00:00I think it's clear to talk about US-China relationship.
00:02As you have alluded to, I think decoupling has been proven to be both unachievable and
00:07unobtainable. I think the good news from Busan is that we have some kind of
00:12stability and predictability for the coming 12 months with different
00:16milestones that has been building. April visit by President Trump to China and
00:21President Xi is going to attend G20 in Florida. So both team is going to look
00:26for deliverables to deliver to both leaders to kind of claim victories for
00:32both constituencies. So we're looking for where will be the areas that both can
00:37manage the risking competition but also and more importantly to some extent is
00:41where they can expand cooperation. And here I want to make a case for public
00:46health. Mike Bloomberg in the opening of this year's new economy has called out
00:51for cancer collaboration which we've been working on for many years. And I think
00:55this is one area US and China should really work together. Put some data on
00:59the table. US has about 600,000 deaths to cancer as of 2024. China has 2.4 million
01:09deaths to cancer. Globally it's about 10 million deaths every single year. But US and
01:15China accounts for one-third. It is natural for two of the largest victim of cancer to
01:22work together to fight this common enemy of humanity. That's one. Second one is that US
01:28is still leading in biotech and in its regulatory framework. China on the other
01:33hand has clinical trial infrastructure but also a large amount of patient base. It's
01:38also complementary for both to work together to deliver faster and better care and
01:43drugs for patients. And let me add last point. If US and China, if US and Soviet, excuse me, can work together during the peak of COVID,
01:52the cold war, the erratic smallpox, I think US and China should and could work together on cancer.
01:57It's really a human issue, not a geopolitical one. It's interesting. It's not climate. People always say
02:03that's the easiest signs. But it's interesting you brought up the issue of public health. There's still a lot of
02:09structural differences between the two, though, that we have to talk about. When it comes to this
02:15whole, the trade frictions, is that only going to lead to China to continue to this whole kind of
02:21self-sufficiency, tech supremacy sort of regime? Because it seems like, according to the 14-5 year plan, I mean, that is what the priority is right now.
02:30It is so, Yvonne. I think you are right. The stabilization of the bilateral relationship is very much driven by some of the domestic impertinence.
02:38One of them is China's 15-5 year plan, as you alluded to. We also saw the rebalancing of different core relationships within Chinese economy.
02:47And if we may back up a little bit. Sure. We saw some very good performances in the Chinese stock market in the past 12 months.
02:54I think A stock went up 20 percent. Tencent stock went up nearly 40 percent. Yeah. And if we go to healthcare again, the biotech index went up nearly 100 percent.
03:04But why is that? Because the Chinese, within their own thinking, has been shifting the gear of the economy as early as September, October of 2024.
03:17Partially due to their own domestic challenges of economy, but partially in anticipation of Trump 2.0 and the trade war.
03:26Yeah. So they are kind of preparing for that, of changing the local incentive for officials, but also having that roundtable in February with private entrepreneurs, including Alibaba.
03:38The big tech entrepreneurs. Huawei. OK. Deep Seek. Because they have realized the private entrepreneurs in China are not only critical for economic development,
03:46but also for technological competition on the global stage. Then they also had a March roundtable with international investors.
03:54Nine out of the 40 are from, again, the health industry. So they want to also redefine the relationship with international investors.
04:01So that is all driving the shifting of scale of China's economy, partially to deal with the competition with the U.S.
04:09What's next, do you think, in that re-engagement between the Chinese government and the Chinese, the private sector, specifically the tech sector?
04:20Where do you think that relationship goes? Because when you look at the economic numbers, for example, a lot of it is,
04:26we keep talking about what's the government going to do to stimulate growth.
04:30You look at the private side of the investment side, for example. That's not there.
04:35Yeah. So that seems to be the lacking piece to this getting the economy reflated again.
04:40And core of that is that relationship between the two.
04:43Exactly. I think those balancing acts are currently ongoing.
04:47I think the private sectors are not fully convinced this is what this is going to be in the coming 12 months.
04:54But they are increasingly aware, given the external pressure from the U.S.-China competition and internal needs of both technological advancement
05:03for self-reliance purpose, but also for economic reasons, they are needed more than before.
05:09But that social contract hasn't been rewritten yet. It is in the process of being rewritten.
05:15What is still needed then to reinvigorate these animal spirits within the private sector then?
05:21What's still needed for them to invest more?
05:24That's a great question. I think a lot of policymakers in Beijing are trying to think.
05:29I think the Chinese economy on the outside looks complicated.
05:33But if we get to the essence, there's only three key relationships.
05:37One is how the party state is going to have incentive structure for its local officials,
05:43try to create the kind of de facto property protection and personal protection for the private entrepreneurs.
05:50Second is how then the enforcement and implementation of those kind of protections will be put into practice.
05:57As you know, local officials and local governments face a lot of physical challenges,
06:01which leads them to get the private entrepreneurs to supplement what they need at local level.
06:08And third of all is how China can keep open and engaged with the global market for both technology reasons,
06:15but also for the global market. All three relationships need to be aligned to serve its own purpose.
06:21To the point I think Yvonne brought up, and you just mentioned the next five-year plan,
06:26if they're able to rebalance it successfully, that's actually positive for the relationship.
06:32A lot of Chinese trading partners have been asking China to increase its domestic consumption.
06:38Yeah.
06:39Do you think they have announced enough steps?
06:43Is it clear to you that they're going to be able to do that,
06:47rebalance the economy towards a more consumption driven one?
06:50Yes.
06:51Or revived consumption?
06:52I think this is a necessary step for the Chinese government to take.
06:57One thing we see from the 15th five-year plan is, first of all,
07:02a political determination to put economic development at the center again.
07:07That's one political determination.
07:09Second is that I think there's a promise to double the income of its people by 2035,
07:15which means in the duration of the 15th five-year plan,
07:20it needs to reach about 4.2% of annual growth.
07:24So it has a strong foundation for the 16th five-year plan,
07:27which means with the current model of manufacturing and export oriented economy,
07:33it's not going to be adequate.
07:35Hence, to boost up consumption is going to be a necessity.
07:39Then the question is how?
07:41Yeah, how?
07:42A couple of things.
07:44One is to give the people more disposable income.
07:47I'll give you one example.
07:49China has about 200 million giga workers currently in the workforce.
07:54And a huge part of the disposable income are paid to the social security by themselves,
08:00which is around 15 to 20% of their income.
08:03If there's a way for the government to ask the platform companies to cover part of that 15 to 20% of burden,
08:11that will free up a huge amount of consumption capacity for those group of people.
08:16That will help a lot.
08:17the back of their income,
08:18the largest income.
08:22The interest in the household costs are going to be the best.
08:23The rich part of the income.
08:24The price of a population is growing up.
08:25People in the amount of income.
08:26The income is going to be the most有-replaced income.
08:28The interest in the amount of income,
08:29is such as monastic income.
08:30The income is also going to be the most ridden.
08:31The income is the most great because of a certain number of income.
08:34It's going to be the most rich and rich-year plan.
08:36The income is a matter of the people.
08:37The income is going to be the most important.
Be the first to comment