earths is something that we're going to talk about for many years.
02:15Absolutely. And I am curious, though, Jeff, too, like with regards to some of the other issues,
02:19there's been a lot of discussion about China's focus, more inward focus, particularly when it comes to technology.
02:25And I do wonder how this complicates any negotiations.
02:28I mean, I feel like if you had these negotiations 10 years ago,
02:31China had a certain need to be partnered with the U.S. on a lot of these things.
02:35And it seems like right now, and you can correct me if I'm wrong,
02:38they seem to be telegraphing this idea that they don't necessarily need us,
02:42at least not to the same extent that they did in the past.
02:46Maybe not to the same extent as in the past.
02:48But I think a lot of this commentary about how we don't need you anymore, you need us,
02:53that's a typical Chinese negotiating technique.
02:56They want the chips.
02:58They want the high technology.
03:00They know about and they respect the fact that the U.S. has a lead in artificial intelligence
03:06and in other areas.
03:07And they're telling us that it's important because right now they're having their fourth plenum meeting in Beijing
03:13where they're pondering their annual five-year plan.
03:17You know, China tells us in its five-year plans what's important to China.
03:20And the most important thing is technology.
03:23So I discount a lot of this commentary and think that that's a way to try to drive a bargain more easily with the United States.
03:30What about China's financial situation?
03:32And I mean that more from the perspective of internationally.
03:36I know that they've had ambitions to make the yuan much more of a standard bearer for the globe.
03:40And I know they're a long way from that.
03:42But when you look at the weakness in the dollar and, more importantly, the U.S.'s seeming embrace of that weakness,
03:48does this give China an opportunity to maybe push a little bit harder on its own currency valuation?
03:54Well, China's problem is that its currency is not convertible.
03:57So, yes, they can try to de-dollarize, but until they do something about the fundamental problem,
04:03I'm not so sure that things are going to change all that much.
04:05And, you know, this has been an effort of many years to promote the U.N. overseas, to promote digital currency.
04:13This is a recurring theme.
04:15I think we're talking about it more during the Trump trade war because of concern about bonds and some of the U.S. debt.
04:21But this is a longstanding issue.
04:23And, Jeff, before we let you go, you know, we spoke about rarits.
04:27I wanted to talk in a little bit more details about soybeans because Bloomberg News has reported that you take a look at U.S. farmers,
04:33which are, of course, key to Donald Trump's support base, that they're running out of storage for their unsold beans.
04:39They're facing pressure from these lower prices.
04:41And I just wonder, you know, how much of a point of leverage is that for China,
04:46that threat of whether or not they're going to buy these U.S. soybeans?
04:49I think it is a major point of leverage because purchases by the Chinese of soybeans used to be mandatory until the Trump won trade war.
04:59And the threats of that trade war drove the Chinese to seek and encourage other suppliers like Brazil to make up the difference.
05:06Well, now those countries can make up that difference.
05:08And the trade deal that we may see in Seoul coming up could include some element of soybeans.
05:15But if it did so, it would be the Chinese seeing themselves as doing a favor because they have developed alternative supplies in various different countries.
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