The Real Losers Of The US-China Trade War | When Titans Clash | Ep 2/4 | CNA Documentary

[Music] we as soybean farmers and united states have a 35 to 40-year relationship with china the tariffs definitely affected us there so many people that just couldn't continue to operate china had driven most of the companies into bankruptcy most of the u.s companies into bankruptcy at that point xi jinping had said to me if our people get to know each other then our countries can get along in china a dual circulation economic model is underway to mitigate the effects of protectionism both superpowers brace for the possibility of a financial war there are two pillars of us dominance in the global financial system that allow it to sanction countries i do think the invention of the g41 will become a very important catalyst for the international addition of the rmb [Music] this is muscatine a town along the mississippi river in the state of iowa it may seem odd but china and muscatine are bound by deep ties those ties are bringing the relationship between the world's two superpowers down from the realm of geopolitics and directly into everyday lives [Music] back in 1985 an unknown county official named xi jinping made his first trip to the united states he was part of a government delegation sent to study animal feed [Music] sarah londe was part of a small group of people who hosted him i'm coming in to have a cup of tea and tell you a little bit more about china this is the table where xi jinping had a potluck dinner with us [Music] he seemed like a person happy to be in america because he said it's the first time he'd been to america and he had question question question question question [Music] we had been told that he read mark twain so we're right on the mississippi river that was great and he loved the farmland and the openness of it all china was just opening up and we were eager to learn more from them and maybe them from us also the young xi jinping slept in the bedroom of a teenage boy in this house and even learned to drive a car [Music] dance in 2012 c came back to muscatine now as china's vice president when he went in the door there was just a smiles on both sides that couldn't be contained and then he said i met with president obama hillary clinton vice president biden they said why are you coming to iowa and he turned to the old friends and said because of you so this air china 747 flew from d.c to moline illinois and all these guys got like in limos to come down here for one hour took the limos back this is lucy landy and president xi gave her a gift of a beer it's my son chris this photo was taken the night xi jinping was here meeting with old friends xi jinping had said to me you know if we can have exchanges in all areas sports business arts if our people get to know each other then our countries can get along those visits by presidency changed the course of muscatine's development to see how interconnected china and america are you only need to take a walk around this midwestern town from a swank 40 million dollar riverfront hotel and convention center built with the help of a chinese investor [Music] to exchange programs in china for muscatine students to chinese interest in a proposed international river port in the upper mississippi river and the biggest chinese investor has been glad chang the man who bought the farmhouse she stayed in and turned it into a friendship house glad it's a wonderful guy i've met him many years ago and he has really contributed a great deal to muscatine certainly he has brought some [Music] development this is one of glad chang's more iconic contributions to the city the new merrell hotel and conference center overlooks the river chang has a sizeable stake in the property chang made his millions in china and then decided in 2015 to split his time between muscatine and beijing he had a dream of global kumbaya [Music] [Music] [Music] foreign chang was one of thousands of chinese investors in the u.s before thai soured china's direct investment in the u.s dropped from 5.4 billion dollars in 2018 to 5 billion dollars in 2019 the lowest level since the recession year of 2009 and from january to march 2020 chinese direct investment in the u.s virtually vanished to just 200 million [Music] iowa [Music] [Music] when decisions are made at the top levels between countries that trickles down to what happens in small town america right here in muscatine that is felt and so the thing that i think that we can really hope for and count on is that the relationships between countries will be rebuilt and that this will be a temporary stop between investors going coming into the country and certainly into muscatine [Music] an initiative by a major muscatine industry kent corporation to create an international river port could have been a game changer costco a state-owned chinese shipping company expressed interest in the project but with ties worsening by the day all talks have ground to a halt two hours drive away from muscatine is where you will find the kimberley farm yeah how's it going up there come on and the most famous american farmer in china rick kimberly kimberly rose to fame after president c visited here in 2012. president xi when he was at our home he talked about using our farm as a model of modern agriculture for the for china and so we've begun a china u.s demonstration farm in hebei province i am humbled and honored for the kimberley family kimberly farms to be the first phase of the china u.s demonstration forum i look forward to continuing to come back many times help build relationships and be friends with china the friendship farm was to be a part of a 4 000 acre endeavor featuring fruit groves livestock and even a disney style version of a small town in iowa it is connected to nearby beijing by a road and high speed rail link [Music] we as soybean farmers and united states have a 35 to 40-year relationship with china i've been to china over 20 times visited over 60 cities 12 provinces so i've been over a good chair of china grant my son and myself we've been to china many many times we've helped work on this relationship but even his special relationship with china did not prevent him from being whacked by the u.s china trade war after the u.s decision to put tariffs on a long list of chinese imports in 2018 china responded by placing a 25 tariff on soybeans china buys 60 of the world's exportable soybeans so by far and away they're the largest buyer of soybeans in the world and we are one of the largest exporters of soybeans in the world so when you get blocked out of one of the largest markets there's certainly going to be a price impact we saw lower prices the last couple years the tariffs definitely affected us financially our margins are tight anyway and with the tariffs the price came down even more so uh profitability there just weren't wasn't any profit there so uh many people that uh and not all but some that were financially affected they just couldn't continue to operate a phase one agreement was supposed to get china to buy more soybeans again but as of n2020 farmers say the sales to china are still lower than pre-trade war levels the kimberleys hope a phase 2 deal will improve exports the u.s china relationship we're kind of struggling right now it has become a little contentious and we would like to see it uh cooler heads prevail we as two large countries united states and china we need each other and we need china to continue to buy our products our soybeans it's very important to us that we have them as one of our large customers both countries are the largest two economies in the world they need to work together they need each other one by itself is not going to be as strong as both of them working together the moderate views of the people of iowa are currently in a minority in the u.s according to polls a record high number of americans have an unfavorable view of china biden is expected to continue a tough approach to beijing if you look at what members of congress are saying about china just about everybody is worked up about something you see a bit of a split you see a few people worried about trade what you also see is a growing number of people worried about human rights and democracy issues and rule of law and autonomy of hong kong so i think one way or the other there will be u.s china tensions america alleges that china has damaged its economy and the list of accusations are long i.p theft currency manipulation and unfair trade practices leading to a trade deficit that reached over 400 billion dollars in 2018 the year the trade war started but to understand how that deficit happened we need to turn the clock back to 1999. that was the year chinese and u.s negotiators signed a historic trade deal that paved the way for china to join the world trade organization an agreement of this sort with its breadth with its scope can help to anchor the relationship between the united states and china in a most fundamental way and from that anchor i think other good things will emerge for close to a decade james green has worked inside the u.s embassy in china he first lived in wuhan in the 1980s later he was in the meeting rooms at china's state guest house in arranging presidential and ministerial meetings on both sides of the pacific he recalls the imperatives of the wto agreement i actually worked at the embassy in two different stints one was 1999 until 2001 and then a second time 2013 to 2018 when i was the trade representative there was a lot of optimism at that time for having china join this international institution that would benefit both americans and chinese the chinese leaders zhang ziman and jurong ji really did make a lot of very difficult political choices to open up the economy and i think we forget that oh it was preordained that china was going to become the workshop of the world and no it really wasn't you know jurong g laid off 40 million state-run enterprise workers and these people were used to the iron rice bowl and they were not used to having to go hustle and drive a taxi and that took political courage and then from the u.s point of view i do think there has been damage to the u.s economy from globalization and i think for a lot of political leaders there was a neglect of the downside of globalization of what in the u.s people call flyover country that is you know not the two coasts but the middle of america where there's a lot of manufacturing jobs that got lost that said there's also been great benefits that is consumer benefits benefits for industrial producers i think one study said that 2000 to 2006 like manufacturing input costs went down by 10 or 12 because china was producing intermediate goods that was then going into u.s manufacturing so helping youth manufacturing so certainly agricultural sectors services consumer goods u.s companies benefited by having a market like china that was open certainly helped american brands i think the nba for example has done spectacularly well in china and really what was most incredible about ira kassov's introduction to china the most important james green also produces a podcast at the georgetown university over the last two years he has interviewed two dozen former u.s officials on china-related issues so in the eyes of u.s senior officials what went wrong the distortions that happen because of the chinese economy affect the global economy and so the global economy the global economic system doesn't have ways to deal with state enterprises that might have easy access to state capital to protect a domestic market or to environmental standards that aren't upheld we kind of don't have mechanisms to deal with that when china joined the wto in 2001 it was really based on early 1990s global trading rules and they weren't updated whether the u.s gained more than it lost in trading with china is still a subject of heated debate in the u.s what's indisputable is a trade deficit of over 300 billion dollars a trade war was launched in 2018. it is still unclear whether the new administration will put a stop to it videos hi my name is joe morenville i'm the president of energy independence solutions we do a wide mix of anything solar price of solar i mean when we started the business it was around three dollars a watt for a module now you know a decent module you're getting at under 50 cents it's like a you know one-eighth the price or something the reason for the low-cost chinese manufacturing the u.s was once a stronghold of solar module manufacturing accounting for around a quarter of global solar module shipments in the early 2000s but that started changing around 2010. we stayed american made up until maybe 2012 2014 when we could no longer buy the product anymore because at that point you know china driven most of the companies into bankruptcy most of the u.s companies into bankruptcy at that point actually testified in the trade case in washington for it china basically subsidizes at their production level so their product is coming off of the line before it goes into a container already carrying subsidy u.s solar manufacturers were going broke but the overall industry was growing fast people found employment selling and installing the china solar modules well couldn't compete head-to-head with china but it kind of improved the whole market everybody started to really step up to the plate and then it started to the finances started to make sense you know just started a steamroll from that point 2016 was the best year on record for solar energy in the united states helped by cheap imports solar installations doubled [Music] that year it seemed as though solar energy was about to revolutionize the energy sector and end american dependency on fossil fuels then trump got elected [Applause] china solar modules were slapped with a 30 tariff in 2018 under trump's trade war we're out here to fight against the solar tears that the trump administration has imposed we want to make sure that those don't hurt american workers in this growing industry so it's growing we don't want to stop the growth the industry's top trade group the u.s solar industries association said solar installations plummeted as prices went up 62 000 jobs in the solar industry were lost due to tariffs 100 megawatt plant might be built over a five-year period and they need to know what the price is going to be over a five-year period and if you don't know what the tariff is then you can't really predict what that cost is when you start talking about adding 20 or 25 tariffs that can kill a deal in a heartbeat and it did many of them a few solar module manufacturing plants did open but the jobs created were overshadowed by those lost around 62 000 jobs were shed because of the tariffs [Applause] i think it's very important that the u.s and china work together for the greater good of the environment [Music] pollution is something that affects my wife and my kids and whether they get cancer or whether they have lung issues they need to get politics out of the way and start looking at the good of the human race and what we need to do in order to make make things better and keep our families healthier [Music] across the pacific ocean chinese businessmen too are reeling from the fallout of superpower rivalry [Music] in one factory in tonkwan it has been a roller coaster year for business my izanti for over a decade matsutek built its business as an oem manufacturer for big western brands oem stands for original equipment manufacturer and they're a class of companies that produces equipment that are then sold by someone else in matsutek's case they supplied firms such as philips and honeywell that strategy paid off for two decades helping matsutek grow into the world's second largest maker of robotic vacuum cleaners but then the trade war hit in 2019 and the company joined a long list of corporate casualties terry wu says it was a moment of crisis for the company [Music] to its own xiaowei shu and papatso vacuum cleaners promoting them on china's e-commerce platforms instead of focusing on the u.s markets as oem manufacturers they will now focus on the china companies across china are now beginning to think the same way presidency emphasized that chinese companies must now pursue a new development strategy he calls dual circulation and move away from export-led growth aiden yao was born in liaoning china and now lives in hong kong he has spent the last decade conducting in-depth research on the chinese economy this strategy really consists of two parts you got the inner circulation which aims at extracting more of a domestic potential growth through the like of a consumption upgrade innovation technology and urbanization so on so forth the outer circulation really defines the relationship that china wants to build with the rest of the world through things like trade collaboration army nationalization and further opening up of the capital markets and so forth now i think there are two elements that are quite new here one is that the beijing is adamant that they're going to put more emphasis on the inner circulation because of the changing external environment and secondly i would imagine that some of the things that uh china has pushed very hard uh over the past a few years in terms of a rodent belt in terms of investment in sensitive technologies will have to be watered down going forward once again because of the changing external dynamic china needs this domestic circulation model to work the wto projected that even under a relatively optimistic scenario the volume of world merchandise trade in 2020 would contract by nine percent it's clear the days of 20 plus percent export growth are over for china matsutech is one amongst hundreds of chinese suppliers now decoupling with their american clients companies like nintendo gopro hasbro have accelerated plans to build factories in places such as india vietnam and mexico there are many examples of decoupling in the press but survey results reveal a different truth it seems most american companies are not headed back home only about four percent of the more than 200 manufacturers surveyed by the american chamber of commerce in shanghai said they will shift any production to the u.s more than 75 percent said they don't intend to move production out of china while 14 said they will shift some operations to other countries and seven percent planned on relocating domestically decoupling it seems is a greater focus in policy circles rather than actual business circles certainly the word of 2018 in washington dc was reciprocity the word of 2019 and of 2020 is decoupling that's what almost everyone is talking about now it's interesting to note that that idea is a chinese idea first discussed in china over the last two decades because of their concerns about being too close to the united states and they exported that idea to the u.s we imported and now we've made it our own the reality is that although there are some places where we can reduce our relationship with china particularly in advanced technologies the idea that we're going to thoroughly decouple trade investment people flows uh is beyond impossible and even if we did do that the pa the likelihood that we would actually isolate china or weaken them or make us safer is is uh not likely to occur whether it is starbucks apple or general motors scores of american brands must continue to operate in china as the market is simply too big to give up the u.s china business council a trade group representing more than 200 u.s companies that do business with china polled its members in june 2020. they found that up to 83 percent of the companies counted china as either the top or among the top five priorities for their company's global strategy china is the world's largest trading nations its major customers are in the west the financial flows going both ways are largely between the west and china labor flows knowledge flows financial flows enormous between china and america and europe so in that sense it's very hard to have what i call a serious cold war when the two participants are economically so intertwined when you have the world's largest trading nation producing for example 60 to 70 percent of the products in walmart or in costco and you're saying don't trade you have a problem we're gonna get all these products you're talking about an extensive relationship breaking it down has almost an unimaginable cost it's been a bruising trade war for u.s and china and in recent months there are concerns that the trade and technology war might expand into a volatile new front finance a financial war will weaponize capital in 2020 the u.s government moved to prevent a federal retirement fund from investing billions of dollars in shares of chinese companies a bill to force chinese companies to de-list from u.s stock exchanges if they do not open their books to u.s regulators was also passed unanimously by the senate in may the same year [Music] what could a financial war look like one scenario a dispute over swift the world pays for practically everything mainly using the swift international payment network every day 5 trillion u.s dollars gets transferred across the world using this system there are two pillars of us dominance in the global financial system that allow it to sanction countries and track fund flows the first is swift which is a messaging service that nearly all banks use to communicate payments information swift is based in brussels but american policymakers have enormous influence over it for example after 9 11 the u.s treasury set up what's known as a terrorist finance tracking program which used information about payments subpoenaed from swift to investigate al-qaeda and other terror networks the other pillar of u.s dominance is a vast network of u.s banks that serve as intermediaries the control of this infrastructure gives the us immense power to trace financial flows around the globe as well as to cut entities off from using this infrastructure through sanctions questions that used to be unthinkable are now being considered could the us sanction china through this swift dollar payment system or could it order the big banks which cleared dollar payments in america to stop serving chinese banks there is a massive experiment underway in china which hints at how seriously the country is responding to the threat of financial war presidency has designated blockchain to be one of the country's top innovation priorities and china pushed ahead with trials of its new digital currency taking early tentative steps that could one day free the world from relying on the dollar for international transactions to understand how a digital yuan works first look to the cashless payment ecosystem in china even a trip to a place of worship is [Music] cashless e-wallets and systems like wechat pay and alipay are now dominant instead of cash and widespread adoption of cashless payments have paved the way for china's central bank to begin experimenting with the digital yuan in 2020 china became the first major economy to conduct a real-world test of a national digital currency electronic payment we call it ep is actually a very important a pre-step for the digital currencies since we have alipay and tencent wechat payment and all of this payments method enables people to get used to a new way of making payment so i think ep actually paved the way for the dc digital currency china's digital currency is now being trialled in four chinese cities domestically but the ultimate aim is to accelerate the internationalization of the yuan china's former central bank governor said china's digital currency aims to push back against u.s dollar hegemony china is the top trading partner of many countries but its years-long ambition of internationalizing the yuan has progressed slowly the yuan accounted for about two percent of global reserves and 1.76 percent of cross-border payments by june 2020 an ambitious plan for digital yuan could set the motion for change starting with china's borders with asean we have 10 countries in asean countries many countries are linking border with china do you have any idea how many people are traveling back and forth from china in the border regions like china and the vietnam border and china myanmar border so there are tens of millions of people just doing business between the borders so in the past if you are a myanmar farmer you have your fresh bamboo you want to sell it to chinese trading partner and then you have your myemma dollar and then you have to convert it to chinese yuan now with digital currency for friends in myanmar and vietnam and lao they don't need to open up a bank account in china which is very hard now they can download an app and then they can put their money into the authorized exchange post and then the exchange post to well issued the chinese dc into their wallet they could use it for trade immediately so they will enable the people's connection they will boost the border trade and with this change in the border and then the influence will you know go bigger and bigger [Music] in the u.s the digital un experiment is raising concern systems like swift has given the u.s leverage over other states as sanctions that cut a country off from this network are usually a death sentence iran is a case in point washington has been increasingly relying on sanctions as a foreign policy tool but the sharpness of that tool is now in question as china's digital currency takes root globally the scenario might be that iran or another u.s adversary imports the digital currency infrastructure developed by china to set up its own digital currency and to conduct cross-border transactions with willing nations without the ability of u.s authorities to monitor or sanction these transactions so in the case of iran if you remember the u.s and its european allies used financial sanctions to bring iran to the negotiating table for the joint comprehensive plan of action or the iran deal which was signed in 2015. at the time of the deal iran could not do business with u.s and with europe it had been cut off from swift meaning they could not pay for imports or receive payments for exports and its economy had been essentially crippled so the us and its negotiating partners were able to leverage this and agree to lift some of these sanctions in return for limits to iran's nuclear program the threat that digital currencies pose is that they could be used to conduct cross-border transactions that a don't need to use the swift messaging service to communicate between banks and b they eliminate the need for correspondent banks because any user can make a payment directly to any other user anywhere in the world so if china were to develop these cross-border technologies then it would be capable of avoiding u.s oversight and u.s sanctions be weakened and in that scenario then iran could be conducting activities like enriching uranium like building up its nuclear program which would be out of u.s oversight it is precisely because of u.s financial sanctions that huawei's chief financial officer has been embroiled in a lawsuit in canada and unable to return to china such cases may become a thing of the past if china's digital currency takes root [Music] trade war financial war and a war of words these are the legacy of the trump presidency [Music] so profound has been its impact that the legacy is likely to continue in the new administration i think the current area of competition and confrontation and conflict with china will outlast the trump administration some of the issues particularly around technology and technology ecosystems are ones that will be with us for years to come i wouldn't be necessarily so pessimistic my view is the last five years sure they've been difficult in u.s china relations but that doesn't mean the next five years will therefore be difficult we have an ability to adjust our policies and to interact with each other in a way that's productive climate change is the natural one that we could have overlapping interests i think having in afghanistan and the greater middle east peace there yes i think that's an area for potential discussion with the chinese north korea is another natural one [Music] m [Music] [Music] [Music] foreign [Music] the ties between the united states and china i think we need to build on the relationships that we've already had and try to repair them i think it's easy for us to overlook some of those personal relationships that that have been developed over the years and those can be used and are actually critical into healing some of the bigger wounds that that exist in our world today [Music] i don't know about intellectual property stealing or something but i wish america would just get stronger do our own research you know you can't just criticize them you study with your own science be good be the best and then you know then you can compete [Music] on the next episode a tech war bruised between the two superpowers you know china is building its own internet focused on very different values and it's now exporting their vision of the internet to other countries the sparring between the united states and china has taken a new twist with student visas now in the firing line i think being a chinese person in america especially this year with the coronavirus pandemic a lot of that makes me feel or relate to how it might be similar to how muslims and brown people felt after 9 11. there is a white supremacist nativist xenophobic atmosphere that has been [Music] inflamed [Music] so [Music] you

Channel: CNA Insider

Views: 626,716

Keywords: CNA, CNA Insider, Channel NewsAsia, Asian perspective, People stories, When Titans Clash, documentary, US, China, US China, politics, trade war, Biden, Donald Trump, Xi Jinping, geopolitics, economy, trade, tariff, protectionism, digital Yuan, Muscatine, WTO, globalisation, manufacturing, export, financial war, sanction, digital currency

Id: 1mYrWYSTW28

Length: 47min 21sec (2841 seconds)

Published: Fri Jan 29 2021

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