 We're live, I'm Jay Fidel here on Think Tech and this is our Mina, Marco and me show, except this time we're doing it on Thursday at 4 p.m. and guess what? It's not 4 p.m. in China because that's where Marco is. Hi, Marco. Well, a very warm Nihao, Jay on this very cold day in Shanghai, it's about mid-thirties outside but after a handful of days of no sun and dense fog, I can actually see the sun so that is a glorious time and it's actually inauguration day here, Hawaii time, although you have to wait a bit longer until the 45th president gets sworn in. Ah, yes. Well, let's talk about that. Let's talk about the intersection of Donald Trump and Xi Jinping. You know, Donald Trump started by taking that telephone call from Taiwan and created consternation in the process and Xi Jinping responded with some of his own posturing, including the aircraft carrier in the Straits of Taiwan. But you know, what does he say, and then he went to Davos and made some interesting statements about China's, you know, advancements and comparing China and Donald Trump. So where is he and where is China about Donald Trump? Well, in terms of bilateral relationships, I continue to believe strongly that there's no more important bilateral relationship on the planet than between the United States of America and the People's Republic of China. And I think that's a focus that the outgoing President Barack Obama rightly put, the importance in the effort and energy put into that relationship. So now it's a whole new ballgame. And I think Mr. Xi Jinping is trying to position himself and he made his debut visit to the Hortie-Toydie Confab in Davos, Switzerland, over the past days, that he's positioning himself to be the champion of free markets, liberal trade and globalization. And he's been getting a tremendous amount of press here, both in the print and the electronic media, in terms of his remarks in Davos. And to what extent, to between the People's Republic of China and the U.S. is going to go south in a big way, of course, remains to be seen. I'd say one of the absolute paramount core interests in terms of China vis-a-vis the rest of the world is, of course, the status of Taiwan. And when President-elect Trump, soon to be President Trump, noted publicly that he did not necessarily ascribe to the so-called one China policy, which has existed since Jimmy Carter, 1979, that is about the most threatening thing that any political leader in the world can say, threatening in terms of being perceived by the Chinese as a threat. So to what extent he's positioning himself, Trump is positioning himself to get the attention of the Chinese and that anything less severe than rethinking the one China policy turns out to look moderate by comparison? I don't know. I mean, so much remains to be seen. But I mean, clearly the Chinese, as much of the rest of the world, is very anxious to one degree or another and nervous to one degree or another in terms of how the actual policies are going to play out under the 45th president. Well, let's, yeah, let me just offer a thought and see if you agree. The Davos comments and his response, it's fairly measured response to Donald Trump's maneuvers seems to me to be really smart because he's not playing to Donald Trump. I think he knows he can't either convince or intimidate Donald Trump. What he's doing is he's garnering support from around the world. He's taking advantage of Donald Trump's bad reputation and bad acts in order to raise up China's image around the world so that it's an opportunity for him to improve China's position. And he's taking advantage of it. I think he's doing it more for that reason than to engage with Donald Trump. I would largely agree with that. Something I've pondered as of late, Jay, being the international relations scholar that I am. I mean, that was my focus as I was getting my PhD in political science, is you have, we have had essentially something of a hegemon or dominant leader since roughly 1945. I mean, it's been the U.S. which emerged from World War II was the most dominant country on the planet and so many different regards. And now here were what, 70 plus years later, and there would appear to be something of a changing of the guard. And of course, no country can remain on top forever. I mean, historically we know that to be true. But the post-World War II international structure, so to speak, has been dominated by institutions and norms that were largely pushed and established by the United States and other Western European countries. And if that foundation is in fact crumbling, and recall what Donald Trump said about the UN seven or 10 days ago, called it essentially just a bunch of people talking and not doing anything. In other words, he was very derisive about the UN. That if in fact the UN model and all the norms and institutions and intergovernmental organizations as well as the NGOs, non-governmental organizations associated with UN, if in fact they are in the decline, then the big question is what comes next? What comes next? And you can complain, as a lot of people do, and I have as well, about the lack of American leadership or the lack of foresight at times of American behavior. But we as the hegemon have been willing to bear a substantial amount of the cost to maintain this structure. And the big question I have for the Chinese is, are they willing to step into that breach and bear the cost that a hegemon must necessarily bear as well? And that, of course, remains to be seen. I mean, to some extent, Beijing has been practicing a superbly successful game of what I call checkbook diplomacy over the years. They have a substantial amount of money, the largest amount of foreign reserves on the planet, and they've been able to be very generous in different parts of the world in terms of infrastructure projects, outright grants, cheap loans, and so forth. But there's a big difference between what they've been practicing and what would be required of a new global leader if, in fact, we're changing from an American-centric model to a Chinese-centric model. I mean, this is all, of course, rather speculative. But I agree with you, like when he puts down the United Nations, and when he goes isolationist, he's giving up the hegemony. And by pulling in and turning inward, badly, by turning inward, then he's capitulating to China's initiative to become more of a world power. And at that point, and here's a thought for you, Marco, does it really matter whether China steps into the checkbook role of the United Nations? Is the United Nations that important to China? Maybe not, because China has been very effective in exerting influence economically and politically around the world. I mean, just think of the example of CCTV. Three years ago, CCTV was only within China. Now, look, it's everywhere, except the US. And so it can exert a lot of influence in so many ways. Does it really need the United Nations? It might be better off without the United Nations. So it's a choice that they can make. Xi Jinping can decide to fund the United Nations and step into the role that the United States was playing, or he can abandon it and play the role of the leader without the United Nations. Don't you think he's really in a cat bird seat right now? Well, a number of scholars, including one I have a lot of respect for, a fellow based in Washington, DC, by the name of David Shambaugh, who has written a lot about China over the decades he's been in the field. He has observed, and I think he's accurate in this sense, he's observed that the Chinese have had a rather schizophrenic relationship with these Western-based organizations, norms and institutions that, to some extent, it's allowed them access to the world market and for them to be able to have this just beyond phenomenal unprecedented economic growth year after year after year. But at the same time, they have had a deep suspicion of said organizations and said norms and values. So it has benefited them undoubtedly to have entered into this structure, the model that has been dominant for decades. But at the same time, they've been kind of chafing against it as well. And here's one concrete example which they've actually taken action. Several years ago, they established kind of a rival to the World Bank as in the form of the Asian Infrastructure Investment Bank, or AIIB. And this is only now kind of getting off the ground in terms of having made tangible loans. But this is an example of Beijing having, and not just talk-to-talk, but walk-to-walk in terms of putting together an infrastructure and having quite a few countries buy in, although not the Japanese nor the Americans, but having a source of money for infrastructure projects gives them, and it's based here in Beijing, or not here in China, but in China, gives them a role that they previously didn't have. So it's truly gonna be fascinating to see how this relationship developed between a Chinese leader who we have a high degree of uncertainty is gonna be around until at least 2022, if not longer. And President Trump, soon to be President Trump in the hours to come, who will be in office at least four years, unless something dramatic happens otherwise. So we're really in an uncharted water here, Jay, and we'll see where we end up. Yeah, well, let me ask you this, though. We can't leave this subject until we discuss the role and the reaction of the man in the street in China. I mean, first on Xi Jinping, who some people feel is pretty hard-nosed and who has taken this corruption track of his too far and has punished too many people in too many ways to be popular, and other people feel will know he's doing a good job internationally, especially now in the vacuum created by Trump, and they like him for that. So you're there, you're on the ground. Is he popular? Is he not popular? What do you hear? Well, let me address that a little bit in historical terms, since what happened in 1989 in Qiananmen and the dramatic events of that, very turbulent and violent time. The argument observation has been made, and I very much agree with it, that the Communist Party here, which has been in existence since the beginning of the 1900s, has essentially pivoted away from traditional Marxism, Leninism, Maoism to, one, an ideology essentially based on nationalism, the rejuvenation of the great Chinese nation. And above all, Mr. Xi, I believe, is not seen as, although he's leader of the Communist Party, he is seen first and foremost as a nationalist and someone who is absolutely committed to continuing to lead China to the buffet table to get its rightly placed at the buffet table in terms of world influence and exercising its clout. So because of that, if one were to do independent polling, which is difficult to do here, but if one were to do it, I have no doubt whatsoever that the large, large majority of Chinese poll probably easily in the 80 plus percent range, 80 to 90 percent range would say that they are very much supportive of Mr. Xi Jinping's efforts, and they think of him as a very good leader, a very dynamic leader. And he's also the first leader, by the way, interestingly, Jay, to actually put his wife, who is a rock star, literally in her own way, in her own life, up on the UN, who is the first Chinese, the first Chinese first lady to really take a public and prominent role. And I think the vast majority of Chinese are very, very pleased to see the first lady of China so prominent. She's very attractive. She's very elegant. She's very well-spoken. She is a singer of national repute and was quite famous, in fact, before she even married Mr. Xi Jinping. So to answer your question, I think he is extremely popular here and has the support of the vast majority of Chinese. Before we take a break, and we do need to take a break, I want to ask you one last thing about China. I'd like to know how the Chinese feel about Donald Trump. Why does the man in the street feel about Donald Trump? Are we going to go to the break now, or do you want me to ask for that? Well, I'll tell you what. Why don't we do it as a cliffhanger, Marco? You can think about that and how you're going to formulate a really powerful answer. We're going to take a break. We'll be right back and we'll hear your answer. Hi, I'm Chris Leetham with The Economy and You and I'd like to invite you each week to come watch my show, each Wednesday at 3 p.m. Marianne Sasaki from Life in the Law on Think Tech Hawaii. I'm delighted to tell everybody. I'm so excited. I'm going to Washington to march with women on Saturday, January 21st. It's going to be a huge, huge event. And I think we're doing something in Hawaii too, aren't we? Yes, we are here on Oahu. We're going to be at the Capitol starting at 8 a.m. We're back live. We are enjoying our Thursday afternoon with Marco Mangelsdorf, who joins us from slightly chilly Shanghai by Skype audio. We are so pleased to be able to talk to him at this distance from the perspective of someone traveling away from Hawaii for a little while. So let's finish with the cliffhanger, Marco. What do the Chinese feel about Donald Trump? Well, by all reports, they have been asking many, many questions through their interloque tours as far as the level and the commercial level, to asking their various American contacts. Who is this guy? Does he really mean what he's saying? What is it going to mean for Chinese-American relations? So, understandably, they're intensely, intensely curious because they'd like to get a read of the guy, or have wanted to get a read of the guy before he actually assumes office in a number of hours. And I have to believe, and this is also very apparent, and according to the media commentary that I've been reading in a number of publications, is that there is a high level of concern that if, in fact, Mr. Trump is going after what are perceived as core Chinese interests, of which, of course, Taiwan is at the top of the list, then there's been some mention of the quote, the gloves coming off. But beyond that metaphor of gloves coming off, there's been no, and nor should there be, in my opinion, any specific mention of possible specific retaliation. But I can tell you this, I mean, the folks of the party and the government of Beijing have been analyzing this now since November 9th, and Mr. Trump's election success, in terms of the escalation ladder, as far as if the Americans do AB, then we do XY. So I'm sure they will be ready, but as I said earlier, I mean, there's no more important bilateral relationship on the planet than between Beijing and Washington, and I can only hope that on both sides, cool heads will prevail. There's been a lot of concern here, Jay, mentioned in the press about a trade war, and that, I think, would be very, very bad news for not only both countries, but for the rest of the world as well. Yeah, nobody wins on that, really. So let's turn to, let's turn to, let's turn to energy. Let's turn to energy in Hawaii. Now, you wrote an article recently about the condition of solar here. Why don't you summarize that article for us, and then we can talk about it. Well, my piece in the civil be was essentially what I called Hawaii the state of solar, the state of solar in Hawaii, and I've been doing kind of an annual review over these past five years, looking back in the rear view mirror to the previous year, kind of taking stock on where we are as an industry in terms of photovoltaics across the state of Hawaii. And I was particularly struck by the very ambitious and bold goals that were spelled out in the Hawaiian Electric Power Supply Improvement Plans to have dramatic increases of rooftop solar just in the next five years, in what they call the near term, from 2017 to 20 to the end of 2021. And I was really struck by these bold and ambitious numbers in light of the fact that 2016 was the worst year on record in terms of my record, our record keeping of PV permits across the state, going back over the past five or six years, the worst year on record as far as the number of PV permits issued in 2016 compared to the previous five years. So here these bold goals are being ununfeeded by Hawaiian Electric and yet the numbers in 2016 were going in the very opposite direction. So I chewed on that in terms of what are some of the reasons behind that, what we can expect, and just kind of overall, I don't know if I'd say the irony, but the different parallel alternate realities between what's being discussed at a high polluting level, as I called it, by the state in terms of whether we reached 100% renewable energy and power generation by 2045 or 2040 or 2035, I mean, regardless of whatever you want to pick of the three I just said, it's still decades away. And I'm much more concerned as a business owner and obviously with the vested interest as a business owner in rooftop solar, much more concerned in the next six to 36 months. Now it's going to happen decades from now. So that was kind of the overall gist of my piece is that the numbers that I'm seeing, despite the rosy sounding rhetoric from people who are not in this industry, that I just saw a real disconnect. So in a nutshell, that was just my piece. Well, that's very interesting and I think it's very appropriate. And the question to me is, so if we have a rosy picture and we have goals that are even more approximate than 2045, is there a discussion of exactly how we achieve that? How do we resuscitate the solar installation industry? How do we make it all come together and get on the track and start moving with alacrity forward? Was that discussed? Well, how can I answer that? I mean, you had a chair of the PC, Mr. Randy Awase on your show not too long ago and I actually was able to watch that if I forget where I was, exactly could have been in Vietnam perhaps. This is just a couple of weeks ago, I think. And Mr. Awase alluded to, and he made the same comment, he made the same comment in the past, that essentially getting to these high percentages of renewable energy, it does not center around the photovoltaic industry, it does not center around rooftop solar. Rooftop solar is not the be-all and end-all. Now I'm paraphrasing what he said because he didn't actually use those words. But, and I agree that the focus should not be exclusively of course on rooftop solar, just because I and my colleagues and my competitors are focusing on this line of business and this technology, doesn't mean that the sole focus should be on us. I've never argued that. So the question is, what kind of mix are we gonna have? Jay, when it comes to providing, getting to the magic goal of 100% renewable energy and power generation, what's the mix gonna be between centralized versus decentralized? Yes. And this is gonna be an ongoing debate and discussion and argument in the decades, in the years to come. And I don't know what the right balance is or should be, but I have been in this field now for going on 40 years and I happen to believe that there is a simplicity and elegance and a significant value on allowing individuals and businesses to be able to have their own semi-independent little power plants on their roof. I've always liked that idea, but at the same time I realized that traditionally the cost of those systems on a kilowatt hour cost, kilowatt hour generated basis, that the smaller the system, the more expensive the solar power produced. So I mean, you know, case in point, my friends at KIUC announced just a week or 10 days ago, the six or seventh, I think it is, utility scale PV project that they're doing, which will be cheaper than any other project has ever been done in this state in terms of 11 cents a kilowatt hour with battery storage, working with a company based in Virginia, if I'm not mistaken. It shows you what can be done. Yeah. It shows what can be done. So we shouldn't, I think, you know, go whole hog on either centralized utility scale solar to the detriment of rooftop solar, nor should we go in the other direction either. So the question is the challenge is finding the balance. And then you've got this wild card of community solar, which has so much buzz and hoopla about it, but is a long time in the making. So when community solar is actually gonna come into play, when the first community solar system will actually be installed in producing power, I mean, who knows when that's gonna be? I mean, look how long it took GEMS to get on board and look at all the flack that the GEMS program has attracted. Or GEMS hasn't done anything, GEMS is a failure, in my opinion. But, you know, I guess the question, I go back to the original question, and that is how are we gonna do it? And I guess what that means is how are we gonna, you know, make this economic for people, attract them, incentivize them, help them pay for it, both sides of the coin on rooftop solar and also on business solar and government solar on government building. I mean, how do you achieve that? Who decides the percentage? Who decides the relative incentivization? And I guess what I hear you saying is that, A, it's not decided. B, hopefully one day it will be decided, but I don't hear who will decide it. For that matter, I don't hear the factors by which it will be decided. What do you think, Marco? Well, the players of course are, is the main regulatory body, the Public Utilities Commission, and two of what I call the two power, two of the four power dockets, I'll call them. One is the Distributed Energy Resources docket or DER docket. The other is the Power Supply Improvement Plan. The disposition of those two dockets will play a major role in establishing what the mix is going to be in the years to come. The legislature will continue to try to be involved, I just read recently, the past day or so, that there is a bill or two that seeks to have us become 100% renewable in transportation. Well, you know, rock to rock. It's nice that at least we're talking about that more, but to what extent the legislature can be an active, you know, certainly they have a seat at the table, but I see this happening mostly in the regulatory realm, and it's not just, of course, the three commissioners, Mr. Gorak, Mr. Kiba, and Mr. Owase, who are the three commissioners right now, but it's also the various energy stakeholders for these dockets, from the consumer advocate to other interested parties that all have a say. So it's gonna be a collaborative effort, and I can only hope that they reach something that's actionable and implementable sooner rather than later, because if there's dawdling, no, I don't wanna say dawdling, if the process as it typically unfolds on these dockets unfolds at the usual pace, then I am very, very concerned, and I've been saying this for months and months, that there may not be much of a local solar electric industry at the end of all this discussion. Do two thoughts before we go, Marco. One is, seems to me that the legislature has gotta put its money where its mouth is. It's gotta do incentives. Incentives do change the way people conduct their business, their lives, and if you offer incentives for transportation, for cars, you'll have more than 5,000 cars out of a million cars, which we need to increase that number. But at the same time, you read, of course, that we have failed to fund the employer's retirement system to the tune now of $12 billion. We owe that money. We have another 10 or more billion on rail. We are going to owe that money. We are not a rich state, and frankly, it looks like we're getting to be a poorer state. So if you wanna have billions of dollars of incentives, you know, there may be no money for that. Now the other thing I wanna offer as we go closing here and have you make a comment on it, is the possibility that since there are two sides to the coin in solar. One is the traditional side of solar installers putting solar on rooftops for customers and single family residences and all that. The other side is the utility side. And I'm always wondering why the utility cannot use, have the benefit of, all these installers with all their expertise and their sources of supply and so forth. Why doesn't the utility hire the same installers who do the rooftop work to do large scale projects in solar? Wouldn't that keep the industry busy? Wouldn't it keep the industry viable? Why don't we do that? Why doesn't somebody say something about that? What do you say about that? Well, I say that I've been either part of the HCI family or an observer over the past going on 17 years now, Jay. And I know that Hawaiian Electric at the highest level has thought about and considered very seriously to what degree to have they wanted to get involved in actual project development and actually kind of boots on the ground. And ultimately, you know, my impression is that they've shied away from going in that direction in terms of being more actively involved with actually installing PV capacity on the ground. So, you know, amongst many of the stakeholders, none of the stakeholders, the energy and dynamic between them and Hawaiian Electric is, shall I say, not the best, not the warmest, not the most cooperative. And I don't want to overstate that, but at the same time, I'd be foolish if I just ignored it. So I'll wrap it up this way, just kind of as a means of comparison. I mean, we've got enormous challenges in Hawaii. We live in a beautiful place. Typically, the water is clean to drink out of the tap. The air site from the vogue being yucky on certain days is good to breathe. And we've come a long way. We live in a beautiful place. And the challenges before us, I think, are not insurmountable by any means. And compare that to where I am here now, where I just read a recent report that of the 338 cities in China last year, 80% of them, 80% representing probably close to a billion people, the air quality was substandard by Chinese standards, by Chinese standards. So the challenge that the Chinese government and the party have in terms of cleaning up the environment here that negatively affects hundreds of millions of Chinese is infinitely more difficult and more challenging than the challenges that we have to become more energy independent in beautiful Hawaii. Thank you, Marko. That does put it in perspective. We should continue this conversation when you're back or at least in a couple of weeks. And well, hurry home and let's talk some more. Thank you, Marko. Thank you so much, Jay. The next time in Luang Prabang, Lao People Democratic Republic, if we can swing that, you and I, the two of us. There you go. Xie Xie, Zai Jin, Xin Yin, Kuala Lumpur.