 Welcome to economics and beyond. I'm Rob Johnson, President of the Institute for New Economic Thinking. I'm here today with Jamil Anderlini, the Asian Editor of the Financial Times. Thanks for joining me today, Jamil. Thanks, Rob. We have upon us what I think you've accurately described as the new Cold War. US-China relations are, how would I say, quite strained. This has been a pathway we've been on for quite some time. How do you see, in your mind, why have they deteriorated? What's the state of play now? How is the pandemic that has visited upon us as we start June of 2020? What are the dangers of this deterioration? Where do we need to go to repair? Sure, thank you, Rob. I would say that if you look at relations between the US and China, they're really at their nadir. They're the worst that they've been since ties were normalized in 1979. I'd say they're probably worse than they've been since 1972 when Nixon and Kissinger made the very famous visit to Beijing. So really what we're talking about is the worst state of this relationship in, you know, 40 odd, maybe 50 odd years. So if you want to understand why relations have got so bad, you really, I think, have to look at the underlying fundamentals between the two countries. Now, of course, some of it is personality. Some of it is the personality of President Xi Jinping or General Secretary Xi Jinping, as he's referred to in Chinese. Some of it is to do with Donald Trump and, you know, the personalities of these leaders does make a difference and is important. But there's a fundamental underlying shift that has happened that I think explains a huge amount of the deterioration in the relationship. If you think about what engagement involved and why it was so successful between the US, particularly the US and China, but the rest of the world and developed world and China. Why has China been grown so fast? Why has this relationship become so enmeshed between the West and China? You know, China is more open now than it's probably been since the Tang Dynasty, if you think about it. I mean, you know, millennia since China was this open to the rest of the world. So why is this relationship worked? Well, first of all, China was in the mid-70s, late-70s, China was coming out of the disastrous Cultural Revolution, which followed on from the even more disastrous great leap forward. Its economy was basically not able to even feed its population. It was really in a disastrous state. And Deng Xiaoping in the late 70s, early 80s, he said, right, we're going to open up to the world. We're going to reform politically a bit. And he set the country towards what they call reform and opening up, which is the sort of great change in Chinese policy to sort of embrace the world. And what happened was the rest of the world looked at China and gradually it took several decades, but it really sped up in the 90s and the early 2000s. The rest of the world saw a limitless pool of labor. It saw a country with basically no environmental laws or restrictions. It saw a very, very communist who were able to do business. That was what they saw. And so you had this enormous shift of global manufacturing in particular from Western developed countries to China. I think in the early 2000s, mid 2000s, it cost 15 times more to produce in Mexico for the US market than it did to produce in China for the US market. And so the rest of the world decided to shift its manufacturing production, basically outsource almost everything that you could to China. And it also outsourced pollution. Look at how polluted the West was in the 80s, even in the 90s. And look how clean, relatively speaking, most of the Western countries are now. That's because they exported their pollution to China. And the Chinese people were the ones who basically suffered from that from an environmental perspective. Of course, the Chinese people became much, much richer because starting from a low base, they were able to find many more jobs. They had a huge demographic dividend, which really allowed this enormous rural labor force to move into urban areas and to work in factories. Now, the reason I'm explaining all of this is because most of those factors have gone into reverse. And so, yes, the personalities of Xi Jinping and Donald Trump are important. And yes, the kind of the people in the decision making chairs at various times of the last decade are important. But I would argue much more important are the structural shifts that have gone. The structural changes that were working to encourage engagement between the West and the East and between the developed economies in China. Those structural changes, forces, are basically all gone into reverse. China now has a shrinking labor force. China has now moved up the value chain and is producing much higher value goods. So instead of the West, particularly America being able to sort of make the high value things and design everything and then just get it made with cheap labor and polluting factories in China. Now, China has introduced much stricter labor laws or stricter labor laws. If you look at the minimum wage in China, it's gone up 20% every year for a decade and more. If you look at what China wants to produce, it's much, much higher value products. And China is now innovating. It's now doing what previously only Silicon Valley and Japan and Germany could do. So it's now coming up with things that are competing with what's produced in the West. So you have the benefits of engagement and the benefits of outsourcing diminishing all the time and you now have China as a real competitor. China's also, to be frank, used some quite predatory trade practices, some quite predatory mercantile policies which have allowed it to really beat some of its competitors who are playing on a more even playing field. Many, many, many industries in China are still restricted from foreign investment. Most of those industries are not restricted in Western countries, but there is a growing feeling in most other countries driven, frankly, by those same Western businesses that have benefited over the last few decades that there needs to be more reciprocity. And so I think just to point one more thing out that if you go back a decade, Beijing's biggest lobbying force in Western capitals in Washington DC and around the world. Their biggest lobbyists were multinational businesses who have enormously benefited by outsourcing to production to China and later benefited from the large Chinese market. However, over the last decade, one of the most interesting and important shifts that I've noticed and that I've observed has been the total change in the attitude of these multinational companies. No longer do these companies go to Washington and say, hey, just be nice to China, engagement is the way to do it. You know, don't meet the Dalai Lama, you know, don't criticize China for human rights issues, don't, you know, don't talk to Taiwan. All the things that Beijing sees as very important. These businesses used to lobby on behalf of Beijing for a whole host of things. Today, they're lobbying against Beijing on almost every issue. And the reason is they feel not only have they been Muslim and to a large extent shut out of the Chinese market or unfairly treated in the enormous Chinese and growing Chinese market. But they feel like the Chinese competitors who in some cases have stolen their intellectual property are now coming into their own markets in their home countries and competing with them there. So you've seen a very, very real and very, very strong shift in the lobbying of Western businesses. And I think, frankly, that's one of the most important changes as well. Jamil, do you do you think that the financial policies that related to what you might call modernization of the Chinese market and global integration, which no longer look to be on the horizon. My sense was that Wall Street was a big advocate for friendly relations with China when they thought they would someday bring what Americans thought was a comparative advantage of providing financial services to a very large scale market. And I don't think it's it's been a pretty rough road for them to gain access and contribute in that regard. And I'm just curious how you how you thought that sector was adjusting at this time. Yeah, so I mean a classic example right so who were the big who were the big lobbyists on behalf of China. 1520 years ago it was Goldman Sachs it was JP Morgan and Morgan Stanley it was the big financial institutions who looked at this enormous very under developed financial products market in China and just were licking their chops they were you know and not just the Americans the Swiss banks and the British banks Australian banks thought they were going to come in and because of their much more sophisticated products they could provide and their, you know their value add and a very very primitive financial market they thought they were just going to make out like bandits. And what happened was they came in and they found out that even once the WTO conditions allow them to to operate in China that there was still all sorts of hidden regulations and hidden rules that they, you know weren't weren't really able to overcome and the I think the peak the absolute peak of foreign all final foreign financial institutions market share in China was about 5% 5% of the entire market was was as big as as big as foreign investors got foreign players got and they never got near that again. So, you know, they, they were massive lobbyists on behalf of China for many many many years, hoping that just around the corner, you know, Beijing would let them in. I remember going to see this, I won't name him but this for lawn Goldman Sachs executive who'd been very very senior and was sort of sent to Beijing and he sort of decided he was going to go live in Beijing and be close to them. And he said, you know, you've got to breathe the same air as your clients he was very very sort of stoic, and I just watched him get sort of sadder and sadder over the years that he lived in Beijing as it became clear and clear that they were never going to make headway. And now it's very interesting. If you look at as this trade war ramped up and then as the, as I say new Cold War got, you know, really started to get underway. China suddenly said, you know, Beijing the Communist Party suddenly said we're going to open up and allow you to own your own subsidiary something they've been lobbying for for decades. And suddenly, you know, the Goldman Sachs of the world, you know, the American banks suddenly got very excited, oh, we're going to be able to finally finally we're going to get in there and we're going to, you know, it's two decades or three decades late but we're going to get a little piece of the action. And it's still worth it because it's so big, even though China has a totally closed capital account, we're still going to, you know, we're going to make some money. Preparing all these banks are preparing to hire hundreds of bankers up in Beijing and then COVID-19 hit and then the real, you know, sort of Cold War is starting now I think and, you know, they must be feeling very, very dejected at their chances I would say of really ever breaking in to that market. Now, another point I would make is, if you look at who's powerful in Washington DC from a lobbying perspective today, I mean, no question before the financial crisis it was Wall Street, it was the Wall Street banks these were the people who could buy senators and congressmen and you know who really had the, by far the biggest influence in, in, you know, inside the Beltway and in Washington DC. But I would argue that today, it's the technology companies that are the richest and the probably the most influential when it comes to kind of lobbying power, you know, the giant technology companies. Hey, and guess what? Guess which companies are totally shut out of the Chinese market and always have been Google, Facebook, Amazon. So, so all the companies that are really the most powerful in many ways today and in the US that probably hold the, you know, the biggest weight when it comes to lobbying in DC. Those are exactly the companies that China has always kept out of, out of, you know, with the with the so great firewall of China. And so, again, that's adding to my point that the, the lobbying direction in DC is certainly for disengagement maybe even decoupling not for greater engagement today. I remember, right after the 2016 election, I was in Beijing with Mike Spence. And we met with some very high level Chinese officials. And one of them said to me, I can see with all the fake news and manipulation and discussions of Russia, that your society is now coming around to a view of the cybersecurity web based intrusion that we have been aware of for a long time. So he was sort of saying it to put it in a parable the Americans were treating Silicon Valley like a superhero, and all of a sudden became skeptical in a way that the Chinese had always been skeptical. And what I replied to him, it's interesting that you're skeptical, you know, hesitant because you would turn right around and set up your own systems. So it's not that you're averse to having the systems you're averse to having the system that is not controlled by, by Chinese people. And he nodded, yeah. But, but I think I would argue. Go ahead. Go ahead. No, please. I would argue, they're averse to having systems that are not controlled directly by the Communist Party, not by Chinese. If the Chinese people were to control the Internet. I think the Communist Party would be not long for, not long for the world, probably, and that's their view. It's very clear that, you know, the Internet is not safe to be put in the hands of ordinary people or ordinary businesses. It has to be absolutely controlled by the ruling party. I've actually had senior officials tell me that directly. They've said, you know, when I've asked them why they are all, you know, senior, senior Communist Party officials are all allowed VPNs, virtual private networks, which allow them official ones, which allow them to surf the global Internet freely, Google and, you know, all sorts of things, news sources and anything they want outside of the walls of the Great Firewall. And when I asked, you know, well, how come it's okay for you to see all this stuff but not the sort of average Chinese person to read anything they want on the Internet, they said, oh, you know, why would we trust the people with this? It's far too dangerous to trust the people with free flows of information. Direct quote from a senior party official to me. Wow. Wow. And I guess we're, I'm quite anxious in the realm of US-China relations is that I don't think unless the United States and China move to a more cooperative place that the challenge of climate can be truly addressed. Do you see both the need for collaboration and how we could and how we might get there in repairing this relationship because in some sense, necessity beckons us, at least in my view. Absolutely. I mean, if you go back to the Obama administration, I think the Obama administration started from a place of, you know, we can we can deal with anybody that was really the platform Obama was elected on. It's like, you know, there's no country that we shouldn't at least think about talking to and, you know, we're open and, you know, this is this is the new America. And I think it was pretty quickly that they worked out that there was it wasn't going to be so easy when it came to China. And I think they quite quickly narrowed the scope of their kind of ambition when it came to dealing with China. There's just so many fawny issues when it comes to US-China bilateral the bilateral relationship, and I think they decided to to narrow the scope. I mean, deal on various things when they could deal with on them. But one of one of the areas they focused on and I thought was a very smart idea at the time because it seemed not very politically sensitive and not really sort of very contentious was was climate change. And so, you know, the US and China got together and they really, you know, with other countries and they really, you know, in that was where they really tried to to make, you know, a concerted effort for the betterment of humanity, to deal with climate change. The US was the, you know, historically the biggest polluter China is by far on multiple, you know, you know, scale of, you know, several multiples by far the biggest emitter of greenhouse gases, you know, carbon today. So, you know, you have China the big modern day polluter and you have the US the great traditional historical polluter. And as I pointed out earlier, a lot of that pollution in China is actually outsourced pollution from the rest of the world, you know, you don't want to make dirty things in your country so you send it off to be made in China. So, you know, but but without these two countries, you don't have a solution. I mean, it's just the scale is just so vast when you talk about Chinese emissions that without China being part of some sort of deal or some sort of arrangement. And the US, of course, as well, you're just not going to to deal with this as a as a global issue. And my, like you, my great fear is that, you know, we're just we're talking about a new Cold War where there's going to be only areas of confrontation and conflict and no areas whatsoever, really, of of real cooperation. And I think it's incredibly sad. I think it's incredibly dangerous, frankly, because I think not, you know, journalists are prone to a little hyperbole. Let's put it that way. But but I don't think it's hyperbole to say that the chances, frankly, of of outright armed conflict between the US and China are rising all the time, at least when it comes to proxy proxy countries proxy territories. And that's what I really worry about, frankly. I think climate change, you know, must be addressed by these two countries in particular, and bringing along the rest of the world, but neither of them is seems capable or willing to to show leadership in this area or frankly, in many other areas, and they seem both to be locked in a kind of cycle of of conflict, which is extremely concerning, I would say. I agree. I am reminded of my friend, Orville Schill, who with a co author wrote a book called Wealth and Power. So several years ago, but Orville gave a presentation at an event, when in essence he said, given the woundedness of the Middle Kingdom, China, because of essentially from the opium wars through the Japanese invasion at the time of the Second World War. The Chinese have a great yearning to regain the stature of their national identity at the time at what you might call the top of the world order. And the United States, which has been in that role since the changing of the guard around the time of Bretton Woods with the British, handing, handing the baton to them. The United States would like to have an integrated system led by America, in which you might call is a China that transforms itself to be a cohesive element of that system, but essentially emulating the organization of America. And Orville also brought up in that presentation that part of what was going to be difficult was not just the yearning to rise versus the kind of desire to hold on to the leadership in America, but that these two countries come from very different philosophical systems. Cartesian enlightenment in the US case and the kind of Dallas and Confucian traditions deal with many things, particularly uncertainty, very differently. And I'm curious because you live right in this intersection, working with the FT in Asia, but having been in Beijing and Hong Kong. Do you think the Orville's large perspective, how you say contributes to that understanding of where we are and the difficulties of moving forward. Well, absolutely. So I just point, I just like to say that Orville is one of my favorite human beings on earth and really one of the great, great sinologists. In my opinion, and I talked to him quite regularly and, you know, I'm always smarter, a little tiny bit smarter after listening to him. I would also point out that the focus on the environment and climate change for the Obama administration. There's a person who first explained to me what that policy was going to be and who I was intimately involved in it was Orville actually so. So he was intimately involved in that in that kind of in formulating that approach to China under the Obama administration. So he, yeah, I agree with him entirely that, you know, we're talking about absolutely different worldviews in some ways. However, the US and China are quite alike in that they both have this idea of that they are exceptional. The idea, you know, the Americans absolutely believe in the idea of American exceptionalism. And so do the Chinese, you know, the Middle Kingdom as you as you referenced earlier, you know, China really believes it's an exceptional country. It's different from everywhere else. And they both also, I would argue, believe in this idea of manifest destiny. You know, the US was destined to be the sort of the world's leading superpower and China absolutely believes that today. And if you look at what Xi Jinping from the very first moment he took over as General Secretary of the Communist Party in late 2012. In that very first speech, and I was there actually in the great hall of the people standing a few meters away from him with the other some other foreign journalists and he, he stood there and he said you know I'm I'm here to bring about the great rejuvenation of the Chinese nation. And, you know, that is the China dream, he said, and you know that's that's manifest destiny that's the idea that here I am Xi Jinping I'm the one who's going to bring. You know, the great the great rejuvenation that the return to some, you know, Halcyon time when when China was the dominant nation in the world. It's very explicit I mean we're not talking about sort of you don't have to read tea leaves to to sort of understand what he's talking about and to understand the appeal to the Chinese people. And it's very interesting because he's revived in a way that was anathema to many generations of several generations of communist leaders. He's revived, you know, sort of old ideas of, you know, Confucianism, old ideas of kind of ancient Chinese wisdom that that were scorned, you know, we're actually purged by Mao Zedong and and even in later later generations of communist leaders didn't really want to talk about Confucianism and you know the Cultural Revolution for 10 years in China from 1966 to 1976 was about wiping out Chinese traditional ideas, religion, Chinese, you know, traditional concepts. So, you know, it's, it's, he's revived a lot of these things in the pursuit, probably, you know, you could argue of, of very strong nationalism, and, you know, American nationalism and Chinese nationalism don't leave much room for each other. And I think, you know, that's that's why another reason why we are headed into, I would argue, and a period of more conflict because in the American view of the world there isn't much room for a an ascendant China and in the Chinese current view of the world I don't think there's room for the US at least in China's neighborhood. So China's got a stated goal of pushing them America out of the Pacific is certainly the western part of the Pacific. It's very clear. I mean, it's in all the military doctrines. It's in all the, you know, many of the speeches that party leaders give. It's not a secret either. So, you know, we're talking about a status quo power and a power that wants to really shake up that status quo. And that's another reason we're headed for conflict, more conflict. One of the, I remember, I used to work in the United States Senate, and there was a gentleman named Michael Pillsbury, who wrote a book. I can't remember. I guess it's, it's relatively recent, but it, I had seen him speak and it was called the 100 year marathon, China's strategy to replace America as the global superpower in it resonated with many of these things we see coming to the surface now. Yeah, I mean, it's a, it's a, you know, you need a, you need a title that's going to sell books, right. So it's, it's kind of an alarmist title of a pretty well read. I mean, you know, Michael Pillsbury is on, you know, he has a certain view of of China and it's sort of, you know, it's a it's representative of a, of a certain position on the spectrum and in, in the sort of sinologist world, but I think he argues quite cogently and quite, you know, quite convincingly. And like you say, quite a few of the things that he's argued have certainly been born out by actions in recent years. You mentioned moments ago about being there at the time Xi Jinping came to power. And I remember having a meal with you and your family. A few years later, but not, it was, it was quite some time ago. And you turn me on to the, to a museum exhibit that was at a national museum in Beijing that was almost like a history of the national ascendance of China. And it was a very, very striking and very strong message. I was a bit surprised they let me go see it, but Oh, they want everyone to see it. Yeah. They want everyone to see it. Yeah. Yeah. I don't remember the name of that exhibit or whatever, but I remember you. Yeah, it was called the road to rejuvenation. And that's right. Yeah. Yeah, that was it. But it, yeah, I mean, that's a lot. It foreshadowed a lot of what you're talking about. Absolutely. I mean, the the fascinating for me as a sort of student of modern Chinese history. That exhibition is one of my all time favorites, but just because it's so interesting and because it's so telling it changes all the time as, you know, as the photographs were in the Soviet former Soviet Union would change when when an official would be purged and they'd be cut out of the photographs next time same under Mao Zedong as well under the Communist Party. So does that exhibition change on a regular basis as party officials are purged their photographs disappear from that exhibition and as, you know, one faction or another rises or falls. So do the the displays in those exhibitions are various things that are that are associated with those various factions. So for example, when the Minister of Railways was arrested and thrown in prison for ostensibly for corruption, the big display about the kind of the development of the high speed rail system suddenly shrank to a very, very small exhibition in that in that exhibition. So it's a fascinating if you want to know who's up or who's down you can go to that exhibition and if you have a if you've been regularly and you have a keen eye you'll be able to tell who's who's about to or has just been purged just by going through certainly the more modern parts of that exhibition. But yeah, it tells you a lot it was set up after Xi Jinping came to power that exhibition. Its name is the road to rejuvenation so obviously it's his centerpiece. It's in the National Museum it's a permanent exhibition it's right off Tiananmen Square in the center the heart of Beijing and yeah it gives you a very clear propaganda view of how the party tells history and the way that the Communist Party tells history like other Communist parties and authoritarian systems over the years is it's fluid right so history is a tool for to be used for modern political purposes. So you rewrite history on a regular basis in order to serve whatever your political goals are today. But one thing that doesn't usually change is that modern Chinese history always no matter what museum you go to no matter what the topic of the subject of the museum almost inevitably every museum exhibition begins with modern Chinese history begins in 1840 with the first opium war. There's a long screen usually about the evil British it's always the evil British and I try to explain this to my British colleagues and to you know people in the British government. And I say look you're hoping for a trade deal with China you're really hoping that one day you guys are going to get you know some great benefit from from you know cozying up to China and your Communist Party however you do you will never get any benefit you are always going to be the perfidious British who started the opium wars and dominated carved China up like a melon and it's very powerful this stuff it's taught to very young children from a very early age they are taught history by learning about the opium wars from 1840. And it's fascinating because that curriculum didn't wasn't brought into in China until 1990 91 and it's it's called it's explicitly called the patriotic education curriculum and it was brought in immediately after the Tiananmen Square massacre because the feeling was the student led. A protest showed that the average Chinese young person was not sufficiently patriotic enough and they needed to be they needed to be taught. How to be much more patriotic and so it's fascinating the the and how the curriculum has changed over over the years but that exhibition is a very powerful living example and I'd urge everyone who go to Beijing to go see it. By the way I do recall there was an app for a smartphone that you could almost see like the highlight reel I don't know if that still exists but at the time I went I downloaded an app and came home and showed my friends some of what I had seen and the power of the image. That was being created and disseminated but I'll I'll go research again whether whether that that window in for those of us that are in lockdown all around the world now would give people another way of experiencing that exhibit. Though it was much more vivid spending three four hours in there and all the twists and turns and what you might call the visual editorials and it was just fantastic and that's what that's a that's a belated thank you to you for for turning me on years ago that that that experience is always really resonated with me. When you are when you're looking at the US and China I remember you early in this conversation you talked a little bit about the personalities. But I think the structural issues that you brought up were extremely important and in my own sense of the United States we've talked about essentially all the companies that with no. Environmental restrictions with the huge pool of labor could engage in foreign direct investment and be profitable you had people imagining. Envisioning fantasizing about huge economies of scale you know coke and Pepsi selling to 1.2 billion people and you had a lot of people thinking. Including Silicon Valley and others that they were going to gain substantial market share that the American comparative advantage would allow them to play a very profitable and large scale role in China. But even before Donald Trump began his campaign places like the Council on Foreign Relations started making reports. I remember Kurt Campbell and another gentleman named Blackwell and others in 2014 were writing reports that could see that the convergence or the dreams of scale. Or the integrity of intellectual property rights were not going to we're not going to get to the place that they had imagined in their fantasies. And at the same time when I talked to Chinese officials they could say to me things like well if we were the size of Tonga. Then we'd send people to America get some value added in education come back. America's be the tugboat we would latch on and we would engage in development but it would cause them no difficulty. But they have a population five times the size of the American population or four and a half times the size. And so in some sense they were swamping the tugboat as the momentum continued. Things like the China 2025 report which said we're going to walk up the ladder of knowledge intensive industries and displace all these people we import from or allow for foreign direct investment. So I think there have been a lot of structural telltale signs of and the other two other things that Chinese said to me. The engine of growth in the world in the next phase is largely going to be China moving out of the middle income trap. And having rising living standards here that's where the world's aggregate demand will be centered. And I think they also said Americans do not practice what their economists preach. They talk about free trade can make everyone better off and no one worse off. But it implies a tremendous amount of adjustment assistance in the transformation given the size and influence of the Chinese economy. In which am I called changing the patterns of comparative advantage and the American government doesn't do that. It deregulates it cuts taxes for the rich. It lets people keep their money offshore. So tax evasion is now legal tax avoidance. Then they say they can't afford it. Their infrastructure and their school systems wither and top level Chinese leaders said to me there's nothing we can do about that. But we're being demonized. So I'm painting a portrait here of many facets of this breakdown. But I think it's deep and I think it's been there. How would I say even before the personalities of Xi Jinping and Donald Trump moved to the floor. Absolutely. And I would agree entirely that this is this has been coming for quite a long time. I would argue that it goes back to the aftermath of the global financial crisis because pre the global financial crisis. I think the you know in China they really looked at the U.S. as a model as a as a model that in many ways that China hoped to emulate and economically in particular. And after 2008 I think there was a feeling a recognition that you know America certainly wasn't perfect and that America you know Wall Street had blown up this global system that China certainly didn't want to you know to copy. And so I think yeah definitely goes back to back then and and frankly speaking I think there was a bit of a bit of hubris started to creep in. In China of feeling that actually you know maybe well founded perhaps but but a feeling that you know China didn't want to or didn't need to copy America that China actually maybe had a much better system. And that certainly is the the sort of mainstream of the rhetoric today at least domestically that it's not really what China tries to project outside its borders but certainly the message to the Chinese people is. And you can see it going into overdrive right at the moment with the protests that are happening in the U.S. and the rioting and looting happening across the U.S. The Chinese state media is wall to wall coverage of that and saying see that's that's the American system and look at how much better our system is. And so you know that that is I think you could date it easily back to 2008 but certainly I think that the personalities of Xi Jinping and then later Donald Trump Xi Jinping came into power in 2012 Donald Trump and obviously 2016 early 2017. I think those two personalities well to a certain extent they're both reactions to the changes that have happened the underlying structural changes and and their accelerants for for this kind of more confrontational approach to the bilateral relationship and I think it's you know the personalities do matter they're not they're not sort of irrelevant. And I would say both those personalities have accelerated the the more you know confrontational approach from each country. I'm I'm grinning as I'm listening to you because I'm remembering one of your predecessors in China Richard McGregor and his book The Party about the particularly at the outset of the book there's a passage or or a scene. Where American financiers come in and the Chinese leaders tell them essentially well you blew up Asia in the 90s and now you blown up yourself. You're certainly not the model we're going to emulate as we build this country and but I've thought Richard's book captured that 2008 and slightly beyond window very very skillfully. Yeah Richard was my boss when he was the China bureau chief and he's the one who hired me to the Financial Times he's I like to think of him as my rabbi or Laoshi my teacher and yeah he's a he's a he's a great journalist and a great author. Yes, indeed. So I guess the other thing that relates to China and China US relations. That is how they say very much on the radar right now is the evolution of Hong Kong. And I know you live there and I told the story a couple times on this podcast about being in a car. In December last year when late November I believe it was when a bomb went off in the street in Hong Kong was a bit like a ghost town weekend I was there. The conference I was attending essentially officially canceled and then went to a closed venue and convene there, but it was not publicized and there was quite a bit of protest in the streets. But it seems tell me a little bit about what's happened more recently what's what's going on now in Hong Kong and what is it portend what what what can we learn from that. Yeah well if if Hong Kong is so if there's a new Cold War between the US and China which I believe there is. We're in the early stages of it. If if there is then Hong Kong until now has been West Berlin but Beijing is about to turn it into East Berlin is put it that way. This is really as one of my colleagues put it probably slightly more poetically you need to think about this as two giant weather systems colliding. So if one of the weather systems is authoritarian increasingly totalitarian Communist Party rule in the mainland in mainland China. And the other weather system is the the liberal Western Democratic ideology these two ideological weather systems are really smashing into each other over the you know right above Hong Kong and it's it's really causing a tempest down here on the ground. The the latest is that next week June 4 is the 31st anniversary of the Tiananmen massacre and we expect very large well large protests maybe not very large actually because for 30 years every year there's been. You know, tens if not hundreds of thousands of people have come to Victoria Park in one China and Hong Kong. They've gone there and they've they've held a candle that vigil it's the only place on Chinese soil inside the People's Republic of China where where it's it's been until now legal and totally allowed for people to remember this this event from 1989. Except that this Thursday. Beige is Hong Kong government the Hong Kong police have banned that vigil for the very first time and they're they claim that that's because of the danger of covert 19 but that seems like a very lame excuse. It's clear that the real reason is almost certainly that Beijing is intent on introducing a very strict draconian national security law imposing it on Hong Kong and that the police don't want to. And the Hong Kong government don't want to Beijing appointed Hong Kong government don't want to further antagonize the leadership up in Beijing with the possibility of of a very large very visible very well covered. Vigil on this very sensitive anniversary so this week is going to be, I think very important, but the underlying issue is that Beijing, I think, surprised the Hong Kong government and almost everybody in Hong Kong with this announcement. Very recently or just a week or so ago, week and a half ago, this announcement that they were going to circumvent bypass the local legislature they were going to effectively throw out the idea of one country to systems through which Hong Kong is supposed to be governed. And actually contravene the the basic law the the mini constitution here in Hong Kong by directly imposing a national security law on Hong Kong. So if we've talked to quite a few constitutional scholars and, and, you know, great legal minds and it's very hard to find someone who argues that this is even legal under Hong Kong and Chinese law under the under the Constitution here. But I think that's irrelevant in a sense because Beijing has just effectively decided it's going to do this. Anybody wanted this, even the most pro Beijing figures, although some many of them have come out to publicly support this. I mean until Beijing said this they were all opposed to this isn't as a possibility even. I think so in Beijing's calculation in the Communist Party's calculation they were very very worried about elections tightly controlled but somewhat democratic elections that was supposed to happen in September. If you go back to late last year when these district council elections which is the absolute lowest level of election when these happened. The pro democracy figures anti government figures, you know candidates won a sweeping landslide 85% of the seats or more were won by pro democracy anti government. So that really caught Beijing's by surprise they actually in the weeks leading up had been clearly messaging that they thought that pro government and anti demonstrator candidates were going to win a landslide so this was a sort of stinging rebuke and I think it's quite clear that Beijing felt that when these elections come around in September that they were for the legislative council which is the local legislature that they might even have lost the local legislature so which would have been much more embarrassing to try and null those results. So in Beijing's mind what they've done is they have introduced this now when the rest of the world is distracted by the virus and when the Hong Kong people haven't been protesting so much over the last few months because of the virus and by ramming through this legislation they hope that they will scare the protesters off the streets and everyone will be called into sort of silence and acceptance and hey guess what if people do still come out and protest against this as they have over the last week then they're pretty soon have a national security law which they can use to round everybody up. There are very deep concerns if you go back to 2003 when this when a much much milder version of this was proposed under the actually under the basic law the mini constitution. When a national security law was proposed in 2003 you had the biggest protest up to that point peaceful protest ever in the history of Hong Kong against it and the plan was swiftly abandoned and the Hong Kong government Hong Kong legislature has never been in a political position where they were able to even suggest reviving that national security legislation partly because it's getting quite technical but partly because the legislation itself is almost certain to contradict other parts of the mini constitution in Hong Kong which are supposed to guarantee freedom of speech freedom of religion freedom of assembly the free press. The way that national security is interpreted in China in mainland China is extremely broad so somebody who posts a poem or a satirical cartoon on the internet can go to prison for several years for subversion or incitement to subvert state power as it's referred to in Chinese law so. You know you can see the quite large ramifications for Hong Kong if well this law is almost certain to be pushed through in time for those elections in September and my great concern is I mean you you were talking about witnessing a bomb exploding here in Hong Kong I've been out many times out to the front line to witness as a reporter to see you know how how these protests are playing out and I've seen them get quite violent in some cases and my great fear is that in doing this Beijing, you know the has closed off in many ways the possibility of peaceful protests closed off the avenues for people to protest peacefully and and you know for for some of the more radical members of the protest movement you could see the attract well you could see them going unfortunately for Hong Kong and for everyone here moving in a much more violent direction and my prediction for nearly well for about eight nine months now has been that unfortunately I think we may end up in Hong Kong in a situation somewhat like Northern Ireland and that will be a disaster for the Hong Kong people for the world for you know for anyone who loves Hong Kong and loves China as as I do. Yes. Well thank you that's how you say that that's a daunting portrait it doesn't how'd I say I'm an old sailor. So when you talk about weather systems colliding. Most often that's where you see thunderstorms and lightning and it sounds like that's exactly what's approaching or upon us now in Hong Kong. But Jamil, I always really love talking with you and I learn a lot. I'm inspired to be more curious by your vitality. But, and I hope that we can come back on this podcast together from time to time as events unfold. But, I guess for at this moment, I just want to thank you for being here today and encourage everybody to follow your fine work with the Financial Times and, and they're good judgment making you their Asian editor. I want to applaud that too. Thanks for being with me today. And, like I said, let's meet again soon. It's always a pleasure Rob. Thanks. Thanks so much. Bye bye. And check out more from the Institute for New Economic Thinking at InetEconomics.org.