'Future is Asian' Author Khanna on U.S.-China Trade Tug Of War



address the issue the cow bass laid out because we tend to think of this as a trade dispute and it's involving goods and services and maybe some opening of markets but some people are saying this is more on national security issues it's really a future of the country and we shouldn't be as worried about that can affect cow bass said that indeed and his points really do paint a stark picture of the difference in the social political nature of the regimes and societies of political systems and so forth between the US and China but the point he's making when he talks about you know the asset management community the institutional investors his recommendation that they not pursue deeper investments in China speaks to the other and even larger dimension of China's economic rise in its planning for this year which is not really about the trade war it is about their capital account liberalisation in the opinion that he holds obviously stands in stark contrast that's why his warning is is so is so strongly worded indeed about how the US institutional investing community is looking with you know quite sanguine Lee actually at the opportunity to invest in China's debt equity and other markets this year as things open up and that's trillions of dollars right as you know because the the the total value if you will of foreign holdings of Chinese debt and so forth is relatively low but could stand to quintuple over the course of the next several years and that's going to represent ten or fifteen trillion dollars potentially so you know an order of magnitude greater significance than the stakes here in this trade war so it is an interesting point that he's making an important one well and Parag were you point toward if I'm correct is this is a more fundamental dispute the markets may not have appreciated exactly what's at stake and how fundamental is for both countries and that leads me to the question of who has the upper hand can we calculate that let's compare the two economies for example I could put up a chart that shows the rate of GDP growth in China as opposed the United States China still is growing substantially more than United States but it is coming down somewhere chances uptick president Trump seems to think he is holding the high cards in this in this in this game well I mean that wouldn't be the metric to use in terms of determining who has greater leverage in this geo-economic contest and as you say this is the national security issue shoe economic issue every bit as much as it is just a what has been perceived wrongly of course as a short-term trade issue because of course China with its in PPP terms economy of more than twenty trillion dollars is going to decelerate indeed and you know that's been the case since before this trade war began as we know and of course you know if you're looking for tactical victories of course as some consequences of the trade war have been supply chains shifting out of China in an accelerated rate towards Southeast Asia but for China those aren't the metrics that they would use what they're looking at is achieving autarky greater self-sufficiency and that is the true Holy Grail David of geopolitics not simply to be the largest economy but to have greater self-sufficiency and that in a way is what this trade war is inadvertently accelerating their efforts towards let's remember that made in China 2025 and it's antecedents in terms of other five-year plans that have aimed at greater self-sufficiency in technology are now going to accelerate their efforts to either domestically produce silicon wafers you know and chips and other high-tech components and products or going to accelerate because they fear that they're not going to be able able to get them from Intel Qualcomm and other US suppliers as reliably as in the past because of our export controls and so there that is actually going to benefit some of our geopolitical allies but our geo economic competitors like Japan and South Korea so this is a multiplayer game it's a tug of war so we can't really measure geopolitical victories in such a narrow time horizon the way one can if you're just looking to see who's scoring points in a trade war so for our that's a terrific view of the Chinese and how they see the longer-term strategic goals play the same game from the United States point of view how can we play this strategically and perhaps get away from just a bilateral question of Beijing versus Washington and this is goes to the center of your book actually but they need to look beyond China when we looked at Asia we could put up a chart actually that shows the rate of growth and if you take the seven countries that are likely to grow the most between now and 2030 and number of them are from Asia in fact this is a great point in that that data point comes from some new research from Standard Chartered which I've been citing you know quite heavily because it's a reminder that the rest of Asia is now outpacing China in growth obviously starting from a much lower base but with given the the younger demographics and the rapid investments that are being made in infrastructure and the liberalisation going on in those economies one can safely predict that there is going to be a very steady growth in those economies like India through Indonesia and the Philippines for the next decade or more and they're obviously very eager to capture those supply chains that are coming out of China so indeed the Asian story is a lot bigger than China and that's why from the corporate American standpoint let's remember that part of the ione this trade war is that it is harming some of our most productive most dynamic most profitable sectors in technology that are now going to struggle in the Chinese market so we are going to have to redirect their efforts even more towards capturing market share in those other economies and of course as they get there they're gonna realize that one of their biggest competitors is Huawei right you know when it comes to issues like 5g so one of the things that the u.s. does need to start to do is to think in terms of national champions and greater public-private cooperation in the internationalization the way our European allies and the way Asian countries are already very accustomed to doing so so part is it possible the president Trump is actually playing a more strategic game than sometimes we in the media give him credit for in this sense we'd hear a lot about disruption of supply chains are we starting to see some of those supply chains change already away from China and toward for example Southeast Asia toward Indonesia even toward India countries like that that might in the longer term we're down to the US benefit well that is something that has been again underway since well before the trade war you know Japan was the first major power with a huge investment footprint and portfolio across Asia to massively redirect its FDI out of China towards Southeast Asia beginning almost 10 years ago the rest of us quite frankly are just following Japan's lead in that regard now when it comes to the accelerated impact that's going to have on grow in those non China emerging markets so Asia X China that's a very positive story however for American companies to truly benefit the Trump administration would have supported the trans-pacific partnership trade agreement rather than backing away from it because again right now the u.s. not joining the TPP actually benefits Canada Japan Australia South Korea and other countries that are that are now active in the region so some of the other data shows us how their exports are growing while ours are receding in the region

31 thoughts on “'Future is Asian' Author Khanna on U.S.-China Trade Tug Of War

  1. When the project china 2025 start was a work to set up that of 8 years in advance. You can’t change this strategy planing because USA want it. The Chinese will launch next year china. 2035. I personally plan a tiny part of this program since 2016 the foundation work was in 2014. So we are a lot. Of people working for a program what will be launch next year with targets for 2035. And USA what to change this ? USA shoud aim now to make a change to not if they want to get something from china by 2050. China in big lines has programs for 2050 and even 2070. Its macro- economy strategic thinking in china —- long vision. Not as in USA 4-8 years plan according with elections Hahahahhaha

  2. So glad the US is not in the TPP. They would have ruined it & prolonged American hegemony.

  3. Who ask America to give up on its lower and middle manufacturing sector in the 1970’s. Now, they are suffering from consequences of it. Instead of taking measures to correct one’s fault, it blame its woes on others. Look at their trillions of debts they have.Without dollar domination, how are they going to get rid of the debts? Virtually impossible. That is why US has to run around the world creating problems for those ctries that are in danger to US dollars domination. I think to help Americans stand up on its own feet again, it is to take away the right of US dollar domination . It is actually a blessing in disguise for Americans in the future for if they were not pampered by their hegmony, they would have thought of other pragmatic ways to stimulate one economy.

  4. Those other Asian countries' GDP growth projections are at the mercy of foreigners, unlike China with a solid foundation and more in command of its own.

  5. Chinese know everything outside China, they just never post comments. They don't write, but they read English. (one of the requirement of college graduation is pass English qualification exams. Lol.) I guess it might be creepy to know Youtube, Twitter etc. are actually filled with Chinese young people peeping behind the back😂 trust me, China has a reason for having such rapid development. If America just condemns IP theft, why did Trump require Chinese government to stop funding high-tech and self-innovative programs in Made in China 2025?(See New York Times) Lets be realistic. If one want to attack a country, he never lack excuses.

  6. what is happening with this guy, his eyes blink 3 times thru a 7 minutes show. He gets a point, the Asia-Euro is forming a separate economy zone out of US center. He didn't realize that this change is actually driven by all Asian countries, include India. Those whom quietly hide behind China and watching if the Western culture give them room for grow as a civilization that deserve some respect. If US defeat China somehow, all emerging countries in Asia and the rest of the world will realize there is no room for co-operate with the west. Whomever grow to the size will have to fight for their right to survive and grow. It will be a tragedy to human being.

  7. Things in China going to open up this year. Uh, no, moron. This has been the globalist bullshit we have been fed for 30 years. No they won't ever open up. No they will never adhere to agreements. Yes they lie to our face like we are stooges for believing them.

  8. The Future is American. We are the world innovators. China will never be a major innovator. They are just a parasite on the US.

  9. Any US company that does business with Communist China should be boycotted. They fire American workers and send their jobs to China for cheaper labor, because of greed for more profits. Thank God we finally have a president that is doing something about this problem, and tariffing that Chinese made junk.

  10. The future is not Asian anymore, because Trump is btch slapping your a_ses with tariffs, which will make the cost of doing business in China very expensive. The EU is also preparing to deal with China with tariffs.

  11. And China dumps their own currency to gain more trade surplus.

  12. The accelerated growth of Asian economy is one factor that can bring about a major shift in the world. By 2030, if the forecast shown on 4:30 is correct South Asia will have a huge middle class. A big middle class mean huge consumption and hence huge flow of trade and services. Thus trade between Asian country will also be huge. This also mean that export to the US as a percentage of total trade would have shrank a lot. Currently most Asian country are very dependent on export to the US and they have no choice but to keep propping up the US dollar even as the US creates more $ out of the thin air which has the effect of export inflation all around the world. I figure that when Asia export to the US shrink to below 10%, the willingness to continue to prop up the US $ many wane. This rather than the doing away with the petro-dollar is more likely the last straw that can break the camel's back. However that will happen only by 2030 or later. So in the meantime any talk of the collapse of the US $ is just, in my opinion, wishful thinking.

  13. It's not that easy. The countries in SE Asia has to upgrade their infrastructures before they can be as efficient. Japan knows well about this. US is really putting itself into a bad situation, not to mention that the world will plan to stay away or question US military might and protectionsim. Nothing is free.

  14. Have you been to small Chinese business they never hire someone outside of there people even though they have job wanted posted.

  15. He has reasonable views. The geopolitical scenario is changing unfavourable to the western world – US, UK, AUSTRALIA, NZ, CANADA, FRANCE and GERMANY!
    The days of western glory are long dead in colonialism and imperialism and one of these nations is finding it difficult to adapt to new circumstances because this nation is drunk with "glory crazy". This nation is no other than the US – today the malicious nation on earth.

  16. If you guys want to understand China, I'd watch YouTube channel China Uncensored

  17. He's right about self sufficiency. That's why tariffs could break China's back, making them not self sufficient

  18. Is the future Asia ? How do you know what the future is when China and US are considering war in SCS ?

  19. THAILAND … #EEC Development is screaming ahead… this should have been mentioned in this interview!

  20. He’s level headed and thoughtful… but just another thesis by fortune tellers reading Tea Leaves. The future is always uncertain and the end is always… hard to see.

  21. USA = jealous about china as No.1 in GDP real ppp terms since 2014/2015.
    and made in china 2025.

  22. rednecks refuse to listen. they still think China is in the 70s. LOL

  23. Funny part is that China is investing far more in those emerging markets, integrating them into its own supply chain.

  24. Tired of buying made in China slaves. Plenty of countries that have people working for peanuts and make me same shoes or kids toys screw them..lol

  25. This guy doesn’t know what he is talking about. The future is not Asian. China’s going to collapse.

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