The Romance of the Three Kingdoms

[Music] Hello and welcome to GEU, the macro podcast that delivers key insights into the global economy. I'm joined today, Stefan Angerick, Denise Chiock, both with me in our recording, virtual recording studio. But bigger news is that we have Henry Wong, Center for China and Globalization, joining us and Henry, it's an absolute pleasure to have you with us. And you've got, you're joining us all the way from Beijing, which makes this even more special for us to have you come and talk to us. Why did you tell us a bit about yourself and the center? Yes, thank you, thank you, Kong Gawi, and all the rest of the team. And so it's a great pleasure to really join your well-known podcast. And of course, as you said, my name is Henry Wong, I'm the founder and president of the Center for China and Globalization. I'm also a former Councillor of China State Council, which are the vice, the Chinese government. But of course, our think time has been started 18 years ago, and we think time focused on global governance and globalization, global trade, and of course, investment and global migration. So those are few areas that we do a lot. And of course, Center for China, Globalization has been ranked by Universal Preservania and quite a few others, global agencies. The top 100 think time in the world. And we have also the only think time in China that has been granted a special consultant, that is by the United Nations. And also we've been working with many international partners. We are a frequent participant of Munich Security Conference, Security Forum, Paris Peace Forum, and also Global Solutions Summit. And though I've fallen just a name of it, we also are very busy. We've been maintaining good relations with almost nearly 100 international think tanks, agencies, and universities. And as a matter of fact, I'm going to Washington tomorrow, to New York to Washington next week for Orban IMF's spring related meetings. And quite a few T20 meetings there, think time 20s meeting as the G20 would be held in the United States. So in a nutshell, we actually, one of the most active think tanks in China, one of the proud things to say is that we actually maintain English News Data, three English News Matter, which is a pecanology and the usage rate and also CCG update. And we have over 40,000 subscribers worldwide and made it from the government, business, and think tank and media. So if you think about one hop, one, you know, a great way to China on Chinese policies, CCG would be really a great contact point. We just finished a launch. Before I come here, we had our 22nd, CCG, monthly VIP launching. And we had seven ambassadors, including European ambassadors, Bansion ambassador. And we had a president of European Chamber of Commerce in China. And also quite a few movecomments of commerce, ex officials, president of a movecom society, we had an excellent launch talk about Copacovans. And of course, China EU relations. So just to give you some ideas, we also published many books, we have many open online books. Under the China globalization, serious book, which is published by the Spring and Nature is most of them open access and very easy to see over several hundred participants, authors and contributors, contribute to CCG, globalization book, serious. So I'm very pleased to talk to you as Moody and your company is well known and I'm very pleased to join you. Well, that's hugely prolific and we are really, truly delighted to have you with us today. And actually that name of the center itself, the China and globalization, that's really what we want to talk to you about China and globalization, because so much has been happening, so much has been happening ever since President Trump in the US, and the US started to de-globalize rather aggressively. And you also mentioned the EU, I'd love to talk to you about EU in China. So we'll get there. But unfortunately, over the past several weeks, there's just been one topic that's been top of mind and that's been the conflict in the Middle East, to the war in Iran. Over the last few days, after a few worrying moments, a certain amount of de-escalation seems to have been achieved, which is very welcome news for global oil markets, for global financial markets, for real money investors, for consumers who find themselves being increased energy costs at home, wherever they are in the world. And so, I'm very curious to hear from you, China's view of the region, its view of what's been going on, especially as it also buys a significant quantity of Iranian oil, and how does China see this playing out? And what sort of role do you think even you could see for China in this in order to bring it to an end? Yeah, this is a very important and timely subject, as you mentioned. I think the war is really at the crossroad now. I was at Munich Security Conference in February this year about two months ago, and we see the theme of the report of the Munich Security Conference this year was under-destruction, basically on the coverage of big elephant coming to a big China shop and the smash everything. So that's probably the world we are seeing since the beginning of the year. We see what happened in Latin America, in Versaula. We also see last year we see what US Express, its expansion is the intention to Greenland, to Canada, and now maybe Cuba is on the least, and many more. To everybody's surprise, Iran in the last month, over a month now, and there's a huge war going on that is very unexpected. And there's no imminent threat, I think to US or to Israel, that Iran was really provoking, and then yet, but the Supreme Leader and many of them get killed or assassinated. And that's a huge shock to the war. Basically we are seeing a global system for the last 80 years we've been familiar with, as really disrupted and dismantled in some way. And we are really, a dangerous, dangerous, a peer of time, and charting the water now. So what I'm saying is that the global system is really under huge tension and threat. And whereas I think, what the rest of the world know, particularly China, European Union, India, and the global South countries, midpowers should really work together now to sustain that. So what I can see this morning, they have some kind of ceasefire for what has happened in Iran and the Hormuz street will be open for two weeks, at least during the talk there. Which is fine because I think, because there's so much pressure on the US and on the on the side and for the World War II that this war cannot be sustained. And also the choking part of the Hormuz street to the global economy is devastating and nobody really has foresee that. You know, there's a link shipping of the world, you know, weakening a spawn that the Iranian is in total control. So. What I think the next is that we see China is merged as a very important player now China, former, Mr Wang has been talking to a number of foreign ministers and a former, US of European Union for a minister of Germany for a minister of France, you know, Russia and particularly we had a former, Pakistan, who actually emerged as the mediator between US, Israel and Iran and we know that Pakistan has excellent relations with China. And so China can act as a lot of influence on the media in process. So I would the thing now, you know, in fact, China probably entered this mediating process. And so particularly we're also going to see President Trump come into Beijing in about mid May and so which only left about the months left. So there's two weeks to reach the deal. So I expect that deal could be reached with China participating and also that US president come with certainly not coming as a war's doing on would be coming on as maybe there's some piece, making process has achieved so I'm cautious and obviously mixing that that Iran war would be, would be. be maybe, uh, probably stabilized by that time. But uh, furthermore is that, uh, we say a, uh, a kind of, uh, uh, you know, a failure of, of the US, uh, approach to the Middle East, where they build a lot of military bases, uh, in the Gulf countries. And then they've been really, uh, you know, weapon, you know, showered, uh, uh, bomb, bombarded the Iranians and, and all those big, big moves, aircraft carries and all the rest. But a mid-country like Iranian, and you can really resist and, uh, fighting this, uh, uh, invasion is, is, is the surprise the world. I mean, and then they use virtue, uh, missiles and drones that really, uh, cause the inventory shortage of a very sophisticated weapons, uh, that, that, that invest the billions, uh, to, to design. And, uh, so it's not sustainable for, for, I think for both the US and even for Iran to continue this. So, we have to come to the conclusion of some kind. And I think, you know, uh, that we'll can see a new Middle East, uh, uh, uh, you know, you get, get even stronger. And we see the diminishing of the intervention and, uh, and, um, imperial power of, of US is, uh, uh, uh, vanish, uh, quite a bit, as we can see from this war. You gave me so many insights there. I'm, I'm trying to sift through them and order the question, my, my next set of questions to you. I think I'll, I'll come back to a couple of things. You said, one very important view that you gave us is that you, you, you, you linked the resolution of this conflict with President Trump's visit to impending visits to Beijing. Now, that, that's quite important that if we do it that way, then that makes us think that, or you said that, um, we could get a resolution of this conflict in the next couple of weeks. Uh, that would be, uh, a hugely positive for the global economy. But what do you think that resolution looks like? Because right now we have the loss of about 20 million barrels of the, uh, oil, crude and product. Then there's a loss of gas. Um, and if we think about the reopening of the state of Hormuz, it's, it's, I'm struggling to see how that actually plays out in practice. So what the deal, what the deal looks like that would allow the straight to reopen at what basic could reopen. And even, even, even subtracting from the messiness, the logistical messiness of reopening, just just focusing on the geopolitics of reopening. What do you think that looks like under such a deal? No, I think the, uh, it's quite probably, uh, you know, uh, uh, doable and possible is that, uh, we have, again, to this year is a piece of negotiating process in, in Pakistan now and, uh, and then, US is hoping in two weeks time or maybe the negotiated will start on the, on the 10th of the day after tomorrow. So basically, and then they hope to achieve that in a week or two time. And that is way before President Trump visited, to, to, to Beijing. And, uh, and then they have, uh, as President Trump already said, you know, the, uh, there's 10 points or 20 points or whatever they have. And most of them, US claim they already achieved. And so I think they, they, it's quite, uh, uh, uh, face saving for them to step down and, uh, and recognize, of course, you can say that regime has changed because, uh, many old, uh, guards has gone and, uh, and then that's number one. Number two is that, uh, the nuclear, uh, facilities and things like that. I mean, even during the last June, last year, you know, the war attack on Iran, US has already claimed at that time they already achieved the process and largely destroyed the nuclear capabilities of the Iran. So I mean, after this round, I'm sure they can say has been probably most, uh, you know, destroyed. So I, I think, I don't think they can come down with some kind of, uh, you know, proving self-claim victory there. And, uh, and then, you know, the war public can see that, uh, you know, uh, Trump has delayed, delayed his deadline and, and really wants to have this peace-making process. But good thing is that Pakistan and, uh, you know, quite a number of countries are, uh, really wants to see, uh, these peace-making. And China has a such a good relation with Pakistan and, uh, I see Pakistan, uh, absent, uh, absentee, the, the UN Security Vope just yesterday and, uh, whereas US and, and many other Gulf countries, uh, Proposal didn't go through for Hormord's, uh, street. So I, I think that, uh, if China and, uh, other countries involved and then to really say, okay, please guarantee, uh, your, your Iranians as a security, uh, please make sure there's no more invasion or attacks on Iranians. Iranians can say, okay, we'll open the Hormord's channel. And then you need that guarantor, you know, just like the first round of Iranian deal, you had a guarantor from, not only from US, but European Union, China, and many more. So I can envision that if the deal has been struck, uh, this time, and then we probably could have some guarantors or, or, or, or, big countries, uh, China, Russia, or, or even European unions and others to really, uh, to make sure that Hormord's, uh, uh, open and secure, security council could pass a new resolution with friends at the UK, uh, into that, uh, to ensure that there's, uh, there's no more, uh, a tap or no more invasion of Iran, uh, no more assassination of its leaders. But, you know, on that condition, Iranians could open the Hormord's channel, uh, uh, as long as this agreement stands. So I, I say there's a way out of this, you know, it's just, uh, as Iranians said, they need international guarantee, and they need international, uh, promise, uh, they need the US commitment and, uh, I'm sure, you know, US has said, uh, already achieved the most of its target as only one or two point, um, no, Wutikov and Kuchin are talking. So I, I can see, uh, you know, things can be done and, and can be handled, uh, you know, as, as we expect. And Iran is long called for these guarantees, hasn't it? It's sort of from day one, it's made it clear that yes, it could, it could pull back, but it just needs to be, um, really convinced that it's never going to be attacked again. We, over the course of the past few weeks, uh, we've also been hearing a lot about, um, the potential solution where Iran continues to control the straight of Hormord's post-deceased fire, post the end of the conflict, and Iran then benefits from, um, fee income from the straight of Hormord's Hormord's. How do you see that working out? Do you think that, um, that's going to be part of any peace deal, or is it really just about security guarantees that provided that Iran is convinced that it's not going to be attacked again? It feels a Tessizai implied guarantees. It will simply pull back and allow, um, shipping to resume and will not try to continue to control the straight through the use of fees or regulate, or regulating passage to the straight. Yeah, I think, uh, you know, uh, you know, uh, uh, Pakistan is really emerged as, as a big peacemaker now, and, and China has, and Pakistan has enjoyed many good relations. And also, furthermore, 78% of Iranian petroleum goes to China. So, uh, you know, I would say China holds a lot of, weight in terms of persuading, uh, Iranians and Chinese, those of the largest trading part of old Gulf states and have a big influence impact there on, on the other side. And then you can have a US-China summit happening right after this. So, I think, you know, it will be really giving a lot of, impact influence that China has in promoting the peace. And China is an envoy. Ambassador Jay has shatling Middle East and back and forth. And as also China is also talking to Israel. So, I think, you know, this war, China, probably can play much more active role now than the formal uh, Russia-Ukrain War. And even for Russia-Ukrain War, President Trump still, uh, is, uh, is a stock there hasn't really put any progress, uh, negotiating with the whole. And then I think that'll be another item for President Trump to come to China's, to seek some Chinese support. Um, I'm finishing that war. So, it really, I think after this whole exercise of, of a new, uh, Trump administration, while you're after, uh, you really see China emerge as a credible, uh, high moral standards, a big, uh, superpower that not abusing. It's, uh, it's power and not invading any countries, not sending soldiers anywhere, but has a huge, uh, has gained a huge respect, uh, around the war now. And, and I was even attending a, uh, ASEAN yesterday, they released the biggest, uh, regional annual report. A survey and, uh, and China emerged as, uh, in many, uh, area has been, they've gained much more points than, than the last year and it turned out to be, uh, China become, uh, a big, uh, increase in terms of its international, uh, reputation and international, uh, uh, influence now. You made a really interesting observation on China being such an important trading partner for various GCC countries and I've just been thinking about the economic outlook for the GCC countries, pretty much non-stop for the past several weeks. We have many clients there, I speak to them very frequently and there's, of course, a lot of concern, understandably about what is going on right now. But I'm also starting to think more about the longer term and, um, you made me, you made me think about China's, China's investment in the region. I'm wondering here, do you see scope, you know, obviously there's been quite a change in, in geopolitics and coming out of all this, the GCC countries will want to repair their reputation, they want to show that they're open for business, that they haven't lost their international allure. They've had a, enjoyed remarkable haven status over the last few years, that when things have gone wrong, in other parts of the world, capitalist fluid into the region, the scene is very attractive, countries in which to invest, to go and live, to work. Do you see the potential here for China to ramp up its investments into the Middle East coming out of this conflict? No, I think there's a lot of opportunities still there. Of course, you see the Middle East, if the war is finished, and then there's a huge reconstruction going on, not only for Iran, but for our Gulf states or even for Gaza in many places. And then China, infrastructure capabilities, the number one in the world, and also with AIB, I share your investment, infrastructure investment bank, China can do a lot in that part of the world. China has done a lot already in that part of the world. So I'm sure that that can be done and China has a huge interest there. But unfortunately, we also see there was a recent rush from global investors, Asian investors, or many other countries to go to Gulf state countries. And then they're thinking, and the US military base protection, this will be a safe haven, not only for security, but also for their investment. But it turned out to be, it was so much disrupted, and then many people escaped and evacuated from that part of the world. Airline has been stopped and an airport has been even in danger. And I was the reason that in Hong Kong, I mean, there's a huge amount of interest in a reshifted back to Hong Kong. And there's a lot of Middle East money comes back now. So what I think is that, you know, this kind of a huge offset and setback, going to be public take a number of years to re-story cover. And if Israel still, like today, Natalia, I was like, okay, the deal is only with Iran, I mean, not with Lebanon. And he's still keeping when the whole post open there threatening that part of the world. So I would think, you know, this kind of confidence building takes years to build, but confidence collapse in takes days to collapse. So you're going to take another few years, at least, to re-gain this kind of confidence. And we'll see, you know, Middle East has always been a trouble spot, has been always engaged with this problem. If the two-state solution is not there, you know, you're going to have this kind of a conflict or regional problem there lingering on for forever. And it always a time bomb there. So I think that, you know, Asia become emerged as Oasis for green, for investment, for stability. There's no war in happening Asia. And there was a little war going on between Thailand and Cambodia and immediately China and other countries has come down that already. I see an account down that. So this recovery of Middle East, I can think you're going to take years to come back. But still, there were a lot of good foundation, good infrastructure, good basis there. Depends how this new agreement, peace agreement stands, and depends how those big players, China, US, EU, and India and many other countries that works there. We'll see, you know, whether that's the ability, possibility, can return as normal as usual as we have experienced in the past. That's also sort of, I guess, what people are worried about that some of these countries might lose their lure and it'll take longer for them to rebuild their brand and their image. I personally think that they can do it. They have a very strong, very strong leadership. They have, as you said, developed a lot to huge amounts of infrastructure. Very deep sectors, if you look at Dubai's financial sector, for instance. So I'm personally confident that they will rebuild it. But I agree with you, this is not an easy thing to overcome. This has been a very difficult period for countries in the region. They've done a huge amount of work to support the economies. And once we come out of this conflict, depending on the shape of the peace proposal, these countries will have to then work quite hard to restore their image and bring money back. But I want to move this conversation along because I'm sure we could spend the whole hour talking about China and the Middle East. The problem with having you on the show, Henry, is that I just don't know which questions to ask you because I've got so many. But let me move on perhaps to one of the key points that you made earlier, which is this marker in the diary of President Trump visiting Beijing. What do you think will come of that? It's been such a complicated relationship between Beijing and Washington. For many years, this predates the first Trump administration even. But looking now, I'm not going to go over the events of the last couple of years. It's all the fresh and people's minds, even though we tend to forget about these things as we jump from one event to the next. But coming back to trade China's relationship with the US, the Middle East, what do you think comes out of the meeting between Xi and Trump? Well, I think this is a long overexpected meeting already. I mean, as President Trump has been saying that the day while he wants to invite President Xi to his inaugural address in the capital hill and also he's been geared up for this summit that has been long expected by the US side. And I think that President Trump is taking more realistic approach to the second term. Even during last year, President Trump and President Xi's summit in Pusay in South Korea, President Trump said this is a G2, which I think China's government ought to recognize as a G2, but in reality, it could be a G2 in many ways. And also, he also published a new national security strategic report and put China as a near-peer status. And we don't see a US emphasized strategic rivalry in this new, this year's strategic report. It's still so different from 2017, first term of Trump that he put China's strategic rivalry. So I see that President Trump become more pragmatic, more realistic, China become more resilient, more experienced in dealing with Americans. And also, both sides probably see that the trade board trade restrictions sanctions, it really doesn't really work. And the US suddenly realized, okay, I mean, the first term of Trump, US has launched the trade war, tariff, sanctions, gains Huawei and many things. But then, the second term, when they do that again, China has a capability now to fight back. If US weaponized all the cheap sales to China, or many companies, restrictions, China can weaponize also rear-earth and the things that China is good at. So it turned out, suddenly, everybody realized, okay, we are so intertwined, we are so much dependent each other, we cannot leave without each other. What's the point of fighting each other and self-destruction? So I think that is the consensus, I think, not only US China, but many other countries realized now. So I think it's good thing, even though globalization has been going on for years and many decoblization, but it's still going on. For example, the VIP launching just happened today. The President of the European Union of China said, the global trade has gone up, 7 percent last year, more than half of the GDP growth. So the trade still continues, and that is really a good thing to hear. Even though we've always set back trade wars and restrictions. Which means that, like or not, China and US have to trade with each other, if not directly indirectly doing anyway, and same for Europe, Japan, and many other countries. So I'm thinking that President Trump comes this time, a trade issue, they're going to continue to extend whatever trade agreement they have. And probably, US, I hope that they can drop this 10 percent tariff on FANTONO, that US having. Because the US has been really attacking those cartels, these drug cartels in Latin America, and they've been doing that in Versailla, in Colombia, in Mexico. Okay, and China has arrested quite a few precursor of FANTONO producers in China, recently announced some sentence for that. So I hope that they can at least get some lower hand food, get rid of this 10 percent, which is good news also. But also, furthermore, I think President Trump realized doing his inaugural speech, he wants to be a president of peace, and he wants to be a president of the Union. So if he wants to be president of peace, the bigger thing he wants to do is to really finish this war between Russia and Ukraine. And And then he realized, you know, you only have to finish that war. He needs China just like this time. You know, he wants to finish the war of Iran and he needs Pakistan, China. I think that there's much more bigger things as the last phone call President, she and President Trump said, you know, US and China are steering a big giant to ship of the world. Are we going to achieve bigger things greater things by working together? Not only by any of the US and China, but for the world. So I think President Trump has a much bigger agenda, has a bigger aspirations. And he want to get an overpissed price. So if he's really working with China, he has to work on that. And finally, I think the big thing is also, I think US, China is, you know, still keep a good term with US in terms of many global issues. And then Taiwan is the biggest core of the core issue of China. And yesterday, the came to the little leader of, you know, opposition party of Taiwan is landed in Shanghai and started a several days visit invited by President Xi. So I think the core street between Taiwan and the mainland relation, I really warmed up now. And there is a huge interest to have a peaceful negotiation, a peaceful reunification and US recognized one China policy and recognized, you know, doesn't support Taiwan to become independent. Why can US go further say, okay, we support the peaceful reunification of the mainland and Taiwan? That'd be great. So I think, you know, on this Taiwan issue, that is what China hoped the most that US can, can really calm down because, you know, on the other hand, US is so busy now with occupying, you know, trying to do a Greenland, a lot of American countries, even think about Canada. Why did they bother to worry about China, unified with one of its provinces? So, so I would think, you know, they could have a lot to talk about and reach a lot of consensus. And also the world really expect the two leaders to reach a lot of tranquility and agreement that the world badly needed that. So I would think this is has a significance not only for China and the US, but also for the whole world. It sounds like you're not too concerned about the current section 301 investigations, which seem to be really directed towards China because they focus on over capacity and over capacity. The evolution problem is of concern to China itself from a domestic perspective. But the world is Europe included quite worried about cheap Chinese goods flooding their markets and the over capacity the Chinese producers have. And the US investigations into this aspect of Chinese trade, I mean, that that on paper is certainly alarming because it could open the door to more tariffs on China, but doesn't sound like you are particularly concerned about this. It feels like you actually think that tariffs might even be lower after after the meeting between Trump and Xi. Yeah, I think that, you know, that is the process of if it's a market supply demand, you know, China didn't force anybody to buy, you know, put the government at somebody's position. It was all market actions. And if China can produce cheap and good, but high quality products, it's a healthy competition. It stimulates the domestic competition of other countries. It also has the multinationals compete in China and then they can train a best product like Tesla, export a lot of EV cars out of China. 40% of EV cars made in China by multinationals export everywhere. So China become an incubation land, you know, kind of a battle ground for, you know, compete for the best product. So if you've gone through the, you know, what this competition in China, you're going to conquer the world as well. So in that sense, I think China provided some healthy competition there. A second point is that I was at the Munich Security Conference, I think about two years ago. There's a German thing that I had told me said, look, if China can produce high quality low cost solar panels, let it be. You know, if China subsidized that or whether it was a world benefit from that, we're fighting climate change. We asked the co-30 to establish a green farm. If China can indirectly helping gopacals have these cheap products to fight in climate change, why not? So there are many things that can be done. But also the other, I think fundamentally China is willing to correct these trading balance and also is willing to invest like Japanese did in the 80s and 90s. You know, one, one, one, one, you know, Plaza Concord was there and then the Japanese felt okay, the way to change that is by investing everywhere. And then that massive Japanese investment, auto industry, you as Europe everywhere has basically, you know, changed that situation. And China can do the same. You know, Chinese EV car, they are, they are, China is the largest ultimate producer in the world now. And but talking about over capacity, it's really, I think it's sometimes it's not really a real issue. For example, Japanese produce eight million cars. And domestic in Japan, they only consume about maybe less than one million. Seven million are, I export it everywhere. And same for Germany. I mean, the German didn't consume probably less than 20% of the reduced 80% the export also. And China, EV car, they produce 60 million EV cars. They only export three, four million. It much, it percentage wise, they're much lower than the Japanese and the European counterpart. So, so I don't think that over capacity issue is really a issue. But even that is a issue. You know, China is willing to invest, center of the EV car and manufacturing Europe in, in US, in, you know, anywhere, you know, they need them or have a imbalance. But the problem is that there's geopolitical, no trust and geopolitical containment. It's threatening a lot of Chinese companies. There's over a thousand Chinese companies on the antitallist Huawei and even, you know, even TikTor has been threatened for so many years, has just recently been calm down and, and the same for Europe as well. For example, 40% of a Chinese investment go to Europe, goes to Hungary. It's because Hungary has the best relationship with China. And now recently, it was a big surge of Chinese investment to Spain, because Spanish Prime Minister four years come to China four times. And Spanish King just came. So, so I think if we can maintain good relations, like President Trump said, welcome Chinese investment, then let the Congress, let's bipartisan, hawkish attitudes be put aside. And then let's say, welcome Chinese investment. I'm sure there could be massive Chinese investment, both the oldest places. That will solve the, you know, employment issue, provide local taxes, you know, and transfer technology, just like multinational, you know, 80s and 90s, you know, transfer technology, exchange for market and Chinese company can do the same. So I would think, you know, we need to trust fundamentally those so-called over-capacity or subsidy issue are really caused by this, it is, there's no trust relation and containment of each other. And that's where the bottom of the problem. So I would think, you know, that's why we really caused for more our level visit. And I think what President Trump did was right. He's very eager to come to China to seek some better relations. And that is what we needed now. Briefly, you want to follow up on your point there about China's economic model, Henry. I hear what you're saying with regard to criticism of China, perhaps being unfair. And it is a view that I share because in many ways, it feels to me that businesses, governments at the west often, they've grown a bit too comfortable in their position. They don't try hard enough when it comes to things like pushing into green industries, etc. the way that China does, right? The China model does illustrate that. It is possible to do big things. But I would perhaps push back a little bit and say it is also true that there's approach that Beijing has taken. It does leave it very dependent on global demand. And I find that very interesting because in many ways, it's, there's always been true ever since Deng Xiaoping started on this process of opening up China, right? It was always that China will grow through exports. I mean, along the way, investment also played a bigger role. But the point is domestic demand was always sort of the emphasized a little bit. And that's really something I would be curious to get your take on. At the recent two session meetings in Beijing, policymakers talked more about the importance of elevating domestic demand. But it doesn't really look like so much as shifted yet in terms of the actual policy making. And it does feel a little bit puzzling looking from abroad because you could argue that it's also China's interest to have stronger demand at home to get on top of the evolution problem, right? So can you share with us how Beijing is really thinking about domestic consumption, where it ranks in terms of the economic importance in policy making and what is looking to achieve? Well, yeah, that's right. I think there's one of the most frequent complaints we're hear about, you know, of course, China does not really produce enough domestic assumptions. And which I think China's government realized that is a problem. And then China's government is really pushing for that and new five years plan, the 15th five years plan has put that as a priority. And also in the two section, the premiums are working report as well. You can see I, you know, China just finished a spring break. In the past, spring break only cost comes, you know, have a three days. Now this year, many schools have a six days spring break now. One of the reasons to do that is really to stimulate domestic consumption and tourism and also spending. I think things are getting better because the reason the the consumption was not was flat for maybe after coffee for a few years, it's people, you know, the real estate has really come down. The real estate come down, people think, okay, I don't have so much wealth now in my pocket or I have to hold wallet tight to my chest so that when when when when I'm getting old, I have enough savings. So let's bit of that. But now, you know, real estate has been stabilized and and also the confidence I come back. So I would we would imagine there would be more consumption there. And also, China's government is very eager. Like they they have practiced this training policy for two, three years now. If you're trading your old model automobile, you're refrigerator or TV, or your computers, you got a big subsidy to buy new. That actually has been working quite well. And furthermore, I think now they they are also stimulating on on the service industry and and you know, that is again, working. I do think the government has a lot of, you know, two in their box. For example, in China, you have a 300 million migrant workers and the 300 million migrant workers, they don't have a city resident status. They don't have a whole code that allowed them to enjoy the local resident rights. And then they they have the rent a very shabby apartment house in in this urban centers and a suburb and things like that. But yet the money they made, they they sent it back to the rural area and on the household land, they build huge houses and apartment, which is empty only left to the seniors and the juniors. And that's why you see the Chinese New Year traffic of people return home has reached 9.5 billion in this past February. So, so I think one of the policy they could have is to allow those 300 million migrant workers to really lease out or even has right to sell their home their homeland in the rural area and allow the city resident to go and buy this house for land to build their retirement homes. If that bear is knocking off, you're going to see a huge Chinese liberalization, you know, they could, you could maybe produce another 100 million middle class because 300 million migrant workers, a lot of them have have a working in the city for 10, 20, 30 years. Yet they don't have a local resident status and and that because they they worry about future and then they don't really want to buy and and consume in the cities. But if they are selling their home homeland in the rural area, then the urbanization rate will be accelerated. For example, China, the urbanization rate, if you look at Japan, you know, you've got a 100 million some kind of but the percent of the population leaving the big cities is much higher than the population leaving big centers in China. So, I think the government can do many things to stimulate domestic consumption. So, so that that is really the issue. I think China is having. But of course, China has now, for example, developed technology, they have developed AI, they have developed a lot of manufacturing capabilities. That absorbing a lot of new college graduates every year as well. So, I'm not very, you know, optimistic because I think China, even though the real estate has come down, has been flat. But other synergies, you know, China has 70 percent of the global speed railway, the 5G station, they reached almost 6 million, 10 times more than the US and Europe. And also, the power generation is 2.5 times of US, 3 times of Europe, which they can have a lot of a computing power for AI. And China also, out of the 10 largest container ports in the world, several of them are in China. And this kind of a synergy, you know, 1.2 billion smartphone users, everybody has a ERP, you know, we chat, highly effective efficient communication. So, there's, and then there's a new job created like there's a 50,000, 45,000, deliverable, you know, on the street, everyday fast delivery, all kind of product. And then according to the developed country, rate, one doctor, you need the four nurses to accompany that. And if that rate is applied to China, China needs a 50 million extra nurses in the healthcare industry. So, I think, you know, there's many Rome, China still can grow. And domestic consumption would graduate, be picking up. Now, I think the domestic and some accounts about 50, some percentage, maybe not 60%, but developed country, maybe 70, 80%. But I think China is there. It's going to continue. And also, now they're more confident. They see there's no war going on in China, in Asia, they can travel, they can. I was talking to those seven European ambassadors in my lunch. I said, China opened the free visa to 20 some European countries. Why can't European countries open free visa for Chinese tourists? Talking about imbalance. You know, let those tourists travel to your country free of visa. I mean, Thailand opened the visa for China. Eight million Chinese traveled to Thailand. You know, Central Asia opened the visa. Russia opened the visa. You know, there's a flood of Chinese tourists. I see European Union can do the same. And then we'll help a lot to correct those imbalance to have more service trade. Let me ask you one more question about China's domestic economy. Well, it also speaks to China and global, the issue of China and globalization before moving on to Europe and Latin America and Asia, which are topics that like to discuss China and AI. You talked about AI and data centers briefly. We hear a lot about American led AI. We hear a lot about China led AI. And these are the two countries, superpowers, AI world leaders that we have. Europe is really nowhere to be seen in all of this. But in all of this, we also hear a lot about investments being made in data centers in the US. And we don't hear much about investments in data centers in China. We also don't get the data, of course. So I'm just trying to understand here China's roadmap for AI development. We know that China is a hugely innovative country when it comes to industrial applications for technology, robotics, etc. China is really world class in how it deploys technology in manufacturing. But also thinking about consumer technology and the way in which AI is used by companies like Alibaba, China once again, really at the forefront. Do you have a sense for how much productivity gains will come from AI for China because it seems like another huge big growth area? Absolutely. That area is enormous. I mean, China is the largest drone producer in the world. China is the largest auto driving public producer in the world and power green EV producers and also AI aid the manufacturing. I mean, I was surprised to see all those things added AI element on that. And then also AI education is taking shape like mandatory. The Beijing high school, each semester, elementary school, have to spend eight hours in learning AI on full classes. And furthermore, the essence of AI is computing power. The essence of computing power is electric power. Electric power Chinese 2.5 times of US and 3 times of Europe. And I'm sure there's a lot of data computing center being established in China. I mean, all those big players, they all have it. Alibaba, Tencent, Baidu, they all have it. And China, because they can't afford it because they have so much electric power now. And China is building new three-gorgeous largest hydroelectric power printer in the world. China is currently building another three-gorgeous project. It's real four-gorgeous project. I'm going to add a lot of hydroelectric to really optimize the some power and wind power and stuff like that. And China has high voltage 800 to 1000 high voltage transmission light everywhere. It's enormous. And so I would think that if you talk about data, now they have invented a token. China is the largest token producer in the world for AI data. And also, if you talk about application scene, 1.4 billion smart for users. I mean, they are generating data every day. And that gold mine is-- it can be utilized for Medicare, diagnosis, or disease, computing your industry, innovation, and many more. So this AI-driven technology-- AI-driven manufacturing, AI-driven production. The China public is the most advanced in the world. And then, finally, I think China is the open system, China deep-sick, and many more AI company. They are open system. They're using a fraction of the cost of the US. But then they have open system to own the global sales or the other countries. And many companies can use that. AI is not that expensive to have to add for hospitals, for manufacturing, for travel, for hotel management, everything, for problem-solving, or for academic research. So I think that AI has added a lot of power for China. And then it goes to the bottom of the computing power and the electric power. China is prepared for that. And with the data, AI needs data to feed. And to train the models, I mean, China probably has the best in the world. So I'm not to worry about China's AI development. I'm sure you can at least keep a parallel position with the US. Yeah, now, I just wanted to stay on the topic of China's economy and stuff, pitching on what you were talking about with the AI things. I think one of the main things that came out of the Liang Hui back in March was the growth target. It was a range for the Ziozo 4.5, which is 5%. And then one of the theories is that, oh, maybe the 4.5 is giving some allowance for the productivity gains for this AI to come in later on. So maybe this one come in this year. There's another theory that the Beijing is allowing the economy to slowly switch to what's their domestic lead consumption. And then the last one is more that, oh, maybe this suggests a reflection of the external volatility that's happening. There's not the fault of China's conflict in the Middle East. You know, Tariya's oldest thing that might hit the growth target. So just wondering what your take on this is. Yeah, the 4.5 to 5%. I think the one they have this meeting that the Iranian war has already broke out. I mean, that's exactly China put this cushion there. You know, originally, they may be planned for 5%. But it looked, I mean, we had this chalk important of a horrible state. We have this war going on. And we have a purpose supply issues, global recession. So they are building the 5%, 0.5% cushion there. So they said it could reach 4.5 to 5%. So I think that is really important. So think about 5%. It's enormous. Every year, you know, China adds 5%. It's almost over $1 trillion. That's a totally Indonesia. Oh, and Netherlands GDP. You had a country GDP of mid power to your China's GDP now. So I think that the reason China can do that is there's highly efficiency and highly effectiveness of everything works together. And then the other success factor, China, has is one five year plan after another five year plan. There's no waste of a policy debate back and forth. I mean, we see new President coming, veto all the previous leaders policies and things like that. And then the old leaders come up with this current one. I mean, that kind of cycle is a big waste of democracy, so-called. So that's why I think if you borrow it down the competition, I mean, subsidy or SOE over, it's not really issue. The really issue is that China is invented a new model of meritocracy. You choose people from like every year, there's a 50 million college who went to exam, a 30 million getting to the university. And 3 million went to the exam, 200,000 gets into government. There's a huge competition to getting those positions and university degrees. And then all of that, the officials not promoted by how well you speak, make a public speaking. But what can you deliver at grassroots level from village to county to municipality to province to top central government? So there is a performance driven culture there. They have 31 province and cities that in China, they have 2,800 counties. Every mayor, every party secretary is a CEO of its own and compete. And then China invests hugely on the infrastructure. China infrastructures are the best in the world. And that kind of synergy produce a lot of high quality and high speed product. So I would think by maintaining that, by maintaining stability, that's why I think people start to realize why China always stress stability and over everything. Because stability, you can continue to produce miracles. And then you cannot really have ups and downs and back and forth and all those debate and those no actions and no five-year plans. So I'm thinking that this kind of a meritocracy versus China's also performance-based culture. And furthermore, China is a very unique model in the world. It's a mixed hybrid economy. You don't see anywhere in war. You got 60% private sectors generating 50% though government taxes, 60% of innovation, 70% 80% of older enterprises, 90% of employment. And they have another 20% SOE does older 30 jobs and older strategic important jobs, maintain communication, high-speed railway networks, and all those-- And they have another 20% multinational generating 40% of China import and export and employ 40 million people. So the trilato structure of Chinese economy, you don't see anywhere in the world. So all those things, I think, we make China stable and continuously. And also, the final point is China leaves in the world of democracy. Even if people say China doesn't have a democracy, no, China has. US is biggest opposition party. And maybe Europe could be another one. The lead is constantly adapting and changing. And you've got a world media. All those West media, pinpoint China, criticize in China. And they know what's going on. They can adapt and change. I can give you an example. Like 2015, when Paris are called China, John that. And then there's a heavy smoke in China. Chinese summer officials say, OK, we are just about to develop. And you have a polluted ozone layer for 2/3 of that. It's our time to pollute now. Why the time we start to pollute, you stop us. We cannot pollute anymore. And finally, realize, OK, it's for China's good to not to pollute. But also, it was also monitored by the foreign impact as well. Like, US embassy put on a roof. Every day announcing PM 2.5, how bad in Beijing is. Beijing is a government doesn't like that. But then they change. They did a study. They find that 60% of pollution of Beijing was out of automobile emissions. And then they started this green EV. And now 60% of EVs run in Beijing electric cars. And China become last year. They had a record number of clear sky in Beijing. And so you see good examples. The international monitoring, international quickness of China, the taste of China really adapted that and changed that. So I'm thinking, the way China, the China, so-called the way of doing things, China is the core modernization drive or path that China failed. The shoe is fitting for themselves. And then that's why China become more pure now. And more tourists come into China, really. This is totally different than what they heard. We see in the Western press. And then that give a lot of convincing explanation of what has done in China. You talked about green energy. And it's a bit of a favorite topic of mine. Combining green energy Europe and China into one question. It feels like Europe is quite hesitant to allow in more Chinese investment. But it clearly could benefit from more Chinese investment. You mentioned Hungary and Spain. But Europe could also benefit from much more investment into green energy and Chinese green tech, which it seems reluctant to do. It seems to be, it could actually have more investment. And you would think that that would be even necessitated as a result of the latest energy shock. Europe had one energy shock in 2022 when gas prices went up so much. And it actually improved its climate targets as a result. It made them more stringent. More recently, so relax some of its climate targets, which probably needs to revisit given the latest oil price shock. What does Europe need to do to attract more Chinese investment into EVs and other areas of green tech? Yeah, you're right. That's a good question. I've been talking to all those people. I mean, I just had Pasagalami, you know, former WTO director, and it came to my office in a two weeks ago. We're basically saying, look, there's so many European companies out here, you know, like you talk about all to industry, Volkswagen, Mercedes-Benz, BMW, Bosch, and many other European and German companies. They have a huge JVs in China. That's the way they came into China. And then they know how to work with Chinese companies. So I'm suggesting, why can't we JV? You know, they partner with Chinese EV cars or EV upstream downstream and invest back to Europe. The problems that we have, these are, you know, not healthy relation, but naturally. China is always blamed for you know, involved with Russia on the war you quaint, which China has not really involved, not conspired on the war with Russia, but it takes so long for them to, you know, get to realize that. So I think there's a JV to go back to invest in Europe is one way. The other way is now on the technology world. China is totally new now. You know, you talk about this combustible engine, old energy model of the automobiles. The production of the EV and the design and the software is totally different. I was visiting a Huawei factory, you know, they have this model of powering up all the most advanced EV cars in China now. I have all those great features. You went into the car, you have a music, you have movies, you have a, you have a wavy or a hand in the door is open and it's like auto AI machine you sit in. It's so advanced. So this kind of a software design for automobiles, not like old manufacturing models have different silos, production, design and it's all separate and it's it's it's all vertical. Now it's so horizontal. Everything's going through and then you can you just can play with a with a computer on all kinds of features for this with this automobile. So so that model is totally new and then a lot of technology of that can be transferred to European countries. And then just like European countries come to China and JV and transfer technology externally for Chinese market, European countries can do the same for Chinese technology and Chinese investors the same. I think there's a huge potential there to collaborate. So that's that's one area and the other areas that the European, you know, we should have a lot of institutional arrangement. I mean, comprehensive investment, agreement on investment, Kai, which China reached seven years ago is basically on the shelf and it's not really making you make you let's why can't we upgrade that improve that because it was a huge European services industry hasn't really got able to come to China and we can we can do that. And China also wants to join is WTO, you know, government procurement agreement and and and then there still hasn't been able to join and so you know there could be open more ways for European companies to operate in China if China is allowed to join that. And and and finally I think that the service to the street that the European is good at can can be more coming to China and and even if European Union have a free trade agreement with with India, you know, why can't they have a free trade agreement if here with China. So I think, you know, European China has no border issues. They have all long history, culture, diversity, they can get along quite well and even more so now we are getting probably into economic wise with the G3 world and Europe has to be more autonomous independent. It's the two second or third largest economy and if China, you know, Europe and US if EU can be more independent, they can really mediate the China-US relations and then they can back get best of two world. So rather than China versus West, you know, we can have a romance of three kingdoms. So I'm thinking that, you know, it's really important you become more independent, have a better in relation with China and then and also they see how US is unreliable now for for what has happened in Greenland and and and and Denmark and other and particularly on on on recently Iranian and there's no European country or NATO is supporting US invasion there. So we see the war is getting more diversified and so that China versus West or democracy versus autocracy narrative is probably gone and we have to be really see, you know, what what are the best interests for us and we're not picking sides and but then we are we can align you on this issue we can now you as the other on the other issue. There's many ways to collaborate and so China, Europe can have a huge potential to work together. Same for China, US President Trump is very interesting to have a good relationship with China and China is really one step of good relationship with everyone. I do think that that that time may come. You know what Henry, whenever I recorded episode one of the things that goes through my mind constantly is a search for a title for that episode and you've just given me one and I think because you have to name this episode the romance of the three kingdoms. Some people might think that this is actually really we're we're pulling off a book by Wang Dulu and and talking and this is going to be some kind of romance novel but actually it's very fitting to talk about a new world order in this way with with Europe potentially playing a key role in mediating across different powers but that brings me perhaps to my last question back in 2001 we had the term bricks and that just seems like not relevant anymore. How do you see that? Do you see a future for the bricks? Do you see these particular countries, particularly India, China, Brazil working together or do you see it more? It's a more fragmented it's a more fragmented world order. China has its economic interests and its view of the global order in various other countries will have their own and so the term bricks is perhaps less useful now it's much more about different countries trying to find their own economic feet and work with other small countries, large countries, middle countries in order to find a new economic equilibrium for globalization. Yes, yes, thank you. That's a good question actually. What I see the bricks I was talked to Jim O'Neill he called in the term "brick" we had a dialogue a few years ago and I think the emerging of the bricks country is really a trend that continued with 7070 land-lized movement and we also represented the global south countries that they are already fed up or they are really suffer from the north. Basically have a lot of streams attached, have a lot of a condition around them to change, a regime change and all those things. So that's why they all even though they have a different system but then they got together. So because they do have a north to face with and they have a lot of common grievances on that. But I think now the world is getting more a little bit diversified and mid-power has emerged as well. So I would think that the bricks as a developing country, a big block there, is why that China India has big appeal to them because China and India has just gone through the developing stage and has a lot of a similar experience and had all become a colloquial, the foreign oppression historically has a lot of a back legacy there. So a lot of global south country has the same thing. So I think those common denominators are probably pushing them together but also furthermore, they also want to have a development. I think if one term that categorized a bricks country is the development. A development is really the key for all those countries and everybody wants to do that. Whether China, India, Brazil, South Africa, Turkey, United States, development is really the buzzword that they want to have. So what I'm thinking is that bricks country will become more and more important, particularly in the future. For example, in this Russia, Ukraine, conflict, I think you just have a NATO guarantee or have a EU guarantee, US guarantee is not enough. Russia probably need a bricks guarantee, China, India, Brazil, South Africa, then we have a good balance in that respect. And also if we talk about G20, half of G7 countries and half of them are bricks countries. And so I think it becomes well balanced in terms of a global economic development. So So I would think that the Briggs will play an important role in the future in terms of balancing the global landscape. And then we talk about multi-polar war, and certainly Briggs countries become a huge polar there. And if you really categorize the war, you know, you can really, if you talk about the vulnerable countries, the vulnerable countries, Briggs certainly represents a huge vast evolving countries. And so I would think that this grouping of the country will be there for a long time. And then you have a lot of things to learn from each other and also be a good kind of a, it's a non-lines, but it's a political forces that can really resist some Western pressures altogether. But again, I think there are several parallel groups going on. We talk about G3, G4. You know, if that is going well, then maybe Briggs and a global North, global South term will disappear someday. But before we intertwine all those things, I still think the big player has a lot of roles to play. And then behind the big players, there are some countries have some preferences. So you have G7, you have G20, now you have Briggs, you know, it's just one more platform to air their concern, to show their solidarity and to show their voice for the global development. I think that for now, in that, that solidarity will continue, even though there's a lot of differences. But the fundamental problem is that we need to trust among the big players, particularly the U.S. Security Council. And I had an article on foreign policy, not too long ago, how do we form U.S. Security Council? I'm saying that G20 should be all in there, even though the other 50 members may have a different level of status. But that's the way to go, because 80% of the work GDP is produced by G20 now. So many things we need to continue to push the U.N. reform and I think Briggs countries can play a lot of the important role there. Thank you. It's been absolutely fabulous having you on our podcast. And I feel this is such a rich conversation and obviously we could keep doing it for, we could keep talking about these issues for a lot longer. But our time is up. Thank you, Stefan Ungrich and Denis Jock for joining me and a huge, huge thank you to Henry Wong, principal founder and head of the China Center for Globalization. It's been an absolute pleasure. You've been listening to the global economy unwrapped. Thank you.