00:00 - 00:06
thank you very much it's really a great
00:03 - 00:08
honor to be here we're often told that
00:06 - 00:11
we're living in an Asian Century that's
00:08 - 00:14
going to revolve around a forever Rising
00:11 - 00:17
China but I think when the history books
00:14 - 00:19
about the 2020s are written they're
00:17 - 00:22
going to say that this was the decade
00:19 - 00:25
that China's epic rise finally came to
00:22 - 00:28
an end and that changed everything it's
00:25 - 00:32
what took us fully from a postc cold war
00:28 - 00:34
globalized happy International order to
00:32 - 00:37
one of much more intense security
00:34 - 00:39
competition among rival blocks so I
00:37 - 00:41
realized that's not the conventional
00:39 - 00:45
wisdom so I'm going to develop that in
00:41 - 00:47
three key points the first is that
00:45 - 00:48
China's rise is not just slowing down
00:47 - 00:49
it's not just ending it's actually
00:49 - 00:55
reverse the second point is that uh the
00:54 - 00:58
China hangover is here and what I mean
00:55 - 01:00
by that is many countries tied their
00:58 - 01:02
economic wagons to China they got rich
01:00 - 01:05
selling into the China Market they
01:02 - 01:07
became dependent on Chinese loans but
01:05 - 01:09
now the slowdown in China's economy
01:07 - 01:11
which lifted up so many economies around
01:09 - 01:13
the world is going to drag more of them
01:11 - 01:15
back down and already countries are
01:13 - 01:17
starting to point the finger at China
01:15 - 01:19
which is putting China in a much more
01:17 - 01:22
difficult geopolitical situation at the
01:19 - 01:24
same time that its economy is
01:22 - 01:27
slowing and then the third and final
01:24 - 01:29
point I'll make is I don't think China's
01:27 - 01:32
going to react particularly well to
01:29 - 01:35
these pressures it's a classic peaking
01:32 - 01:36
power meaning that it was once Rising
01:35 - 01:39
but now it's facing slowing growth and
01:36 - 01:41
greater geopolitical push back and what
01:39 - 01:43
we've seen from past peaking powers in
01:41 - 01:46
history is that they don't just mellow
01:43 - 01:49
out and dial back their Ambitions they
01:46 - 01:51
tend to crack down on descent at home
01:49 - 01:52
and then expand aggressively abroad and
01:51 - 01:54
I think there's already evidence that
01:52 - 01:56
unfortunately China is starting to inch
01:54 - 01:58
its way down this ugly historical path
01:56 - 02:01
so I'll get to all that fun wonderful
01:58 - 02:03
story in a little bit uh but first this
02:01 - 02:06
idea that China's rise is reversing I
02:03 - 02:08
mean that literally so this is China's
02:06 - 02:09
economy compared to that of the United
02:08 - 02:11
States and you can see that China is
02:09 - 02:13
actually shrinking relative to the
02:11 - 02:16
United States and this is using Chinese
02:13 - 02:18
government data which we know
02:16 - 02:21
exaggerates the size as well as the
02:18 - 02:22
speed of China's GDP
02:21 - 02:25
growth when these are the different
02:22 - 02:27
growth estimates for China the red line
02:25 - 02:29
is what the Chinese government says the
02:27 - 02:31
Chinese economy is growing at the other
02:29 - 02:34
line are based on objectively measurable
02:31 - 02:35
data things like how much electricity is
02:34 - 02:38
being used at night that you can see
02:35 - 02:40
from Outer Space if you use those other
02:38 - 02:43
estimates then China's economy is
02:40 - 02:45
actually at least 20% smaller than the
02:43 - 02:47
graph I showed you before and when you
02:45 - 02:50
dial down into other metrics you see a
02:47 - 02:52
similar story so this is productivity
02:50 - 02:54
this is what you really need to grow an
02:52 - 02:57
economy to grow an economy you can
02:54 - 02:59
either add more workers or you can spend
02:57 - 03:01
more money or ideally you can become
02:59 - 03:03
more productive by producing more at
03:01 - 03:06
lower cost and you can see that with
03:03 - 03:08
really the exception of the 2021 that
03:06 - 03:10
the reopening from zero covid
03:08 - 03:13
productivity growth in China has been
03:10 - 03:14
negative for over a decade which means
03:13 - 03:16
that China is becoming less efficient
03:14 - 03:17
over time and you see this also
03:16 - 03:20
reflected in the so-called Capital
03:17 - 03:24
output ratios so this is how much
03:20 - 03:27
capital or money do you have to spend to
03:24 - 03:28
produce every unit of GDP growth you can
03:27 - 03:30
see that in recent years those is
03:28 - 03:32
skyrocketed which means means that China
03:30 - 03:35
is spending more and more to produce
03:32 - 03:38
less and less and the natural outcome of
03:35 - 03:40
this is a huge explosion in debt so in
03:38 - 03:42
recent years China has gone from you
03:40 - 03:45
know about an average developing country
03:42 - 03:48
level of debt similar to India to above
03:45 - 03:50
and beyond even the American Fat Cats in
03:48 - 03:52
terms of its debt with no end in sight
03:50 - 03:54
if any of you have been traveling to
03:52 - 03:55
China recently as I imagine some of you
03:54 - 03:57
have been um you know a lot of people
03:55 - 03:59
come back and say there's a palpable
03:57 - 04:02
malaise in Chinese society that didn't
03:59 - 04:05
used to exist before and you're seeing
04:02 - 04:07
that in public opinion surveys so for
04:05 - 04:09
the first time really in more than a
04:07 - 04:11
generation you're having more and more
04:09 - 04:15
Chinese citizens saying that their lives
04:11 - 04:17
are getting worse year by year you see
04:15 - 04:19
this reflected in the so-called lying
04:17 - 04:21
flat generation a lot of the youth who
04:19 - 04:24
can't find jobs commensurate with their
04:21 - 04:25
education level you see it in the
04:24 - 04:27
capital flight the wealthy who are
04:25 - 04:29
trying to get their kids and their money
04:27 - 04:30
out of the country as quickly as
04:30 - 04:34
a whole host of indicators suggest that
04:32 - 04:35
all is not right with China's economy
04:34 - 04:38
and you know I think a lot of people
04:35 - 04:41
have been saying this this slowdown in
04:38 - 04:43
China's economy was entirely predictable
04:41 - 04:45
a lot of people think that the rise of
04:43 - 04:47
China was the normal thing that China
04:45 - 04:50
would just rise forever that's just what
04:47 - 04:51
it does and that anyone who argues that
04:50 - 04:53
it's going to slow down doesn't know
04:51 - 04:55
what they're talking about but in
04:53 - 04:57
retrospect we now know that China's rise
04:55 - 05:00
was the exceptional event it was the
04:57 - 05:02
weird thing that usually does not happen
05:00 - 05:04
in the International System and it was
05:02 - 05:07
propelled by a few fleeting
05:04 - 05:08
circumstances a few fleeting Tailwinds
05:07 - 05:10
that have now become headwinds that are
05:08 - 05:11
dragging China back down so I just want
05:10 - 05:13
to walk you through some of these the
05:11 - 05:15
first of these Tailwinds turned
05:13 - 05:18
headwinds is just basic security for
05:15 - 05:21
much of the last 40 years China has had
05:18 - 05:23
the most secure geopolitical position of
05:21 - 05:25
any time in its modern history and
05:23 - 05:28
that's really important because China as
05:25 - 05:30
you know is in a very rough neighborhood
05:28 - 05:33
it's surrounded by 19 countries most of
05:30 - 05:35
which are powerful or unstable or
05:33 - 05:37
both trying to you know if you play the
05:35 - 05:39
geopolitical board game Risk you know
05:37 - 05:41
that trying to hang on to the territory
05:39 - 05:42
of China is damn near impossible and
05:41 - 05:44
that's what China has to do every single
05:42 - 05:47
day and for big parts of its modern
05:44 - 05:49
history uh China failed to do this so
05:47 - 05:51
for a hundred years from the first Opium
05:51 - 05:56
1839 until the end of the Chinese Civil
05:53 - 05:58
War in 1949 China just gets ripped apart
05:56 - 06:00
by imperialist Powers it collapses into
05:58 - 06:03
two of the worst civil Cil Wars in
06:00 - 06:07
history and then even after the Chinese
06:03 - 06:09
Communist Party unifies the country in
06:07 - 06:11
1949 China almost immediately becomes
06:09 - 06:13
the chief enemy of the United States
06:11 - 06:15
because of the Korean War and the direct
06:13 - 06:17
fighting between the two countries and
06:15 - 06:19
then 10 years later China's alliance
06:17 - 06:22
with the Soviet Union falls apart and so
06:19 - 06:24
by the 1960s China is the top enemy of
06:22 - 06:27
both Cold War superpowers and not
06:24 - 06:30
surprisingly it's isolated and
06:27 - 06:32
impoverished so it's not tell 1971 in
06:30 - 06:34
the opening to the United States that
06:32 - 06:36
China starts to get some reprieve from
06:34 - 06:39
this geopolitical Vice because now it
06:36 - 06:42
has a superpower on its side and the
06:39 - 06:44
Americans actually warn the Soviet Union
06:42 - 06:45
on multiple occasions do not attack
06:44 - 06:47
China otherwise we're going to have a
06:45 - 06:51
problem with that the Americans also
06:47 - 06:52
FastTrack China's entry into Western
06:51 - 06:55
markets and the timing of China's
06:52 - 06:58
opening up is perfect so China starts to
06:55 - 07:01
join the global economy right as this
06:58 - 07:04
period that we now hyper globalization
07:01 - 07:06
kicks in so this is the period where in
07:04 - 07:09
30 years you know from the 1970s to the
07:06 - 07:13
early 2000s world trade and investment
07:09 - 07:15
surges six plus fold China both propels
07:13 - 07:17
and rides this wave to become what we
07:15 - 07:18
know of it today which is this dominant
07:17 - 07:22
Workshop of the world a huge
07:18 - 07:25
manufacturing power and a rising
07:22 - 07:27
economy the second factor that China
07:25 - 07:31
really needed for its rise was decent
07:27 - 07:33
government so in 1976 six Mao dies and
07:31 - 07:35
China's leaders basically say let's not
07:33 - 07:39
do another Cultural Revolution and so
07:35 - 07:41
they start to reward lower level Chinese
07:39 - 07:43
leaders for good economic performance
07:41 - 07:45
not just blind loyalty to the Chinese
07:43 - 07:47
Communist party uh the actually
07:45 - 07:51
ironically the cultural revolution
07:47 - 07:52
itself so destroyed the state planning
07:51 - 07:54
apparatus that there just weren't as
07:52 - 07:56
many Chinese bureaucrats running around
07:54 - 07:57
telling the peasants what they could and
07:56 - 08:00
couldn't do and so the Chinese people
07:57 - 08:02
were partially freed from that rigid
08:00 - 08:04
state plan and they basically formed
08:02 - 08:06
quasi private markets and industries and
08:04 - 08:08
started trading and you had this big
08:06 - 08:09
boom of economic activity and the
08:08 - 08:11
Chinese Communist Party eventually
08:09 - 08:13
started to begrudgingly accept that and
08:11 - 08:15
then expand the range of Quasi private
08:13 - 08:17
markets around the country so China had
08:15 - 08:20
the right policies to capitalize on its
08:17 - 08:23
new opportunities at the right
08:20 - 08:25
time a third crucial Factor was the
08:23 - 08:27
greatest demographic dividend in human
08:25 - 08:30
history so for a big part of the last 35
08:27 - 08:33
years China had anywhere between 10 to
08:30 - 08:35
15 workers available to support every
08:33 - 08:37
elderly retiree that's two to three
08:35 - 08:40
times the global average and it's the
08:37 - 08:42
unreputable result of China's very
08:40 - 08:45
peculiar population history basically in
08:42 - 08:47
the 50s and 60s Mao inherits this
08:45 - 08:50
country that has been decimated by
08:47 - 08:52
Decades of war and strife and he wants
08:50 - 08:53
to turn China into a superpower and so
08:52 - 08:55
he the Chinese government starts to
08:53 - 08:57
incentivize Chinese families to have
08:55 - 09:00
lots of children and they do and so the
08:57 - 09:03
population explodes by 80%
09:00 - 09:05
in 30 years but then the Communist party
09:03 - 09:07
starts to worry about overcrowding and
09:05 - 09:10
in the late 1970s they implement the one
09:07 - 09:12
child policy and so for much of the last
09:10 - 09:15
35 years you've had this baby boom
09:12 - 09:17
generation in the prime of their working
09:15 - 09:19
lives they had relatively few parents to
09:17 - 09:21
take care of because so many of them had
09:19 - 09:24
died in the in The Civil Wars and the
09:21 - 09:25
the famines and they had relatively few
09:24 - 09:26
children to take care of because they
09:25 - 09:29
weren't allowed to have them so this
09:26 - 09:31
population was absolutely primed for
09:29 - 09:34
economic productivity demographers think
09:31 - 09:37
this demographic bubble alone explains
09:34 - 09:40
at least 25% of China's rapid growth
09:37 - 09:41
over the last 35 years and then the
09:40 - 09:43
final factor that China had going for it
09:41 - 09:46
that was really crucial for its rise was
09:43 - 09:47
abundant natural resources so up until
09:46 - 09:49
fairly recently China was almost
09:47 - 09:52
self-sufficient in just basic things
09:49 - 09:53
like water food energy resources and
09:52 - 09:55
this made growth very cheap because raw
09:53 - 09:57
materials were cheap you could just set
09:55 - 09:59
up a factory plow through the raw
09:57 - 10:03
materials uh and grow very Qui quickly
09:59 - 10:06
so really from the early 1970s up until
10:03 - 10:08
I would say the early 2010s China had
10:06 - 10:12
these four factors working for it uh to
10:08 - 10:14
varying degrees but now each of these
10:12 - 10:15
assets are becoming liabilities that are
10:14 - 10:17
starting to drag China down and this is
10:15 - 10:18
why we shouldn't expect a major
10:17 - 10:21
turnaround in the Chinese economy
10:18 - 10:23
anytime soon so for starters China is
10:21 - 10:26
just running out of resources half of
10:23 - 10:28
its rivers are gone 60% of its
10:26 - 10:30
groundwater is so polluted that the
10:28 - 10:32
Chinese government has said it's unfit
10:30 - 10:33
for human contact so you can't touch the
10:32 - 10:35
water so that means you can't use it
10:33 - 10:38
even for agriculture or industry let
10:35 - 10:40
alone to drink uh Beijing has about as
10:38 - 10:42
much water available per capita as Saudi
10:40 - 10:44
Arabia does it's a similar story in
10:42 - 10:46
terms of energy resources so China's
10:44 - 10:49
plowed through most of its exploitable
10:46 - 10:51
oil even coal is becoming scarce so as a
10:49 - 10:53
result China is now the top importer of
10:51 - 10:56
energy resources around the world it's
10:53 - 10:58
also the top food importer in the world
10:56 - 11:01
China can't feed itself anymore because
10:58 - 11:03
half of it Farmland has either become so
11:01 - 11:06
polluted you can't use it or it's just
11:03 - 11:08
turned into desert and so raw material
11:06 - 11:10
costs in China have gone up
11:08 - 11:11
substantially in recent years and that
11:10 - 11:13
makes economic growth much more
11:11 - 11:16
expensive it's more it's three times
11:13 - 11:19
more expensive to produce each unit of
11:16 - 11:20
GDP today than it was in the 2000s and
11:20 - 11:24
rising at the same time China's running
11:22 - 11:27
out of people so that baby boom
11:24 - 11:29
generation I mentioned earlier is now
11:27 - 11:32
retiring and falling onto the the backs
11:29 - 11:35
of a tiny one child generation just over
11:32 - 11:37
the next 10 years China is going to lose
11:35 - 11:40
more than 70 million working age adults
11:37 - 11:42
it's going to gain more than 130 million
11:40 - 11:45
senior citizens that's like taking an
11:42 - 11:47
entire France of workers consumers
11:45 - 11:50
taxpayers out of the country and adding
11:47 - 11:51
an entire Japan of elderly pensioners
11:50 - 11:54
and it's going to happen just in the
11:51 - 11:57
next 10 years that 15 to1 ratio I
11:54 - 11:58
mentioned earlier of workers to retirees
11:57 - 12:01
that's going to collapse to 2:1 two
11:58 - 12:03
workers available able to support every
12:01 - 12:06
retiree uh by the late
12:03 - 12:08
2030s now managing these problems is
12:06 - 12:11
going to be increasingly difficult
12:08 - 12:14
because China is now run by a dictator
12:11 - 12:16
who consistently sacrifices economic
12:14 - 12:18
efficiency to enhance his political
12:16 - 12:19
power the zero covid lockdowns the
12:18 - 12:22
crushing of Hong Kong those are just the
12:19 - 12:25
most obvious examples the the channeling
12:22 - 12:28
of subsidies to state connected firms
12:25 - 12:30
the anti-corruption drive that has
12:28 - 12:32
scared lower officials from engaging in
12:30 - 12:33
any kind of experimentation or
12:32 - 12:35
entrepreneurship because they don't want
12:33 - 12:37
to ruffle the wrong feathers disrupt the
12:35 - 12:40
wrong patronage Network and end up the
12:37 - 12:42
target of an anti-corruption probe the
12:40 - 12:44
censoring of negative economic news so
12:42 - 12:46
youth unemployment data is going off the
12:44 - 12:47
charts and then that's just eliminated
12:46 - 12:50
all these things just make it harder to
12:47 - 12:52
course correct in the middle of an
12:50 - 12:54
economic downturn and don't bode well
12:52 - 12:55
for China's economy and then finally
12:54 - 12:58
China is starting to lose some of that
12:55 - 13:01
easy access it had to Rich Country
12:58 - 13:03
Market Market technology and capital so
13:01 - 13:06
the United States obviously is waging a
13:03 - 13:09
sort of trade and Tech war against China
13:06 - 13:10
the European Union Japan to varing
13:09 - 13:12
degrees are starting to follow suit and
13:10 - 13:14
so China just faces thousands of new
13:12 - 13:16
trade and investment barriers every year
13:14 - 13:18
that it didn't face as recently as 10
13:16 - 13:20
years ago and at the same time China's
13:18 - 13:22
security environment is also starting to
13:20 - 13:24
look a lot more dangerous so this is a
13:22 - 13:25
map of US military bases that are
13:24 - 13:27
currently being
13:25 - 13:29
expanded you don't need to be a
13:27 - 13:31
strategic genius or attend the the World
13:29 - 13:32
Knowledge Forum to understand the basic
13:31 - 13:34
story that's going on here this is what
13:32 - 13:37
shaning calls all around encirclement by
13:34 - 13:40
the United States so China's boom now is
13:37 - 13:43
finally coming to an end and
13:40 - 13:45
unfortunately it's having shock waves
13:43 - 13:47
for lots of other countries today
13:45 - 13:51
because so many economies tied their
13:47 - 13:52
fortunes to a rising China um and for
13:51 - 13:54
good reason and so to sketch this out I
13:52 - 13:56
kind I want to take you back to the
13:54 - 13:58
2000s some of you are probably too young
13:56 - 14:00
to remember that but for those of you
13:58 - 14:01
that do remember it uh you'll remember
14:00 - 14:04
that China was growing at double-digit
14:01 - 14:06
rates you might also remember that the
14:04 - 14:09
ri the rise of China was the most
14:06 - 14:11
readout news story in the world by far
14:09 - 14:13
nothing else came close it was the most
14:11 - 14:15
decisive event of the first two decades
14:13 - 14:17
of the 21st century way more than 911 or
14:15 - 14:19
the the British royal wedding or
14:17 - 14:21
whatever other news story you want to
14:19 - 14:25
put out there and for good reason uh
14:21 - 14:27
China generated more than 40% of global
14:25 - 14:30
economic growth in the 2000s and the
14:27 - 14:33
'90s um some Scholars compare it to the
14:30 - 14:34
Industrial Revolution or the Renaissance
14:33 - 14:36
in terms of its Global impact I don't
14:34 - 14:39
know if I'd go that far but it certainly
14:36 - 14:42
was spectacular to see China rise and
14:39 - 14:43
during this time China becomes a buying
14:42 - 14:46
machine it just starts buying up
14:43 - 14:49
everything around the world soybeans
14:46 - 14:51
computer chips cars Pharmaceuticals
14:49 - 14:52
Machine Tools whatever it was China was
14:51 - 14:55
buying it and so the China Market
14:52 - 14:56
becomes a gold mine for many countries
14:55 - 14:58
around the world you can see that
14:56 - 15:00
Imports as a share of China's economy
14:58 - 15:02
rise substantially
15:00 - 15:04
The Economist magazine even created an
15:02 - 15:06
entire index that they call the Sino
15:04 - 15:09
dependency index which just showed how
15:06 - 15:13
incredibly dependent other economies
15:09 - 15:15
became on China's economy even major
15:13 - 15:18
countries Germany South Korea Japan
15:15 - 15:20
France had upwards of 10% or more of
15:18 - 15:24
their fortunes essentially tied up in
15:20 - 15:26
trade and investment with uh with China
15:24 - 15:29
China's rise its insatiable demand for
15:26 - 15:31
resources also just drove up the price
15:29 - 15:34
of Commodities around the world and so
15:31 - 15:35
this had the indirect effect of bringing
15:34 - 15:37
up countries that weren't even trading
15:35 - 15:38
directly with China they just benefited
15:37 - 15:41
from the fact that the things they had
15:38 - 15:44
to sell were selling for a higher price
15:41 - 15:47
uh Russia for example the rise of China
15:44 - 15:49
basically created massive demand for
15:47 - 15:53
everything that the Soviet Union used to
15:49 - 15:57
produce whether it was weapons or uh oil
15:53 - 15:59
and gas or machine tools and so China's
15:57 - 16:00
rise helped Propel the Resurgence of
15:59 - 16:03
Russia as well as dozens of other
16:00 - 16:04
economies during this time at the same
16:03 - 16:07
time China wasn't just buying stuff it
16:04 - 16:09
was also lending money abroad so as it
16:07 - 16:12
accumulates wealth it then turns around
16:09 - 16:14
and starts lending out money so that
16:12 - 16:17
mainly so countries could employ Chinese
16:14 - 16:19
companies to build infrastructure roads
16:17 - 16:22
Bridges telecommunications networks
16:19 - 16:24
soccer stadiums uh over the last 20
16:22 - 16:26
years one out of every three
16:24 - 16:29
infrastructure projects built in Africa
16:26 - 16:33
was built by China um and and so China
16:29 - 16:33
becomes this dominant dispenser of of uh
16:33 - 16:39
loans but unfortunately that era is now
16:37 - 16:42
over this era where really countries
16:39 - 16:44
were getting a triple win from China a
16:42 - 16:46
huge Market to sell their exports into a
16:44 - 16:48
seemingly bottomless supply of loans to
16:46 - 16:50
finance all their development projects
16:48 - 16:51
and then lots of experienced Chinese
16:50 - 16:55
companies that knew how to build pretty
16:51 - 16:57
much anything that all has been going
16:55 - 16:59
away in recent years studies show that
16:57 - 17:01
every 1% decline in China's economic
16:59 - 17:03
growth rate reduces the economic growth
17:01 - 17:06
of its trading its main trading partners
17:03 - 17:08
by about the same amount and one reason
17:06 - 17:11
for this is that China is just buying
17:08 - 17:14
less from the world than it used to so
17:11 - 17:17
this is Imports as a share of China's
17:14 - 17:19
already slowing economy and as a result
17:17 - 17:21
countries are seeing their exports to
17:19 - 17:24
China plummet so South Korea's exports
17:21 - 17:28
to China dropped about 20% last year
17:24 - 17:31
Germany's dropped 9% commodity producers
17:28 - 17:32
like Australia Saudi Arabia Brazil are
17:31 - 17:35
starting to feel the
17:32 - 17:38
pinch at the same time China's not
17:35 - 17:42
loaning money anymore it wants that cash
17:38 - 17:43
at home it's not offering debt relief to
17:42 - 17:46
other countries it's demanding that its
17:43 - 17:48
Partners now pay back the money with
17:46 - 17:49
interest and as a result lots of
17:48 - 17:51
economies are being pushed into debt
17:49 - 17:53
distress because of the massive loans
17:51 - 17:57
they took from China you've seen just in
17:53 - 17:59
recent years Venezuela La uh Zambia um
17:57 - 18:01
lots of other countries are starting to
17:59 - 18:03
feel as Pakistan um because of the
18:01 - 18:05
drying up of Chinese
18:03 - 18:07
loans and at the same time to make
18:05 - 18:09
matters worse in order to save its own
18:07 - 18:11
economy China is pumping up its
18:09 - 18:13
companies with subsidies its
18:11 - 18:15
manufacturing Enterprises and then
18:13 - 18:16
flooding Global markets with subsidized
18:15 - 18:19
exports you're seeing this obviously in
18:16 - 18:22
electric vehicles solar panels a number
18:19 - 18:25
of other main manufacturing Industries
18:22 - 18:28
and so as a result many countries trade
18:25 - 18:30
deficits with China have really surged
18:28 - 18:33
in recent years and so this is now
18:30 - 18:35
creating a triple threat to a number of
18:33 - 18:38
economies because China's buying less of
18:35 - 18:40
their stuff it's no longer giving them
18:38 - 18:43
easy loans and now their markets are
18:40 - 18:45
being flooded with a wave of cheap
18:43 - 18:49
Chinese Imports that are crowding out
18:45 - 18:51
domestic producers so you're starting to
18:49 - 18:53
see this bite and needless to say China
18:51 - 18:55
is not making a lot of friends during
18:53 - 18:57
this time so China's International
18:55 - 19:00
favorability around the world has fallen
18:57 - 19:02
by more than half since the 2000s
19:00 - 19:04
anti-china sentiment around the world
19:02 - 19:07
has surged to levels we haven't seen
19:04 - 19:09
since the 1989 tenan Square massacre and
19:07 - 19:12
this really is a sea change because when
19:09 - 19:14
China's economy was growing very rapidly
19:12 - 19:16
so many other countries were currying
19:14 - 19:19
favor with Beijing to get access to its
19:16 - 19:21
Market uh you know the British hand back
19:19 - 19:24
Hong Kong the Portugal hands back maau
19:21 - 19:26
the Taiwanese pursue engagement with
19:24 - 19:28
China you have doz a dozen countries
19:26 - 19:30
settle their border disputes with China
19:28 - 19:32
you have the United States shepherding
19:30 - 19:35
China into the World Trade Organization
19:32 - 19:37
and in fact writing technology transfer
19:35 - 19:39
uh protocols into China's accession
19:37 - 19:42
agreement so like please take take some
19:39 - 19:46
of our technology but that now is
19:42 - 19:48
flipping as as China's economy slows as
19:46 - 19:50
China focuses on trying to save its own
19:48 - 19:53
economy and putting other economies at a
19:50 - 19:56
disadvantage now more and more countries
19:53 - 19:58
are seeing China less as a profitable
19:56 - 20:00
economic partner and more as a Potential
19:58 - 20:02
Threat but both economically as well as
20:00 - 20:04
in some cases
20:02 - 20:05
geopolitically and so this now is
20:04 - 20:07
putting China under a lot of pressure
20:05 - 20:09
because it's not only dealing with a
20:07 - 20:12
slowing economy it's starting to get
20:09 - 20:14
more geopolitical push back and so this
20:12 - 20:17
then begs the question how is China
20:14 - 20:19
going to react to these pressures so I
20:17 - 20:22
actually um because I knew I needed to
20:19 - 20:24
make slides I put my presentation notes
20:22 - 20:26
into chat GPT and just asked it to draw
20:24 - 20:28
a picture of what I was talking about
20:26 - 20:29
and this is what it came up with um
20:28 - 20:31
everything's going to be fine don't
20:29 - 20:35
worry about it uh no look I don't want
20:31 - 20:38
to be alarmist uh but I am my my concern
20:35 - 20:40
is that China is becoming a classic
20:38 - 20:41
peaking power which historically have
20:40 - 20:43
been the most dangerous kind of
20:41 - 20:46
countries in the world so for the past
20:43 - 20:49
four decades this rapid growth has
20:46 - 20:51
pumped China up it's equipped it with
20:49 - 20:53
the money and the military muscle to
20:51 - 20:54
really make big moves on the
20:53 - 20:57
international stage it's also just
20:54 - 20:59
puffed up the Ambitions of China's
20:57 - 21:01
leaders you know they think hey this
20:59 - 21:03
could be our Century uh and we need to
21:01 - 21:06
move on it but now slowing economic
21:03 - 21:08
growth greater International push back
21:06 - 21:11
is giving China the motive to move more
21:08 - 21:13
aggressively to achieve those lofty
21:11 - 21:15
Ambitions and when you look back at
21:13 - 21:17
history a lot of these peaking Powers
21:15 - 21:19
really none of them mellowed out and
21:17 - 21:21
dialed back their Ambitions instead as I
21:19 - 21:23
said they cracked down on descent at
21:21 - 21:26
home and they expanded aggressively
21:23 - 21:28
abroad a few even uh catalyzed massive
21:26 - 21:30
Wars so I I'll just give you a few
21:28 - 21:31
examples of these historical cases so
21:30 - 21:33
you can kind of see the range of
21:31 - 21:35
different outcomes and then I'll go back
21:33 - 21:38
to talking about China and how I worry
21:35 - 21:40
that it's starting to inch its way down
21:38 - 21:41
this well-worn historical path so one of
21:40 - 21:44
these cases is actually the United
21:41 - 21:46
States in the late 19th century
21:44 - 21:49
basically after the US Civil War in the
21:46 - 21:50
1860s there's this big economic boom in
21:49 - 21:52
the United States because they're no
21:50 - 21:53
longer the Americans are no longer
21:52 - 21:55
fighting each other they're starting to
21:53 - 21:58
spread Westward across the North
21:55 - 21:59
American continent but then by the 1880s
21:58 - 22:01
you have a series of what were at the
21:59 - 22:03
time the worst depressions in American
22:01 - 22:05
history and the Americans started to
22:03 - 22:08
freak out that the reason their economy
22:05 - 22:11
was doing so badly was the frontier was
22:08 - 22:12
closed there was no more open land to
22:11 - 22:15
expand into there were no more
22:12 - 22:17
Greenfield investment opportunities to
22:15 - 22:19
exploit and so the US government did a
22:17 - 22:21
couple of things first it cracked down
22:19 - 22:23
hard on organized labor so if you study
22:21 - 22:26
US History this is the era of just
22:23 - 22:28
brutal repression of Labor movements uh
22:26 - 22:30
sending in police forces to basically
22:28 - 22:31
beat work workers with clubs and then at
22:30 - 22:34
the same time the Americans started to
22:31 - 22:37
pump exports and investment into Latin
22:34 - 22:39
America and Asia then the Americans
22:37 - 22:41
built a giant Navy to protect those
22:39 - 22:42
far-flung Investments and then the
22:41 - 22:44
United States just started annexing
22:42 - 22:46
territory overseas so when times got
22:44 - 22:48
tough the United States really got
22:46 - 22:51
moving in a big way this is the era of
22:48 - 22:53
American imperialism full-throated
22:51 - 22:54
imperialism um and it comes right after
22:53 - 22:56
the worst economic crisis that the
22:54 - 22:59
United States had suffered up to that
22:56 - 23:00
point uh Russia
22:59 - 23:03
around the same time at the turn of the
23:00 - 23:05
20th century sees its economic boom
23:03 - 23:07
fizzle out and the Zar responds by
23:05 - 23:10
putting 70% of the country under martial
23:07 - 23:14
law and then seizing assets and
23:10 - 23:16
resources in Manchuria moving into Korea
23:14 - 23:18
as well Russia sends about 200,000
23:16 - 23:20
troops into East Asia to take over
23:18 - 23:22
resources and they don't stop expanding
23:20 - 23:25
there until the Japanese as you can see
23:22 - 23:27
on the right side of that screen uh boot
23:25 - 23:29
them out in the Russo Japanese war
23:27 - 23:31
Germany and Japan we know the story well
23:29 - 23:33
the Great Depression they don't react
23:31 - 23:35
particularly well uh to that Japan in
23:33 - 23:37
particular as it's experiencing these
23:35 - 23:39
economic troubles also is feeling the
23:37 - 23:41
pressure from the United States but more
23:39 - 23:43
recently you know people forget that
23:41 - 23:47
Russia's aggression today also has a
23:43 - 23:49
peaking power origin so in the 2000s
23:47 - 23:52
Russia was a resurgent economy it was
23:49 - 23:53
banging out roughly 8% annual economic
23:52 - 23:56
growth rates largely because all those
23:53 - 23:59
commodity prices were very high but then
23:56 - 24:00
after the 2008 financial crisis a lot of
23:59 - 24:02
the prices for all the things that
24:00 - 24:04
Russia was selling go down they take
24:02 - 24:07
down Russia's economy and Putin's
24:04 - 24:09
popularity with it he responds first of
24:07 - 24:11
all by jailing more dissidents and
24:09 - 24:14
dialing up anti-western propaganda but
24:11 - 24:17
he also starts putting pressure on
24:14 - 24:19
former Soviet States to join the
24:17 - 24:20
Eurasian economic Union this Customs
24:19 - 24:22
Union where he basically says I'm going
24:20 - 24:23
to put tariffs around all of you so that
24:22 - 24:25
it's harder for you to trade with the
24:23 - 24:28
rest of the world but you have to lower
24:25 - 24:30
your tariffs with Russia and basically
24:28 - 24:34
become economic vassals of the Kremlin
24:30 - 24:36
so needless to say some ukrainians were
24:34 - 24:37
not so excited about that idea they were
24:36 - 24:39
much more interested in getting a giant
24:37 - 24:41
trade deal with the European Union and
24:39 - 24:42
we know how that tug of war between
24:41 - 24:44
Russia and the West has ultimately
24:42 - 24:47
played out so you see this pattern over
24:44 - 24:51
and over again in history it's the the
24:47 - 24:53
rapid rise followed by the fear of a
24:51 - 24:55
potential decline if countries don't do
24:53 - 24:57
something that if you don't get moving
24:55 - 24:59
the international balance of power may
24:57 - 25:01
eventually turn against you and so when
24:59 - 25:04
I look at China today I see China doing
25:01 - 25:06
three things that make me very concerned
25:04 - 25:09
uh first of all China has been dialing
25:06 - 25:12
up domestic repression and I actually I
25:09 - 25:13
now use the term Fascism and I don't use
25:12 - 25:15
that lightly because I know it's a
25:13 - 25:17
loaded term but if you look at what's
25:15 - 25:19
happening in China today a lot of the
25:17 - 25:21
classic Hallmarks of a fascist regime
25:19 - 25:25
are starting to show themselves so first
25:21 - 25:27
of all you have the worship of a central
25:25 - 25:28
leader if you listen to Chinese
25:27 - 25:31
propaganda today they celebrate Shin
25:28 - 25:33
ping like he's the third pillar of this
25:31 - 25:36
Holy Trinity so they say under Mao China
25:33 - 25:38
stood up under dunia ping China got rich
25:36 - 25:41
and under Xin ping China is going to
25:38 - 25:42
become Mighty again hentau and Jang
25:41 - 25:44
zamin I guess are just forgotten they're
25:42 - 25:46
not even mentioned in this but you see
25:44 - 25:48
this extreme worship and he is
25:46 - 25:51
centralized power of course as no leader
25:48 - 25:53
has sense ma another aspect is dialing
25:51 - 25:56
up of hyper nationalism and not just
25:53 - 25:58
like our country is great nationalism
25:56 - 26:02
but this this idea of taking
25:58 - 26:05
revenge on hostile foreign forces that
26:02 - 26:07
disrupted the Golden Age Of The Nation
26:05 - 26:09
this golden age that the dear leader is
26:07 - 26:11
going to eventually restore you see
26:09 - 26:13
these themes of national Rejuvenation
26:11 - 26:16
and recovering from the century of
26:13 - 26:18
humiliation increasingly featuring in
26:16 - 26:21
schools in popular media as well as in
26:18 - 26:23
government documents you also have the
26:21 - 26:25
brutal repression of ethnic minorities
26:23 - 26:26
so Chinese documents increasingly
26:25 - 26:29
describe the Wagers other ethnic
26:26 - 26:31
minorities as a cancer that has to be
26:29 - 26:33
cut out of the system before it infects
26:31 - 26:35
the rest of the body politic and you've
26:33 - 26:37
seen the Extreme Measures that China has
26:35 - 26:39
gone to in order to control these
26:37 - 26:41
minority populations the re-education
26:39 - 26:44
camps the bulldozing of uh traditional
26:41 - 26:46
communities and so on you also have the
26:44 - 26:48
development of this orwellian
26:46 - 26:49
surveillance state that can just track
26:48 - 26:52
massive populations and then discipline
26:49 - 26:54
people instantly by if you do something
26:52 - 26:56
wrong maybe getting cut off from travel
26:54 - 26:57
um and then if worse comes to worse you
26:56 - 26:59
can just send in the traditional
26:57 - 27:02
authorities to crackheads and then
26:59 - 27:04
finally this worship of military
27:02 - 27:06
strength and it's not just the the
27:04 - 27:07
parades and the goose stepping it's it's
27:06 - 27:10
more subtle things like the Civil
27:07 - 27:12
military Fusion concept which is
27:10 - 27:14
explicitly designed to erase the
27:12 - 27:16
boundaries between civilian and Military
27:14 - 27:18
Life any organization any company can
27:16 - 27:21
essentially be commandeered to serve the
27:18 - 27:25
nation in a geopolitical or military
27:21 - 27:27
sense so at the same time um China also
27:25 - 27:29
is developing a new economic strategy
27:27 - 27:32
and it seems to be one that is
27:29 - 27:35
prioritizing leverage rather than just
27:32 - 27:36
rapid growth so I think the basic idea
27:35 - 27:39
is okay our economy is not going to grow
27:36 - 27:41
as fast as it did but we can still get
27:39 - 27:43
leverage over our trade partners by
27:41 - 27:46
dominating what Chinese documents called
27:43 - 27:47
the choke points of the global economy
27:46 - 27:49
so these are things that other countries
27:47 - 27:51
can't live without whether it's medical
27:49 - 27:54
PPE or rare Earths or certain types of
27:51 - 27:56
computer chips or access to the South
27:54 - 27:58
China Sea there are certain strategic
27:56 - 28:00
industries that China is looking to to
27:58 - 28:02
dominate and you see that China pairing
28:00 - 28:05
that with an increased willingness to
28:02 - 28:08
impose sanctions on other countries so
28:05 - 28:10
for example Australia calls for an
28:08 - 28:12
investigation into where covid came from
28:10 - 28:14
and China uses its economic leverage to
28:12 - 28:16
basically wage a trade war against
28:14 - 28:17
Australia now the Australians in typical
28:16 - 28:20
Australian fashion kind of react with
28:17 - 28:23
Good Humor they sponsor this uh fight
28:20 - 28:25
communism by buying Australian wine
28:23 - 28:27
campaign and then uh Parliament members
28:25 - 28:28
and other Western democracies kind of
28:27 - 28:31
pick this up and you know it's the sort
28:28 - 28:33
of patriotic thing um but it's it shows
28:31 - 28:35
that China is much more willing to adopt
28:33 - 28:37
a mercantilist strategy to flex its
28:35 - 28:39
muscles in reaction to the fact that it
28:37 - 28:41
can no longer just buy off other
28:39 - 28:44
countries through Promises of rapid
28:41 - 28:46
growth um by partnering with China and
28:44 - 28:50
then finally what worries me the most is
28:46 - 28:52
this big military buildup so um China is
28:50 - 28:54
engaged in the largest peacetime
28:52 - 28:57
military buildup of any country since
28:54 - 28:59
Nazi Germany it's churning out warships
28:57 - 29:02
and ammunition at an extremely rapid
28:59 - 29:05
rate you see that reflected in a huge
29:02 - 29:07
increase in the military budget so China
29:05 - 29:10
still claims it only spends about $230
29:07 - 29:12
billion dollar a year American
29:10 - 29:13
intelligence suggests it's uh almost
29:12 - 29:15
three times that amount that's been
29:13 - 29:16
backed up by think tanks that basically
29:15 - 29:18
find things that other countries put in
29:16 - 29:20
their military budgets that China has
29:18 - 29:21
been leaving out to make its budget look
29:20 - 29:23
smaller but when you factor those things
29:21 - 29:25
in you see a major increase in the
29:23 - 29:27
budget and you can also just see the
29:25 - 29:28
results of this military investment with
29:27 - 29:31
things that you can see with your own
29:28 - 29:33
eyes so the number of Warships that are
29:31 - 29:36
coming out of Chinese shipyards has
29:33 - 29:40
surged in recent years uh China is
29:36 - 29:42
doubling the size of its nuclear Arsenal
29:40 - 29:44
and increasingly China is deploying
29:42 - 29:46
these military Assets in more aggressive
29:44 - 29:49
ways than it used to and I think this
29:46 - 29:51
all reflects a basic calculation that
29:49 - 29:53
China can no longer rely on economic
29:51 - 29:55
carrots to get other countries to give
29:53 - 29:58
it concessions and so it's more willing
29:55 - 30:00
to start using military sticks to to try
29:58 - 30:02
to coers compliance so in the Taiwanese
30:00 - 30:04
case you know China used to hope that
30:02 - 30:06
the Taiwanese would eventually just
30:04 - 30:08
unify with the mainland through trade
30:06 - 30:09
and investment links and tourism that
30:08 - 30:11
eventually the Taiwanese would come back
30:09 - 30:14
but that has failed and so now China is
30:11 - 30:16
sustaining um the the largest military
30:14 - 30:18
show of force in the Taiwan straight in
30:16 - 30:20
more than a generation to really
30:18 - 30:23
underscore that China has built
30:20 - 30:25
fullscale models of Taiwanese and
30:23 - 30:26
American military bases out in the
30:25 - 30:28
desert as well as fullscale models of
30:26 - 30:30
American aircraft carriers so that
30:28 - 30:33
Chinese forces can do practice bombing
30:30 - 30:35
raids on those uh on those uh mock
30:33 - 30:37
military vessels you're seeing something
30:35 - 30:40
similar happening in the South China Sea
30:37 - 30:42
so this is a heat map that the New York
30:40 - 30:47
Times put together that shows just from
30:42 - 30:51
2021 to 2023 the increase in the density
30:47 - 30:53
of Chinese Naval and Maritime militia uh
30:51 - 30:55
operations a lot of these are
30:53 - 30:57
concentrating around disputed features
30:55 - 30:59
in the South China Sea and they're not
30:57 - 31:00
just increasing the presence China's
30:59 - 31:02
just gotten much more aggressive in the
31:00 - 31:04
way that it uses these Naval and
31:02 - 31:06
Maritime militia vessels so especially
31:04 - 31:08
the Philippines has really come in for a
31:06 - 31:10
lot of coercion just over the last year
31:08 - 31:13
where China you know blasting Filipino
31:10 - 31:14
ships with water cannons and and lasers
31:13 - 31:17
uh you know boarding Filipino ships
31:14 - 31:18
literally with knives drawn and so
31:17 - 31:19
you're just seeing a greater willingness
31:18 - 31:21
to court risk and you're also seeing
31:19 - 31:22
something similar happening on the
31:21 - 31:24
border with India where you've had a
31:22 - 31:27
number of skirmishes some of which have
31:24 - 31:28
actually killed several dozen troops so
31:27 - 31:31
it just seems like across the board
31:28 - 31:34
China is much more willing to try to
31:31 - 31:37
extend its security perimeter even
31:34 - 31:39
having to use Force to shove its way to
31:37 - 31:43
carve out space for itself in what it
31:39 - 31:44
views as an increasingly hostile world
31:43 - 31:46
uh the the last part of this and and
31:44 - 31:48
what also worries me is just that China
31:46 - 31:51
in addition to building up its own
31:48 - 31:52
military has been working increasingly
31:52 - 31:57
autocratic uh revisionist Powers uh most
31:55 - 31:59
notably obviously Putin's war in Ukraine
31:57 - 32:01
sustain that by providing critical
31:59 - 32:03
components China recently reaffirmed its
32:01 - 32:04
alliance with North Korea and then with
32:03 - 32:07
Iran really giving it an economic
32:04 - 32:09
Lifeline there was a massive infusion of
32:07 - 32:12
Chinese investment recently at the same
32:09 - 32:14
time that China sold Iran a bunch of
32:12 - 32:15
weapons and so the again the strategy
32:14 - 32:17
here seems to be what political
32:15 - 32:19
scientists call external balancing
32:17 - 32:21
there's internal balancing where you try
32:19 - 32:23
to counter your adversary by building up
32:21 - 32:26
from within your own military forces
32:23 - 32:28
your own power but if you can't catch up
32:26 - 32:29
then what you can do is ex external
32:28 - 32:31
balancing so I'm just going to get
32:29 - 32:33
allies to help me do some of that dirty
32:31 - 32:36
work and so it seems like China by
32:33 - 32:39
cultivating these partners and helping
32:36 - 32:43
them F Conflict at various points around
32:39 - 32:46
Eurasia is stretching Western forces
32:43 - 32:49
thin um it's also just gaining military
32:46 - 32:51
technology so Russia is giving China um
32:49 - 32:53
quieting technology for its submarines
32:51 - 32:55
stealth technology for its aircraft
32:53 - 32:57
early Warning Systems Etc so You' seen
32:55 - 32:59
these autocratic links some people call
32:57 - 33:01
it an axis I think it gives it too much
32:59 - 33:03
credit I don't think it's quite on the
33:01 - 33:04
level of like a full-fledged military
33:03 - 33:06
Alliance but certainly it's a it's a
33:04 - 33:09
beneficial partnership as far as these
33:06 - 33:12
guys are concerned so naturally all of
33:09 - 33:15
this is fueling conflict with the United
33:12 - 33:17
States and unfortunately I think it's
33:15 - 33:19
going to get worse before it gets better
33:17 - 33:21
part of that again is based on history
33:19 - 33:24
so there's been over the last 200 years
33:21 - 33:28
there's been 27 great power rivalries
33:24 - 33:29
and these cases really only wound down
33:28 - 33:31
not with the two sides talking their way
33:29 - 33:33
out and kind of figuring out how they're
33:31 - 33:35
going to divide up parts of the world
33:33 - 33:37
but only after one side basically loses
33:35 - 33:40
the ability to compete only after
33:37 - 33:42
there's a major shift in the balance of
33:40 - 33:44
power that forces one side to basically
33:42 - 33:46
make major concessions and unfortunately
33:44 - 33:47
in the vast majority of these cases that
33:46 - 33:49
just comes through a massive war where
33:47 - 33:51
one side beats the other into submission
33:49 - 33:53
there's like the Soviet case the Cold
33:51 - 33:56
War where the Soviets just run out of
33:53 - 33:59
gas and have to sell out through
33:56 - 34:00
peaceful exhaustion but that's not the
33:59 - 34:03
norm and when you look at the
34:00 - 34:05
fundamental problem is that um it's what
34:03 - 34:07
political scientists call a credible
34:05 - 34:09
commitment problem meaning making
34:07 - 34:12
concessions to the other side that are
34:09 - 34:14
big enough to reassure the other side
34:12 - 34:17
also give the other side a huge
34:14 - 34:18
Advantage strategic advantage that you
34:17 - 34:20
have no idea if they're going to exploit
34:18 - 34:21
it or not and they can't really credibly
34:20 - 34:24
promise not to exploit it so like you
34:21 - 34:27
look at something like Taiwan and uh the
34:24 - 34:28
Americans say China lay off Taiwan stop
34:27 - 34:30
all that aggression and the Chinese say
34:28 - 34:31
yeah if we do that the Taiwanese are
34:30 - 34:33
probably going to drift further and
34:31 - 34:34
further towards independence we have to
34:33 - 34:36
threaten them in order to keep them in
34:34 - 34:38
line why don't you the United States
34:36 - 34:40
stop selling arms to Taiwan but the
34:38 - 34:41
Americans say okay yeah if we do that
34:40 - 34:43
then the military balance is going to
34:41 - 34:44
shift more in your favor and that just
34:43 - 34:46
makes an invasion or a blockade even
34:44 - 34:48
more likely so there's lots of examples
34:46 - 34:51
like that where a lot of the main issues
34:48 - 34:53
in us China relations are not what the
34:51 - 34:54
chinesee call win-win they're
34:53 - 34:56
essentially Zero Sum you know you can
34:54 - 34:58
either govern Taiwan from taipe or
34:56 - 35:00
Beijing not both the South China Sea can
34:58 - 35:02
be Chinese territorial Waters or
35:00 - 35:04
international waters Russia can be
35:02 - 35:06
ground down or propped back up and so on
35:04 - 35:11
so it's just very hard to walk all of
35:06 - 35:15
this out now um I am cautiously
35:11 - 35:17
optimistic that in 10 maybe 20 years uh
35:15 - 35:19
just based on the trends I showed you
35:17 - 35:21
now there's a possibility that China
35:19 - 35:23
won't be able to sustain the level of
35:21 - 35:26
military investment and international
35:23 - 35:28
expansion that we're currently seeing I
35:26 - 35:31
don't think X would be willing to really
35:28 - 35:33
dial back his Ambitions but he's 71
35:31 - 35:34
years old presumably he'll move on at
35:33 - 35:36
some point and I could see the next
35:34 - 35:38
round of China's leaders if they're
35:36 - 35:40
faced with a declining power ratio to
35:38 - 35:43
the United States and its allies having
35:40 - 35:45
to come back and rebar essentially and
35:43 - 35:46
there is a potential bargain I think
35:45 - 35:48
that could be had to resolve a lot of
35:46 - 35:50
the tension between the United States
35:48 - 35:52
and China really between the west and
35:50 - 35:54
China in general which is basically
35:52 - 35:56
peace and economic access so you go back
35:54 - 35:58
to that bargain it's really the bargain
35:56 - 36:00
that Germany Japan France United Kingdom
35:58 - 36:02
all these Mighty Empires took which is
36:00 - 36:05
we're going to forego our dreams of
36:02 - 36:07
regional dominance and territorial
36:05 - 36:09
acquisition and in exchange we get
36:07 - 36:11
tremendous economic access to the whole
36:09 - 36:13
Western Network we basically get
36:11 - 36:15
security guarantees and our people are
36:13 - 36:16
better off for it so I could see
36:15 - 36:18
something like that happening between
36:16 - 36:19
the United States and China somewhere
36:18 - 36:21
down the line but I think you're going
36:19 - 36:23
to have to have this shift in the
36:21 - 36:24
balance of power first I think the most
36:23 - 36:26
likely scenario is that China runs out
36:24 - 36:28
of gas for all those economic reasons I
36:26 - 36:29
gave but you know it could be we just
36:28 - 36:31
had the debate I didn't see how it went
36:29 - 36:33
between Harris and Trump uh but if the
36:31 - 36:35
United States tears itself apart uh and
36:33 - 36:36
just collapses well then that's a shift
36:35 - 36:37
in the balance of power and maybe
36:36 - 36:39
that'll get resolved in China's favor
36:37 - 36:41
the bottom line is something big is
36:39 - 36:43
going to have to happen for us to break
36:41 - 36:45
this deadlock but the good news is in
36:43 - 36:47
the meantime a cold war between the
36:45 - 36:49
United States and China doesn't have to
36:47 - 36:52
go hot and there are in fact fringe
36:49 - 36:54
benefits to a cold war you could have a
36:52 - 36:56
relatively tense but stable situation
36:54 - 36:59
where ironically the two sides in sort
36:56 - 37:01
of a space race Dynamic push each other
36:59 - 37:04
to innovate faster and as a result
37:01 - 37:06
humans get better Ai and better climate
37:04 - 37:07
reducing uh climate change reducing
37:06 - 37:09
Technologies and all other kinds of good
37:07 - 37:11
things come out of this competitive
37:09 - 37:14
dynamic between two of the leading
37:11 - 37:16
states in the International System so we
37:14 - 37:17
are going to have a cold war for now the
37:16 - 37:19
bad news is I think we're entering a
37:17 - 37:21
moment of Maximum danger just because of
37:19 - 37:23
where China is in its life cycle as a
37:21 - 37:26
great power but if we can make it
37:23 - 37:27
through these terrible 20s I think
37:26 - 37:29
there's we can be cautiously optimiz
37:27 - 37:31
optimistic we'll get to a better place
37:29 - 37:33
maybe in uh 10 years uh so on that happy
37:31 - 37:35
note thank you so much and I hope to see
37:33 - 37:38
you all at the dinner later tonight
37:35 - 37:38
appreciate it
video to article