00:00At the moment, I think it serves China very well and is consistent with past practice not to become overtly
00:08involved,
00:09though behind the scenes, of course, like any other major economy integrated into the global economy,
00:16China has to be concerned about the impacts that the war in the Middle East is potentially going to have.
00:23What would you say that impact is going to be? Because we don't know how long this will last,
00:27but obviously they do have a lot of interest in the Middle East.
00:30They've invested billions and billions into the Middle East.
00:33The choke point affects China in the Straits of Hormuz.
00:37So the oil shock, on the one hand, could help them kickstart their battle against deflation,
00:44but at the same time, there's good inflation and there's bad inflation.
00:47This would be bad inflation because it trickles down to the industrial base.
00:51You're absolutely right that it's bad inflation and that it's price-rise-driven inflation from the costs of the inputs
01:01increasing,
01:01and that's not good inflation.
01:04Other than demand-driven.
01:05That's not based on consumer demand-driven inflation.
01:09But at the same time, I think it's important to note that for the next few weeks, maybe two or
01:17three months,
01:18China did invest heavily in building up its oil reserves to a third of global reserves,
01:25and that probably is going to insulate China longer than other Asian economies from the effect of the oil shock.
01:33Perhaps on the liquefied natural gas front, China a little bit more vulnerable,
01:40less weeks of supply on hand in that regard.
01:44Everything depends, of course, on how long before the Straits can reopen,
01:51and if the Straits do not reopen within two to three months,
01:57the global economy is going to be in for a very bad period.
02:02It's going to be similar, Steve, to COVID.
02:05At the moment, you know, at the moment COVID started,
02:09it was confined to one country and then Asia,
02:13but the contagion spread over the course of two or three months,
02:17and we're going to see the contagion of this oil crisis spread around the world
02:23over the course of the next eight weeks in a very severe way.
02:28You
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