00:00When we look at AI, that is really front and center, right?
00:04And it's frontier technology that is at the heart of the competition between these major economies.
00:11How do you see things shaking out and how does the trade war affect all this?
00:16Well, it's been a long path of de-linking between the two economies, right?
00:19It's not just this year. It's not just last year. It's been almost a decade of this.
00:23But right now, obviously, this is at the heart of it.
00:24It's based on AI, based on chips, based on other technologies, where you are seeing real bifurcations through export controls, through licenses on rare earth and magnets and the like.
00:35And while we've seen a ceasefire when Trump and Xi met in Busan, we've seen sort of a calming down of this.
00:40I think it's only really a ceasefire. We're going to continue to see these two economies and particularly in the tech sector, these two economies move apart.
00:48The extent in which they can truly decouple, though, what do you see a couple of years from now?
00:53You know, I look back at these last several years and you have started to see really, especially on the Chinese side, moving away from the U.S. economy, even before tariffs, even before these export controls on the Trump administration.
01:06You know, China was trading more with Southeast Asia. It was trading more with Russia than Germany.
01:11It was already starting to move away. So as I look the next two years, I think we continue to see that.
01:16And if anything, it accelerates. We start seeing moving apart and particularly China pivoting and looking to the rest of the world.
01:23I mean, that's been the conversation here at the New Economy Forum, right?
01:25The HSBC CEO saying that Asia buys Asia is the new key trend when it comes to trade relations now.
01:32Although I do have to put a caveat there because we're also seeing disputes among the Asian economies.
01:38China, Japan continues.
01:39That is true, right? There are always there are lots of disputes, geopolitical disputes within Asia, though.
01:44So I would say I've seen, you know, we've seen a doubling down between China and the ASEAN nations, right, upgrading their free trade agreement.
01:50You see lots leaning into RCEP, the Regional Comprehensive Economic Partnership.
01:54So there is a framework for this.
01:56But at the same time, for lots of Asian economies, you know, China is a huge benefit, right?
02:01There's lots of foreign direct investment. There's technology sharing and the like.
02:05But it's also a big challenge, right?
02:07You're seeing markets flooded with, you know, textiles, with furniture, with EVs, with other things that they also have ambitions to produce themselves.
02:13So that, I think, is a challenge for lots of the Asian nations.
02:16And the thing is that the U.S. has been unhappy with this global world order for a very long time, right?
02:21This is not about a Trump administration 2.0 coming into place and just applying tariffs everywhere.
02:25So does that mean that the new global world order will persist even after Trump 2.0?
02:30I think that's right. You look at the U.S. and the bipartisan, there are, you know, frustrations with the order that it has been, frustrations with the WTO, with some of the rules there.
02:41But what I think is interesting right now is, yes, the United States is taking actions, tariffs and other things.
02:46But the rest of the world is responding. There are reactions.
02:49And there I see lots of nations, the European Union and others, going out and signing all kinds of free trade agreements or negotiating them with India, with Malaysia, with Singapore, with other countries in Asia, with South America.
03:01And so I think as we look at these next few years, there's going to be a fundamental rewriting of trade rules, not just from the United States, but from others.
03:08What has been the true cost, you think, of this pursuit of economic policy in this manner for U.S. competitiveness?
03:17You know, on the one side, the U.S. is still one of the biggest, wealthiest consumer markets, and we have seen lots of promises of foreign direct investment, and some of that will appear.
03:26We are going to see, and we already see, back to, you know, the AI and technology, huge investments in the United States in those sectors.
03:34That will continue.
03:35I think the challenge here is you're going to get much less bang for your buck, because to build those data centers, to build that energy network, it's just going to cost more money bringing in steel, aluminum, and other things because of tariffs.
03:48When it comes to China, what is your sense of the vulnerabilities in the economy in that market now?
03:55I mean, there are vulnerabilities, obviously, in consumption, there's vulnerabilities in, you know, the demand that it has within China, and there are still vulnerabilities in the tech sector.
04:06There's been huge gains and, you know, huge breakthroughs in China, but we are coming down to chips in many ways, and there they do maintain this vulnerability.
04:15We have seen the U.S. administration, of course, really carry out the French shoring, and they're having some clear benefits for, say, South America, Latin America, Mexico.
04:25At the same time, the Trump administration is pursuing other policies on immigration, talking about potential, what, attacks into Mexico in order to fight the drug cartels, of course, alienating Colombia as well.
04:38How do all of those different policies work out?
04:41You know, this is a big question.
04:42I think the biggest change from the Trump administration, from previous administrations, is it's so unilateral.
04:49And so whether we're talking trade, whether we're talking security, whether we're talking diplomacy, it really is the United States for the United States.
04:56So I think there's a lot of transactions to be made.
04:59There will be that nearshoring.
05:00Lots of companies will continue to source from countries in the Western Hemisphere, but it's going to be a much heavier hand, as we've seen on the security side, and that will be a challenge.
05:09When all of those themes converge, and it's not just the economy and trade policy, but security issues together, how much more complex does it get navigating these challenges for other economies across Asia?
05:21I think it's really complicated, but what has been interesting to me as I look at the trade agreements that have been signed with the United States, with Malaysia, with Thailand, with Vietnam, with South Korea, Japan, Australia, there's a bit of an exchange here.
05:35If you provide foreign direct investment, if you open up your markets, there's a security aspect there.
05:40We saw that with Australia, AUKUS was back on the table when they said they would provide critical minerals.
05:46We've seen it with South Korea, you know, investing in Philadelphia and shipbuilding, you get back on nuclear submarines.
05:52So I think we are going to see even more from the U.S. government ties between trade and security.
05:57You were alluding to some of this earlier about this being a trend that lasts past perhaps this administration even.
06:04Talk to us about crystal ball gates for us, right?
06:08Past this administration, what sort of U.S. economy and global trading order will the next administration perhaps be inheriting?
06:18Well, I think we will continue to see tariffs, right?
06:21These are, they may change, but we're still going to see tariffs from the United States.
06:24And I think those are very hard to roll back.
06:27We've heard that here at the forum over the last couple of days.
06:29I agree with that.
06:30I think that is a change.
06:32But we are also going to see a couple of years from now, I think, a fundamentally different lay of the land
06:36in terms of other free trade agreements.
06:38So the next U.S. president will have to deal with that table that's been set by China, by countries in Asia,
06:45by the European Union, by all others who are signing agreements.
06:48So I think as we go forward, it may not just be the United States that's leading on this.
06:52They'll have to accept the world as it's reshaped itself and in particular the global economy.
06:56This seems to be an international organization that needs to be seen.
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