Can China escape its confidence doom loop? (Shehzad Qazi)

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Righto Muddy Miners.
Early day for us, Late day for

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our guest from Steetser.
To.

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York Oh great, we're feeding
this China storage AD like just

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like MMS is feeding all the dirt
to provide the steel for any

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potential boom in China
stimulus.

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So mate, if you want to take
advantage of any any uplift in

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the China economy, get MMS to
start moving the dirt for you.

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Contract ready, the gears ready,
ready to go to take advantage of

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China.
All right, Maddie couldn't.

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Have said it better, like with
JD, you've done a bit of

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recruitment hustling.
As per usual.

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We've got Shahzad Kazi from
Stateside.

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Mate.
Gobba, thanks for staying.

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Uploading having a yawn to us to
today mate.

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Welcome to Australia, briefly.
Thank you.

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Thanks for having me on.
Maddie, I'm pretty excited to

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share this one.
We've, we've got a bit of an

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each we need to scratch in this,
this China narrative in recent

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times.
And I actually heard a colleague

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of Shahzad's Leyland speak on a
podcast a few weeks ago.

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And I thought their views were
so interesting and a bit

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different to what you're hearing
out there.

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I thought, why not just get them
on and let's chat about it on

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the podcast.
So I think the the best place to

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start this one, Shahzad, with
all the news and all the so

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called experts about China
flying around in recent weeks, I

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want to hear from you what the
the biggest misconceptions that

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you're seeing out there with
this China stimulus narrative in

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the recent two or three weeks?
Well, I think the biggest 1 is

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that this was immediately
treated as the Chinese policy

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makers are panicking, there's an
economic crisis and they are

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stepping in with a big bazooka
stimulus move to solve the

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problems in the Chinese economy.
But that's not all.

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This is a pull out, the stops do
whatever it takes draggy moment

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for China.
I think that was that was the

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biggest misconception that we
saw there.

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And the problem by the way, is
there is no economic crisis in

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China, right.
It's the people who think

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there's a crisis in China who
then tell you, oh, the Communist

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Party sees is panicking, there's
a crisis and now they will throw

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as much money as they possibly
can or need to, to fix the

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problem.
And so that narrative snowballs

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into being something bigger and
badder and way more impactful

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sounding than so far it seems
any of it will be.

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Was there, was there
misconceptions on the scale

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when, like when China says
they're going to do something to

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people, is there a misconception
about how much they have to do

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based on how big China is?
Is that was that taken the wrong

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way?
I think there's there's

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absolutely a part of it which is
just this obsession over the

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overall number, the size of the
package and people are throwing

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around, you know, sums in the
various trillions if you want.

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You know, it's, it's going to be
a 10 trillion this and a six

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trillion that and so on and so
forth.

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But the other problem is just
kind of saying it's stimulus,

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stimulus, stimulus without
specifying what the policy

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approach actually is and whether
what's being announced is

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actually going to be seen
practically getting rolled out.

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And, and also what's being
announced, is it addressing the

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challenges at hand.
So let me just get very specific

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about that.
A big chunk of what was

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discussed upfront was actually
in the area of monetary policy

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easing, bringing down the
required reserve ratios and

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forcing banks to lend out more
money.

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But the fact is China's had like
a lot of monetary policy easing

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over the last couple of years.
The problem in China isn't that

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the cost of capital has been
very high or that it's been

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rising.
And, you know, companies are

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actually reporting to China
Beige Book year after year for

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the last few years that the
overall interest rates that they

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have to pay on a particular, on
any loan that they're taking

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out, they're actually coming
down.

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The problem is companies are
just simply not interested in

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borrowing and at the levels that
they used to, you know, before

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COVID, because they're not
hiring at those levels, They're

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not investing at those levels
because the economy is not

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running at that pace anymore.
So you could do monetary policy

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easing, but that that kind of
stimulus is not going to work

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anymore because a problem is not
one that can be solved by

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monetary policy.
So that's just a big one, right,

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For starters, that markets have
completely misunderstood and I

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think missed.
So how does China then break

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this?
I think as your colleague kind

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of put it, it's a doom
confidence loop.

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How?
How do they correct that?

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But I think a lot of what they
did was it was exactly getting

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at that.
They said, look, equities are

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falling.
They're, you know, not a week

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goes by when some kind of
investment bank report doesn't

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come out doing AGDP forecast
downgrade.

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There are fears of the skies
falling.

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And this is a real problem when
it comes to economic commentary

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or market commentary on China,
right?

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It's it is very bipolar.
Either it's boom times and

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everything's going great and
everything's going to soar and

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record breaking rallies and, and
high growth levels, or it's a

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massive bust.
China's in a crisis.

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You know, you've got a Lehman
moment upon us and, and, and the

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Sky's falling.
And so this tends to be a real

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weakness in the China commentary
world and China watching world

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period.
And I think some of it was just

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done to say, OK, we need to
provide some kind of floor so

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that there's a floor within the
sentiment floor when it comes to

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the the market participants, the
investors to a very large

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extent, I think domestic
confidence and so forth.

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So the idea is to arrest that,
you know, to make sure that you

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don't kind of go down that doom
confidence loop.

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And if you announce enough, you
know, moves and manoeuvres to

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help buttress the economy, you
get some of that, as as we've

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seen play out over the last few
weeks now.

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So were you surprised that they
one of the mechanisms they did

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that through was sort of
buffeting the the stock market?

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No, not surprised at all.
I mean look, there has been over

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the last several years, you
know, we've seen a few face

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ripping rallies now since
especially the lifting of COVID

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0.
But really even even this, this

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2022 and the rallies have all
resulted in just sell offs one

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after the other.
And I think we were in the

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middle of another a pretty big
sell off after, after what was

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a, a pretty impressive rally at
the beginning of the year when

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as you remember, again, the hope
was that China was just going to

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take off this year.
And I think the, the, a big, big

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chunk of the, the approach was a
significant amount of the

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approach was, hey, you know
what, let's create a little bit

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of confidence there.
Let's give markets a reason,

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rally a little bit and let's
more importantly, we have any

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time there is a sell off in
China which is severe and you

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started getting into bear market
territory.

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One of the things you get is
that the the national team, so

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to speak, steps in and starts
buying up stocks, right?

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And what they've done this time
around is make this a little bit

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more formal in many ways.
They've created that stock

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market stabilisation fund, which
actually then relieve some of

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the pressure off the national
team because it creates a

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mechanism for other
institutional investors and so

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forth to get in there.
So, so, So what they're doing is

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they're institutionalising a lot
of that sort of approach that

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they already have and paper now
that's it.

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Let me take a step back and and
point out, I do not for a second

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believe that Secretary XI or the
Communist Party are ultimately

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staying up at night because the
stock market isn't doing well.

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I don't think a lot of their
attention goes towards the stock

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market.
I think the vast majority of

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their attention really, quite
frankly, now goes towards

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national security issues.
But that said, you can't ignore

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the stock market altogether.
So, so stabilising the the

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sentiment over there and and
helping the market recover a

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little was certainly important.
Days this effort, the stimulus

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effort.
What what, what do you think

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about it?
Is it good or bad long term,

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short term, What's the what's
your overall view of it?

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Well, stimulus.
Stimulus in general.

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Look, there has to be some
amounts of stimulus taking place

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within the economy, but it needs
to be very, very targeted and

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you know it, it needs to be, I
think much smaller in scope and

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scale than investors wanted to
be.

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So why do I say this again?
Let's look at the economic

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realities of China.
Those years of of high single

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digit growth are way, way, way
back in the past, never coming

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back.
What you've got ahead is an

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economy that can no longer
function on the old premise of

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we're going to invest a bunch of
money, we're going to build a

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bunch of infrastructure and it's
going to result in a in high

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levels of growth.
The road has completely run out

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on that thing.
The future now is something that

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is much slower pace and in an
ideal world more sustainable

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because it is driven by strong
household spending and strong

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consumption parts of the
economy, not the high investment

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or or the traditional industrial
parts of the economy.

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So now we have to focus on what
is it going to take to help

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transition the economy.
That's where you get into the

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stimulus side.
So could monetary policy be

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helpful?
Yes, it can, but not the way

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they're doing it today.
Monetary policy can be helpful

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if you actually create specific
types of loans or lending

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facilities that are targeted
exclusively towards private

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enterprises, towards SM ES.
These are parts of the economy

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that the Chinese policy makers
have been telling us that

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they're trying to help for years
and years and years, but in

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practise, in reality just
doesn't happen.

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Our proprietary tracking for
example, of credit access, one

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of the things that we see
repeatedly is that SM ES borrow

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at far higher costs at a far
higher cost than large firms do

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and their borrowing levels
typically tend to be far lower

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as a result of that than
compared to large enterprises.

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Money is simply not going
towards the parts of the economy

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that would actually be driving
China forward from from the

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standpoint of hiring a lot of
young folks, right?

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Youth unemployment is a big
problem, right?

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So and, and be putting money
back in the pockets of Chinese

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households that can go out there
and spend and help lift overall

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consumer spent sentiment and
then, you know, consumer

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spending.
So those sorts of that, that's

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an area where you could have
stimulus as I've laid out, but

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we're not really seeing anything
of that sort.

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The property market overall, you
know, they, they really strangle

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that they, they tighten the
noose around the neck of the

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property market pretty severely.
Letting some of that go now

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makes sense has to be very slow
and very measured.

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You cannot get into the problem
off again reflating the bubble.

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So, so you know there is good
stimulus that can be done in

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China.
It just, we're going to have to

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wait and see how how much of it
is actually coming through.

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Wait, so when even when like JD
over here is old and grey in the

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dead the many, many decades to
come, as you said, they've gone

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from this huge growth now to
like it's more of a slower burn.

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Like will China eventually get
to the point look of a Japan

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where the the economy will start
deflating?

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And if if so, in the future
future, what like effect is that

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going to have on the rest rest
of the world?

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Yeah.
So look, I mean, if you if you

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get a Chinese economy that can
grow, that can manage to grow

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more than a percent, 2% at best,
and then you get some years

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where it's just seeing no growth
at all.

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Or are you getting these patches
of stagnation that is naturally

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a bad news for at least parts of
the world, right, That that's

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bad news for commodities
producers, predominantly for

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selling China copper and steel
and oil and so forth.

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That's pretty bad news for you.
On the other hand, it can also

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be bad news for you if you're a
China, if you're trading

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partners of China and, and we're
in a position similar to today's

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where the government realises,
OK, property is a very small

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part of the overall economy.
We want it to be that way and

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and that that's where it is.
We haven't been very successful

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at getting Chinese consumers
revved up.

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00:11:45,200 --> 00:11:48,760
So consumer spending really
isn't driving much of economic

227
00:11:48,760 --> 00:11:51,320
growth.
Well, looks like we're kind of

228
00:11:51,320 --> 00:11:55,320
stuck with helping having
manufacturing just be that

229
00:11:55,320 --> 00:11:57,120
economic driver.
And yes, it's not the

230
00:11:57,120 --> 00:12:00,880
manufacturing of off to the
2000s of the 2000 and 10s, but

231
00:12:00,880 --> 00:12:03,680
it's still something.
So you know, what you do is you

232
00:12:03,680 --> 00:12:05,760
continue pumping money into that
sector.

233
00:12:06,000 --> 00:12:09,560
And to the extent you possibly
can, you continue flooding the

234
00:12:09,560 --> 00:12:13,240
world with cheap products.
You bring prices down

235
00:12:13,240 --> 00:12:15,240
artificially, you keep subsidies
high.

236
00:12:15,560 --> 00:12:18,280
But that's really bad news for
the economy, for the other side,

237
00:12:18,440 --> 00:12:19,880
right?
Because then you're talking

238
00:12:19,880 --> 00:12:24,280
about that continuation of the
overcapacity problem in China,

239
00:12:24,520 --> 00:12:28,720
which is a big, big, big policy,
a concern and and a legitimate

240
00:12:28,720 --> 00:12:31,280
problem that that we're facing
now.

241
00:12:31,280 --> 00:12:33,720
I mean, what has China done
since the outset of COVID?

242
00:12:33,720 --> 00:12:35,520
I mean, it's been a
manufacturing driven recovery

243
00:12:35,520 --> 00:12:37,240
there.
And over the last couple of

244
00:12:37,240 --> 00:12:40,680
years especially countries
around the world have realised,

245
00:12:41,080 --> 00:12:43,880
man, there's a lot of Chinese
steel coming into our into our

246
00:12:43,880 --> 00:12:45,680
borders.
There's a lot of Chinese copper

247
00:12:45,680 --> 00:12:47,840
coming now into our borders.
There are a lot of cheap Chinese

248
00:12:47,840 --> 00:12:51,320
cars that have absolutely
decimated the the car industry

249
00:12:51,320 --> 00:12:53,600
and the, and the automotive
industry around the world in

250
00:12:53,600 --> 00:12:55,600
different countries.
Europe, of course, overwhelmed

251
00:12:55,600 --> 00:12:58,800
with Chinese EVs.
So, so you could have that.

252
00:12:58,800 --> 00:13:02,880
So in any event, a China that is
not a vibrant economy, even

253
00:13:02,880 --> 00:13:06,840
though it is growing at A at a
slower pace, a China that is not

254
00:13:06,840 --> 00:13:11,160
economically successful is bad
news for multiple reasons.

255
00:13:11,160 --> 00:13:15,080
Do you do you think that's going
to really drive the ex China

256
00:13:15,080 --> 00:13:18,000
thing around the world if that
is the case?

257
00:13:19,720 --> 00:13:23,400
Like debottlenecking everyone
from China.

258
00:13:25,160 --> 00:13:28,400
So do you, when you say that, do
you mean getting getting China

259
00:13:28,400 --> 00:13:29,560
out of supply chains?
Do you?

260
00:13:29,560 --> 00:13:32,120
Or do you mean getting China out
of stock indices?

261
00:13:32,120 --> 00:13:33,560
Which what?
What specifically are you?

262
00:13:33,640 --> 00:13:39,240
Thinking supply chain mostly.
Yeah, I think there is a policy,

263
00:13:39,240 --> 00:13:42,760
there's absolutely a policy push
now certain within the United

264
00:13:42,760 --> 00:13:45,840
States, we're getting some of
this in Europe now, the whole

265
00:13:45,840 --> 00:13:50,080
concept of China plus one, China
plus whatever.

266
00:13:50,560 --> 00:13:53,440
And that's most likely the
trajectory of, of, of where

267
00:13:53,440 --> 00:13:57,160
things are headed, but it's,
there's no telling how quickly

268
00:13:57,160 --> 00:14:00,520
that's going to be accomplished
and how deep it's going to be

269
00:14:00,520 --> 00:14:03,400
and how wide it's going to be.
So how many industries

270
00:14:03,400 --> 00:14:06,240
ultimately are going to be
forced to say we need China plus

271
00:14:06,240 --> 00:14:08,160
one?
A lot of industries in the, in

272
00:14:08,160 --> 00:14:10,400
the many and a lot of
manufacturing, broadly speaking,

273
00:14:10,400 --> 00:14:13,160
of course, realise that during
COVID, when their factories kept

274
00:14:13,160 --> 00:14:16,040
getting shut down over and over
again and they couldn't produce

275
00:14:16,040 --> 00:14:18,760
things to service their clients
back in their home markets or

276
00:14:18,760 --> 00:14:20,960
even if they were foreign
companies, Vietnamese or so

277
00:14:20,960 --> 00:14:24,000
forth that were selling abroad,
right, or selling elsewhere in

278
00:14:24,000 --> 00:14:25,680
Asia.
OK, so that so that was a lesson

279
00:14:25,680 --> 00:14:27,880
you took away.
But COVID was was potentially a

280
00:14:27,880 --> 00:14:29,640
once in a lifetime thing.
Maybe it doesn't come back.

281
00:14:29,640 --> 00:14:32,800
So you that that risk comes down
in your calculations.

282
00:14:33,880 --> 00:14:36,120
Well, certain critical
industries, maybe the medical

283
00:14:36,120 --> 00:14:39,280
industries, the pharmaceutical
industries and and so forth.

284
00:14:39,560 --> 00:14:43,960
Maybe they realise that you do
need to have a China plus one.

285
00:14:44,320 --> 00:14:47,400
But where you go, where is the
capacity elsewhere in Asia that

286
00:14:47,400 --> 00:14:51,840
can actually be a legitimate
transplant or, or, or

287
00:14:51,840 --> 00:14:54,400
alternative, I should say, to
producing in China.

288
00:14:54,560 --> 00:14:56,160
So I think we're seeing this
unfold.

289
00:14:56,160 --> 00:14:59,080
I do think that ultimately
policy makers, especially out in

290
00:14:59,080 --> 00:15:02,040
the West are going to start
applying more and more pressure.

291
00:15:02,040 --> 00:15:05,760
It's just going to take a while
to build up the political, I

292
00:15:05,760 --> 00:15:10,800
think, I think desire is, is the
political will is, is there, is

293
00:15:10,800 --> 00:15:13,640
there.
I say it cautiously, but you

294
00:15:13,640 --> 00:15:17,720
know, I think, I think
politicians need crises to do

295
00:15:17,720 --> 00:15:20,000
the right thing sometimes and
it's taking them a while to get

296
00:15:20,000 --> 00:15:21,400
to get their act together, I
think.

297
00:15:21,880 --> 00:15:24,440
Shazad, you, you mentioned the,
the property sector earlier

298
00:15:24,440 --> 00:15:26,640
there and I think the, the
number that's commonly thrown

299
00:15:26,640 --> 00:15:29,800
around that it makes up sort of
25% of the economy and China

300
00:15:29,800 --> 00:15:34,920
very much has the the interest
to pull that into kind of size.

301
00:15:34,920 --> 00:15:36,240
What do you think the the end
game is?

302
00:15:36,240 --> 00:15:39,160
What do you think the natural
size for the property sector as

303
00:15:39,160 --> 00:15:40,760
a part of the broader economy
is?

304
00:15:42,320 --> 00:15:44,440
Yeah, that's a question.
Well, look, it's all, it's all

305
00:15:44,440 --> 00:15:47,200
TBD.
And and you know, we, we, we

306
00:15:47,200 --> 00:15:50,320
really will not be able to
figure this out for I think

307
00:15:50,320 --> 00:15:52,880
several years ahead.
And I'll tell you why this is so

308
00:15:52,880 --> 00:15:56,360
complicated.
We're in a period right now

309
00:15:56,360 --> 00:16:00,240
where the property market has
been basically in a free fall.

310
00:16:00,800 --> 00:16:04,600
The housing market is, is, is at
the lowest levels that we've

311
00:16:04,600 --> 00:16:07,160
seen it at.
And the commercial real estate

312
00:16:07,160 --> 00:16:10,480
side of the, of the property
market is also, by the way, and

313
00:16:10,480 --> 00:16:13,640
a lot more pain than is
understood or or acknowledged.

314
00:16:15,200 --> 00:16:18,680
You could get a property market
bailout as we're seeing happen

315
00:16:18,680 --> 00:16:22,600
right now that stabilises the
property market, I think or

316
00:16:22,600 --> 00:16:24,720
helps the market find a bottom
in the bigger cities.

317
00:16:25,040 --> 00:16:27,080
But I think this, this is this
is sort of a cyclical thing.

318
00:16:27,080 --> 00:16:29,720
Maybe you get a couple of good
years and then again, you start

319
00:16:29,720 --> 00:16:32,720
getting some amounts of property
paid cyclically in the bigger

320
00:16:32,720 --> 00:16:34,320
cities.
Those are the bigger cities.

321
00:16:34,640 --> 00:16:35,840
That's what everybody focuses
on.

322
00:16:36,040 --> 00:16:38,480
And I think if you get a
cyclical bottom in places like

323
00:16:38,480 --> 00:16:41,720
Shanghai or Beijing and all
that, most of your markets

324
00:16:41,800 --> 00:16:45,240
market participants and Western
observers and bankers and, and I

325
00:16:45,240 --> 00:16:47,360
bank and our investment bankers,
I should say analyst, they'll,

326
00:16:47,360 --> 00:16:49,640
they'll be pretty happy.
But there's a whole bunch of

327
00:16:49,640 --> 00:16:52,480
pain in the property market that
is going to go, I think,

328
00:16:52,520 --> 00:16:57,920
unacknowledged and, and unsolved
or unresolved in the lower tier

329
00:16:57,920 --> 00:17:01,200
cities where, by the way, the
bulk of the, of the, of the

330
00:17:01,440 --> 00:17:05,520
overbuilding took place.
So if you think about, you know,

331
00:17:05,520 --> 00:17:08,079
including that in the accounting
of, of National Statistics,

332
00:17:08,440 --> 00:17:10,640
well, that's going to be a big
problem year after year after

333
00:17:10,640 --> 00:17:12,960
year where those apartments are
just sitting empty and nobody

334
00:17:12,960 --> 00:17:16,280
wants to buy them and, and
people who did own them are not

335
00:17:16,280 --> 00:17:19,319
able to get rid of them.
And so that's just a dead weight

336
00:17:19,599 --> 00:17:21,800
that you're carrying.
So I think it's not clear

337
00:17:21,800 --> 00:17:25,240
whether this ends up being 5% of
the of the GDP, whether it ends

338
00:17:25,240 --> 00:17:27,520
up being a little bit more, ends
up being a little bit less.

339
00:17:28,000 --> 00:17:29,880
But we know it's going to be a
sliver and we know that it's

340
00:17:29,880 --> 00:17:33,400
going to be a pain point for for
a while to come.

341
00:17:33,520 --> 00:17:36,960
Even if in the short run we
start to get some amount of

342
00:17:37,360 --> 00:17:41,160
this, this idea that OK, finally
there's a bottom, things are

343
00:17:41,160 --> 00:17:45,160
stabilising, maybe there's a
chance prices start to go up a

344
00:17:45,160 --> 00:17:48,000
little bit, people have come
start coming in for the sideline

345
00:17:48,280 --> 00:17:49,920
and buying up apartments and
stuff again.

346
00:17:50,080 --> 00:17:52,600
Well, people are coming off the
sidelines, boys.

347
00:17:52,600 --> 00:17:55,000
For K Drew, that's always coming
off the sidelines.

348
00:17:55,000 --> 00:18:00,680
They are staking their claim as
we speak in WA exploration.

349
00:18:00,960 --> 00:18:02,840
Good to see more companies using
their names.

350
00:18:03,000 --> 00:18:05,840
K Drew in the announcements.
There is, we've got one right

351
00:18:05,840 --> 00:18:09,720
here.
Bloody look at smashing out some

352
00:18:09,720 --> 00:18:14,160
RC holes at the gold worthy ace
project for macro metals like

353
00:18:14,200 --> 00:18:18,200
just highlighted their K drill
make free advertisement for ASX

354
00:18:18,200 --> 00:18:20,440
companies.
You engage K drill to do the

355
00:18:20,440 --> 00:18:22,680
contract for you.
You get a screenshot that is

356
00:18:22,680 --> 00:18:26,080
like bloody the deal of a
lifetime and I've got a bit of

357
00:18:26,080 --> 00:18:27,480
word on the.
Duke They knew it because they

358
00:18:27,640 --> 00:18:29,840
they put in two photos of the K
drill in the captions as well.

359
00:18:30,000 --> 00:18:32,720
Bloody easy, easy.
And they get to meet Ron

360
00:18:32,720 --> 00:18:33,800
O'Sullivan.
Mate.

361
00:18:33,880 --> 00:18:37,360
And bit of word on the decline
about Ron O'Sullivan as we know

362
00:18:37,360 --> 00:18:41,760
like because like it's old news
that he painted, patented the

363
00:18:42,360 --> 00:18:45,280
bare hand drilling technique,
but made him here and he's

364
00:18:45,280 --> 00:18:48,920
actually training up Drew Harvey
on the technique so they can

365
00:18:48,920 --> 00:18:51,640
cover both day and night shift.
What's the technique?

366
00:18:52,040 --> 00:18:56,000
I don't know it's I'm not
willing to go there due to legal

367
00:18:56,000 --> 00:18:57,360
battles.
I don't know how they're going

368
00:18:57,360 --> 00:18:59,280
to do that.
And the BD at the pubs.

369
00:18:59,280 --> 00:19:01,560
The pub.
If any team can, it's the K

370
00:19:01,560 --> 00:19:03,000
drill.
If you want a bare hand drilling

371
00:19:03,000 --> 00:19:06,000
demo from the great Ron
O'Sullivan and his protege Drew

372
00:19:06,000 --> 00:19:09,320
Harvey, give K Drill a buzz and
holy snap and duck shit.

373
00:19:09,320 --> 00:19:12,240
They can punch into Marcy and
diamond holes for you as well.

374
00:19:12,480 --> 00:19:13,520
OK, drill.
OK.

375
00:19:13,560 --> 00:19:17,440
Drill go Australia.
So do you think we then see a

376
00:19:17,440 --> 00:19:19,080
couple of these property
developers?

377
00:19:19,080 --> 00:19:22,400
I mean, we've seen some big
names in recent years, but do we

378
00:19:22,400 --> 00:19:26,320
continue to see them go to the
wall in in the next 5-10 years?

379
00:19:28,200 --> 00:19:30,480
I think, I think I think there's
more pain ahead and some of

380
00:19:30,480 --> 00:19:33,520
those, you know, smaller
developers, you know, we, we

381
00:19:33,520 --> 00:19:36,200
might start hearing off of
developers that are second or

382
00:19:36,200 --> 00:19:37,640
third tier also that are in
trouble.

383
00:19:37,640 --> 00:19:40,840
The the size of the overall
balance sheets are naturally not

384
00:19:40,840 --> 00:19:43,200
going to be what the big ones
were with like the average of

385
00:19:43,200 --> 00:19:45,680
the world were like.
But I think the idea that

386
00:19:45,680 --> 00:19:49,160
somehow developers are now going
to slowly be able to get out of

387
00:19:49,160 --> 00:19:50,560
trouble.
I don't think so.

388
00:19:50,560 --> 00:19:52,640
I think they're, they're going
to be lots of developers,

389
00:19:52,640 --> 00:19:55,600
including the big ones still
sitting, you know, with a lot of

390
00:19:55,600 --> 00:19:59,800
debt that they are unable to
repay or repay in any time, any

391
00:19:59,800 --> 00:20:02,800
anytime soon.
So I think there is still still

392
00:20:02,800 --> 00:20:07,120
bad news ahead if if you're a
bond holder of a Shimao or, or,

393
00:20:07,120 --> 00:20:08,760
or a country garden or whatever
else.

394
00:20:09,840 --> 00:20:13,880
And so or or some other Chinese
developers, I think there's

395
00:20:13,880 --> 00:20:19,000
probably still some more pain to
be felt down down the road.

396
00:20:19,520 --> 00:20:22,120
And on the commodities you
mentioned earlier, you mentioned

397
00:20:22,200 --> 00:20:26,480
copper, steel, iron or I found
it pretty surprising, we were

398
00:20:26,480 --> 00:20:29,160
speaking about this a couple
weeks ago to see them all RIP a

399
00:20:29,160 --> 00:20:33,320
bit higher on the back of all
the stimulus given the the by

400
00:20:33,320 --> 00:20:36,240
and large sort of monit monetary
nature of a lot of the, the

401
00:20:36,240 --> 00:20:39,840
stimulus, not too much big
infrastructure plans or anything

402
00:20:39,840 --> 00:20:41,920
like that.
So I want to hear it from an

403
00:20:41,920 --> 00:20:43,560
expert.
Did did it surprise you to see

404
00:20:43,560 --> 00:20:47,600
iron ore jump as as high as it
did and and steel and and copper

405
00:20:47,880 --> 00:20:49,800
and other sort of base and
industry metals?

406
00:20:51,560 --> 00:20:54,280
This was all speculation.
I mean we certainly got a big,

407
00:20:54,760 --> 00:20:56,360
you know, rally in the equity
side.

408
00:20:56,360 --> 00:20:58,560
A lot of it was I would say
significant amount of

409
00:20:58,560 --> 00:21:00,680
speculation there.
But I think the commodity stuff

410
00:21:00,680 --> 00:21:05,160
is largely speculation because
let's think about this.

411
00:21:05,280 --> 00:21:08,080
Has has there been any
announcement on the fiscal

412
00:21:08,080 --> 00:21:13,840
stimulus side to date that says
we're going to do more building

413
00:21:14,560 --> 00:21:18,080
court renovations, renovations
of other infrastructure, perhaps

414
00:21:18,200 --> 00:21:20,520
construction of new
infrastructure or upgrading of

415
00:21:20,520 --> 00:21:22,680
new infrastructure That would
help us say, OK, there's going

416
00:21:22,680 --> 00:21:24,840
to be more steel that's going to
go in or more copper.

417
00:21:25,160 --> 00:21:27,320
Copper is going to get used.
OK, That's a bullish sign.

418
00:21:27,560 --> 00:21:28,920
There hasn't been, I haven't
heard anything.

419
00:21:30,040 --> 00:21:31,520
Property market.
Let's look at the property

420
00:21:31,520 --> 00:21:32,920
market.
You know what what they're

421
00:21:32,920 --> 00:21:35,120
saying they're trying to sell.
There are already two things,

422
00:21:35,120 --> 00:21:36,680
right?
They're trying to, first of all,

423
00:21:37,040 --> 00:21:40,360
apartments that are, that have
been paid for but not yet built,

424
00:21:40,520 --> 00:21:43,240
they want to get them finished
and so that people have access

425
00:21:43,240 --> 00:21:45,000
to them.
Is that somewhat bullish for

426
00:21:45,000 --> 00:21:45,920
commodities?
Maybe.

427
00:21:45,920 --> 00:21:48,520
But unfinished apartments can be
a different phases of the

428
00:21:48,520 --> 00:21:50,240
finishing cycle, right?
Doesn't necessarily mean they're

429
00:21:50,240 --> 00:21:53,640
completely unbuilt, but the
other thing that they've

430
00:21:53,640 --> 00:21:56,800
announced is no new
construction, or at least they

431
00:21:56,800 --> 00:21:58,560
said they were.
They're going to like to see no

432
00:21:58,560 --> 00:22:01,440
new construction because they
don't want to have more property

433
00:22:01,440 --> 00:22:04,160
coming online when there's a
whole bunch of existing property

434
00:22:04,160 --> 00:22:06,640
that they're having that that
that companies are having a

435
00:22:06,640 --> 00:22:08,600
difficult time offloading and
selling.

436
00:22:08,600 --> 00:22:10,720
And there's already that
inventory of unsold property

437
00:22:10,720 --> 00:22:14,600
that has been building higher.
That part of the policy plan, by

438
00:22:14,600 --> 00:22:17,400
the way, is awful for
commodities because that means a

439
00:22:17,400 --> 00:22:20,520
construction activity, which is
already been quite low by

440
00:22:20,520 --> 00:22:23,880
historic standards, can only get
further depressed if they

441
00:22:23,880 --> 00:22:25,960
actually push the GO button on
that.

442
00:22:26,240 --> 00:22:29,160
So that's net, net actually
pretty bad, I think, for

443
00:22:29,160 --> 00:22:31,840
commodities.
So this is, you know, so that

444
00:22:31,840 --> 00:22:34,520
right there tells you that a lot
of it is speculative fervour.

445
00:22:34,760 --> 00:22:37,440
And then #3 the big picture
thing we keep coming back to

446
00:22:37,680 --> 00:22:41,240
what part of the stimulus plans
announced so far are actually

447
00:22:41,240 --> 00:22:44,680
stimulus, actually stimulus
measures that are going to

448
00:22:44,680 --> 00:22:49,400
impact the real economy.
Very, very few if at all as

449
00:22:49,400 --> 00:22:53,280
we've laid out, you know, so, so
unless the the impact of the

450
00:22:53,280 --> 00:22:57,680
real economy is clear, there
shouldn't really be a fund a

451
00:22:57,680 --> 00:23:00,760
reason for based on fundamentals
for for commodities to be

452
00:23:00,760 --> 00:23:03,120
rallying.
So I think a lot of it we can

453
00:23:03,120 --> 00:23:05,400
probably summarise is it's
positive vibes.

454
00:23:07,240 --> 00:23:09,560
Why didn't the stimulus focus on
the real economy?

455
00:23:09,880 --> 00:23:15,640
Is it just sentiment and seeing
housing prices in seeing you

456
00:23:15,640 --> 00:23:18,200
know, your, your, your shares
that you have in your portfolio

457
00:23:18,200 --> 00:23:20,600
go up to to kick up the the
sentiment?

458
00:23:20,600 --> 00:23:22,920
Is that why they targeted in the
way they did?

459
00:23:24,320 --> 00:23:27,000
I think the biggest way to
target the real economy is

460
00:23:27,000 --> 00:23:29,400
through a combination of
packages that are multiple, that

461
00:23:29,400 --> 00:23:32,280
are multi phase.
So multi year packages that get

462
00:23:32,280 --> 00:23:36,520
at the that get at the short
term sort of maybe you know, you

463
00:23:36,520 --> 00:23:40,720
well, you could right now call
cyclical problems such as, you

464
00:23:40,720 --> 00:23:43,800
know, a soft consumer spending,
but really, you know, it's part

465
00:23:43,800 --> 00:23:47,320
of a larger structural problem.
But really that get it, get it

466
00:23:47,560 --> 00:23:49,920
correcting some of the
structural problems within the

467
00:23:49,920 --> 00:23:52,680
economy.
So short term boost when it

468
00:23:52,680 --> 00:23:55,760
comes to affecting the real
economy would be giving

469
00:23:55,760 --> 00:24:00,120
households money to spend,
giving them whether it's cash

470
00:24:00,120 --> 00:24:03,080
vouchers, whether it's other
forms of stimulus cheques.

471
00:24:03,080 --> 00:24:05,480
It doesn't have to look like
what happened out in Europe and

472
00:24:05,480 --> 00:24:07,120
the United States in the
aftermath of COVID.

473
00:24:07,120 --> 00:24:08,960
It's not, it's not the same kind
of economy.

474
00:24:09,120 --> 00:24:11,240
It's not the same kind of
advanced consumer economy.

475
00:24:11,320 --> 00:24:14,680
It's a, you know, it can have
absolutely be done with Chinese

476
00:24:14,680 --> 00:24:17,640
characteristics, if you will,
but but some amounts of money

477
00:24:17,640 --> 00:24:20,120
that is going into the pockets
of Chinese households that

478
00:24:20,120 --> 00:24:22,400
encourages them to go out there
and spend.

479
00:24:23,400 --> 00:24:25,560
But we didn't really see that
what we got over trade in

480
00:24:25,560 --> 00:24:27,320
programmes.
OK, trade in programmes are

481
00:24:27,320 --> 00:24:30,640
great, but trade in programmes
have a, you know, a much lower

482
00:24:30,640 --> 00:24:34,000
ceiling, you know, so you could
exchange your refrigerator out

483
00:24:34,000 --> 00:24:37,800
for perhaps a, a newer one or a
slightly less old one.

484
00:24:38,080 --> 00:24:39,320
And you can do those sorts of
things.

485
00:24:39,320 --> 00:24:43,520
You're, you're pulling growth
forward and and that's fine.

486
00:24:43,760 --> 00:24:46,600
But you know that that's, that
means you're, that's growth.

487
00:24:46,600 --> 00:24:49,400
You're not going to get six
months out or, or, or, or even

488
00:24:49,400 --> 00:24:52,880
potentially even next quarter.
And it's not any kind, it's not

489
00:24:52,880 --> 00:24:54,760
a sustained thing.
You know, how many times can you

490
00:24:54,760 --> 00:24:59,160
swap out a, a old computer or,
or, or or so forth.

491
00:25:00,760 --> 00:25:02,760
So, so the stimulus measures
still have to be when it comes

492
00:25:02,760 --> 00:25:04,400
to the household side, they have
to be a little bit bigger.

493
00:25:04,400 --> 00:25:07,520
They have to be a little bit
more sustained in nature.

494
00:25:07,520 --> 00:25:10,200
That would be the most direct
way to immediately boost the

495
00:25:10,200 --> 00:25:13,920
Chinese to boost the, you know,
the, the economy over the next

496
00:25:13,920 --> 00:25:16,880
several quarters going through
at least through, through

497
00:25:16,960 --> 00:25:18,840
through next year.
But they haven't done it.

498
00:25:18,840 --> 00:25:21,160
If you like to talk about the
bigger structural things, I've

499
00:25:21,160 --> 00:25:25,720
already talked about doing
monetary policy stimulus focused

500
00:25:25,720 --> 00:25:28,160
on the, on the SM, ES and the
economy and the new economy

501
00:25:28,440 --> 00:25:30,160
industries and the private
market.

502
00:25:30,920 --> 00:25:33,480
Start addressing other
structural factors like what is

503
00:25:33,480 --> 00:25:35,920
going on with elder care in that
country, right?

504
00:25:35,920 --> 00:25:38,800
It's a grain population, it's an
older population, that

505
00:25:38,800 --> 00:25:41,640
demographic decline that we
talked about announcing very

506
00:25:41,640 --> 00:25:44,200
serious amounts of social
spending as in regards to Social

507
00:25:44,200 --> 00:25:47,920
Security, healthcare spending
and and everything else that you

508
00:25:47,920 --> 00:25:50,400
would need in front of terms of
having a social infrastructure

509
00:25:50,400 --> 00:25:53,920
and a policy infrastructure to
support your elderly population.

510
00:25:54,440 --> 00:25:57,160
And therefore also take pressure
off young people who are often

511
00:25:57,160 --> 00:25:59,440
times making a salary and having
to support parents and

512
00:25:59,440 --> 00:26:02,600
grandparents #3 And I'll pause
there.

513
00:26:02,800 --> 00:26:05,680
You want to have, you want
people to have kids, right?

514
00:26:05,680 --> 00:26:09,640
Two kids or three kids now?
Well, provide the type of

515
00:26:10,320 --> 00:26:13,160
childcare support that that they
would need to do that.

516
00:26:13,160 --> 00:26:15,960
So this is where I'm talking
about a much more involved in a

517
00:26:15,960 --> 00:26:17,800
bigger welfare state, if you
will.

518
00:26:18,080 --> 00:26:21,240
And social services spending on
a Chinese state today has

519
00:26:21,240 --> 00:26:23,960
implant.
That's now that's stimulus, but

520
00:26:23,960 --> 00:26:26,760
that's really going on and
trying to get into the

521
00:26:26,800 --> 00:26:29,920
structural side of the economy.
I even touched other things like

522
00:26:29,920 --> 00:26:32,400
the, you know, more
privatisation and the transfer

523
00:26:32,400 --> 00:26:35,280
of state assets into private
hands and all those other kinds

524
00:26:35,280 --> 00:26:38,200
of things that could be done,
which would, you know, would be

525
00:26:38,200 --> 00:26:41,200
stimulative in nature, but
really are more structural

526
00:26:41,200 --> 00:26:45,200
changes to the economy than just
announcing, you know, the stock

527
00:26:45,200 --> 00:26:46,600
market stabilisation.
Fund.

528
00:26:46,800 --> 00:26:49,440
You know my peak stimulation
occurs when I see some

529
00:26:49,440 --> 00:26:53,960
Greenland's equipment people on
site sorting mining companies

530
00:26:53,960 --> 00:26:57,040
out for any water related stuff.
Oh look at this.

531
00:26:57,040 --> 00:27:01,640
Look what I've found.
This Greenland's expert checking

532
00:27:01,640 --> 00:27:04,760
shit with a notepad.
You know what a notepad means

533
00:27:04,760 --> 00:27:06,640
boys?
Attention to detail.

534
00:27:07,040 --> 00:27:09,000
Have a look have a look at that
mate.

535
00:27:09,000 --> 00:27:11,720
Look at this pond and pump setup
right.

536
00:27:11,760 --> 00:27:15,840
I look at it and I think holy
shit that looks complex and but

537
00:27:15,840 --> 00:27:17,960
No Fear.
No Fear money miners.

538
00:27:18,280 --> 00:27:20,760
That's why Greenland's run the
water guy.

539
00:27:21,320 --> 00:27:24,920
But complex water projects for
them are like me making school

540
00:27:24,920 --> 00:27:26,880
lunches for the kids fucking
easy.

541
00:27:27,240 --> 00:27:29,960
Like just place a piss.
Do it every morning.

542
00:27:29,960 --> 00:27:31,760
So, but it's like a Lego
project.

543
00:27:31,800 --> 00:27:35,320
Yeah, but no, no Lego heaps out.
Yeah, you right.

544
00:27:35,320 --> 00:27:36,840
You won't do your ZAP kids.
You still play.

545
00:27:37,360 --> 00:27:42,080
I'll do the kid jokes.
Oh, but you want any water job

546
00:27:42,280 --> 00:27:45,920
job done on site?
Greenland needs to be on your

547
00:27:45,920 --> 00:27:47,400
site.
The go to name.

548
00:27:47,680 --> 00:27:50,760
God, give Caleb a buzz.
Go Greenland.

549
00:27:52,280 --> 00:27:55,000
So I want to go deeper on the,
on the commodity and the

550
00:27:55,000 --> 00:27:58,360
industrial part of the economy.
Shazad, one of one of the big

551
00:27:58,360 --> 00:28:02,440
trends we've seen over the past
10-15 years was the one belt,

552
00:28:02,440 --> 00:28:06,960
one Rd initiative.
China going overseas at one of

553
00:28:06,960 --> 00:28:11,200
the areas that we saw quite
acutely was in Africa, China

554
00:28:11,200 --> 00:28:15,240
just gobbling up assets and also
just helping build ports and and

555
00:28:15,240 --> 00:28:17,840
these sorts of things.
Do you think that's something

556
00:28:17,840 --> 00:28:23,800
that slows in the next decade?
It seems like a lot of the one

557
00:28:23,800 --> 00:28:27,800
belt, one Rd activity slowed
down in the middle of COVID for

558
00:28:27,800 --> 00:28:29,640
sure.
And since then I think has been

559
00:28:30,160 --> 00:28:32,360
pretty slow and and there are a
couple of reasons for that.

560
00:28:32,360 --> 00:28:34,840
The COVID 0 policies were
obviously a big chunk of the

561
00:28:34,840 --> 00:28:38,320
driving force.
The need to focus domestically

562
00:28:38,440 --> 00:28:41,880
has been important.
The trade war that then started

563
00:28:41,960 --> 00:28:45,200
of course before COVID with the
US probably had already been

564
00:28:45,200 --> 00:28:48,160
putting pressure in.
I think a lot of the focus is on

565
00:28:48,160 --> 00:28:50,840
national security as it relates
to strengthening the demand

566
00:28:50,920 --> 00:28:55,240
domestic economy as it focuses
on decoupling from the West, as

567
00:28:55,240 --> 00:28:58,200
it focuses on indigenization of
technology.

568
00:28:58,360 --> 00:29:02,280
And I think that's increasingly
taking on a lot of the policy

569
00:29:02,280 --> 00:29:06,720
focus off off the off the party.
I think a lot of the financing

570
00:29:06,920 --> 00:29:10,960
is also being redirected maybe
in, in, in part or a lot of the

571
00:29:10,960 --> 00:29:12,800
of the financial power
firepower.

572
00:29:12,800 --> 00:29:16,320
Now you're thinking about how to
use your your use your finances

573
00:29:16,600 --> 00:29:21,080
for those purposes and not just
to get into these projects

574
00:29:21,080 --> 00:29:23,280
abroad.
But then the other side is that,

575
00:29:23,280 --> 00:29:26,360
you know, China has been doing
one belt, one Rd for over did it

576
00:29:26,360 --> 00:29:30,880
did it for over a decade and
kind of started to realise it's,

577
00:29:30,920 --> 00:29:33,280
you know, where's the big the
big grand strategy.

578
00:29:33,400 --> 00:29:36,200
Parts of the argument make a lot
of sense and it and it sounds

579
00:29:36,200 --> 00:29:39,840
super sexy and people in DC
certainly were very alarmed by

580
00:29:40,480 --> 00:29:42,920
this stuff is hard to pull off.
These are very difficult

581
00:29:42,920 --> 00:29:45,680
countries to operate in.
These are very complicated

582
00:29:45,680 --> 00:29:49,120
markets to operate in.
And, you know, not only do you

583
00:29:49,120 --> 00:29:52,600
get into these areas are, are
these problems where the loans

584
00:29:52,600 --> 00:29:56,440
that you're giving out may never
get repaid, but you know, you're

585
00:29:56,440 --> 00:29:58,600
also putting your people at
risk.

586
00:29:58,600 --> 00:30:02,040
There's physical security also.
And that, you know, you could

587
00:30:02,040 --> 00:30:04,240
take the physical security and
perhaps you say, you know, yes,

588
00:30:04,240 --> 00:30:07,360
you're going to lose some people
to a terrorist attack or to an

589
00:30:07,360 --> 00:30:09,400
uprising because the locals
don't like it, to an armed

590
00:30:09,400 --> 00:30:11,520
uprising to locals and maybe in
an area don't like it.

591
00:30:11,840 --> 00:30:14,280
On top of that, you have to deal
with incredibly corrupt

592
00:30:15,520 --> 00:30:18,160
countries that are just having
incredibly corrupt, large

593
00:30:18,160 --> 00:30:20,560
amounts of corruption, just to
put it frankly, have an

594
00:30:20,560 --> 00:30:24,160
incredible amount of red tape,
both because of bureaucracies

595
00:30:24,720 --> 00:30:28,080
and because of the, the, the,
the way that the, you know,

596
00:30:28,080 --> 00:30:29,800
countries are structured
politically.

597
00:30:30,080 --> 00:30:33,600
And All in all, it ends up being
maybe the bang for your buck

598
00:30:33,600 --> 00:30:36,240
isn't so high.
Or maybe you know, you have to

599
00:30:36,800 --> 00:30:39,240
they maybe maybe people in
Beijing have wondered if so, you

600
00:30:39,320 --> 00:30:42,560
know, so to speak, the, the,
the, the juice is worth the

601
00:30:42,560 --> 00:30:44,040
squeeze.
So there I think multiple

602
00:30:44,040 --> 00:30:47,800
factors that have contributed
towards the pullback in the one

603
00:30:47,800 --> 00:30:54,680
belt, one Rd initiative.
And on, on the sort of topic of,

604
00:30:54,760 --> 00:30:59,560
yeah, China's Foreign Relations,
foreign policy, how do you see

605
00:30:59,560 --> 00:31:02,000
that also playing out?
One of the big themes coming out

606
00:31:02,000 --> 00:31:06,000
of COVID was this decoupling,
French shoring or reshoring,

607
00:31:06,000 --> 00:31:08,080
whatever you you like to call
it.

608
00:31:08,080 --> 00:31:15,320
Is, is that a, a trend that you
believe will just continue on?

609
00:31:15,320 --> 00:31:19,120
And maybe it's a bit out of your
area of expertise, but that that

610
00:31:19,120 --> 00:31:23,040
seems just very inflationary for
the, the the rest of the world.

611
00:31:23,040 --> 00:31:26,000
Is is that something that's
going to stay true throughout

612
00:31:26,000 --> 00:31:30,960
the the twenty 20s?
So, yeah, I mean, I think it has

613
00:31:30,960 --> 00:31:33,520
to be acknowledged that a big
chunk of the reason inflation

614
00:31:33,520 --> 00:31:38,480
was so low before COVID was
because of China, right?

615
00:31:38,480 --> 00:31:40,680
Because China was able to
produce, you could produce

616
00:31:40,680 --> 00:31:43,440
things in China at very, very
low levels.

617
00:31:43,440 --> 00:31:45,640
A lot of the low levels of
global inflation, at least in

618
00:31:45,640 --> 00:31:48,440
the Western, the developed world
that you got were thanks to

619
00:31:48,440 --> 00:31:50,160
China, at least in the United
States.

620
00:31:50,640 --> 00:31:54,280
But then what we also learn is
that some things can be too good

621
00:31:54,280 --> 00:31:56,560
to be true.
And when COVID hit and China

622
00:31:56,560 --> 00:32:00,320
shut down and China from a
political standpoint, became a

623
00:32:00,320 --> 00:32:03,760
very difficult country to deal
with because of the lack of

624
00:32:03,760 --> 00:32:07,640
transparency around what was
happening with COVID and, and

625
00:32:07,640 --> 00:32:10,880
dealing with COVID and COVID
policy and their desire to

626
00:32:10,880 --> 00:32:13,640
reject Western vaccines then and
say we're only going to rely on

627
00:32:13,640 --> 00:32:16,120
domestic vaccines.
And then those didn't really

628
00:32:16,120 --> 00:32:17,400
work.
And then you got repeated

629
00:32:17,400 --> 00:32:18,720
shutdowns.
And it created a lot of

630
00:32:19,120 --> 00:32:23,400
uncertainty and upheaval out
West that what we learned is our

631
00:32:23,400 --> 00:32:27,360
supply chains are very, very
insecure.

632
00:32:28,120 --> 00:32:32,120
And the insecurity of supply
chains then contributed towards

633
00:32:32,280 --> 00:32:36,960
historic levels of inflation,
certainly out in the United

634
00:32:36,960 --> 00:32:41,840
States and and also elsewhere.
So that has led to this idea

635
00:32:41,840 --> 00:32:45,800
that, OK, you cannot have all
your eggs in the China basket,

636
00:32:45,800 --> 00:32:48,440
that you must diversify supply
chains.

637
00:32:49,000 --> 00:32:51,880
It's been the added factor, of
course, is that it doesn't have

638
00:32:51,880 --> 00:32:58,520
to be a pandemic or an epidemic,
a, a, a health crisis that, that

639
00:32:58,560 --> 00:33:01,840
that's the only problem.
You could have geopolitical risk

640
00:33:02,080 --> 00:33:07,440
be another, another problem.
And so it's not safe to be

641
00:33:07,440 --> 00:33:09,800
wholly dependent if you're a
foreign producer or foreign

642
00:33:09,800 --> 00:33:12,200
company or even if you are a
foreign company that just buys

643
00:33:12,440 --> 00:33:16,200
from a domestic Chinese producer
to be entirely dependent on

644
00:33:16,360 --> 00:33:18,640
China.
So it's these factors that have

645
00:33:18,720 --> 00:33:21,680
led to policy pressure building
up, but also companies

646
00:33:21,680 --> 00:33:24,440
themselves, I think realising
that they need to diversify

647
00:33:24,800 --> 00:33:29,320
their supply chains and that
could absolutely carry the risk

648
00:33:29,320 --> 00:33:33,160
of being inflationary.
I think it'll certainly be more,

649
00:33:33,240 --> 00:33:35,000
you know, there will be higher
inflation.

650
00:33:35,000 --> 00:33:37,680
We are in a higher inflation
environment, likely remain in a

651
00:33:37,680 --> 00:33:41,120
higher inflation environment
than we than we were pre COVID,

652
00:33:42,040 --> 00:33:43,960
at least at least in the
foreseeable future.

653
00:33:44,640 --> 00:33:48,440
But there is a sort of the
necessity now to avoid the

654
00:33:48,440 --> 00:33:51,640
downside risk of what what it is
to partner with, with with China

655
00:33:51,880 --> 00:33:53,680
that you have playing up on the
other side.

656
00:33:54,080 --> 00:33:56,440
The decoupling, I think you're
absolutely it's going to be

657
00:33:56,440 --> 00:33:58,040
selective decoupling.
I think it's going to be

658
00:33:58,040 --> 00:34:00,040
particular industries.
It's not, it's not decoupling

659
00:34:00,040 --> 00:34:03,000
across the board, but especially
when, when industries that are

660
00:34:03,080 --> 00:34:06,920
seen as very, very important,
whether it's, you know, critical

661
00:34:06,920 --> 00:34:10,320
minerals, whether it's certain
technological outputs, whether

662
00:34:10,320 --> 00:34:12,040
it's, it's certain.
Of course, you know, we talked

663
00:34:12,040 --> 00:34:14,920
about medical, the medical
industry.

664
00:34:14,920 --> 00:34:17,199
I think I think you certainly
get, I think you certainly get

665
00:34:17,199 --> 00:34:19,719
decoupling going on over there.
There's also other parts of

666
00:34:19,719 --> 00:34:21,920
decoupling, by the way, which is
decoupling in the financial

667
00:34:21,920 --> 00:34:24,400
space, the decoupling in the
technological space, which are

668
00:34:24,400 --> 00:34:27,960
national security priorities and
prerogatives of of policy makers

669
00:34:27,960 --> 00:34:30,120
out West.
Slowing down technology

670
00:34:30,120 --> 00:34:32,360
transfer, technology transfer
technology to China as it

671
00:34:32,360 --> 00:34:35,800
relates to selling them trips or
advancement, you know, are

672
00:34:35,800 --> 00:34:38,199
things that would go into making
them an advanced manufacturing,

673
00:34:38,199 --> 00:34:42,040
a powerhouse and advanced
manufacturing and financial

674
00:34:42,040 --> 00:34:43,960
decoupling.
Similarly, putting money into

675
00:34:43,960 --> 00:34:46,880
Chinese companies that tomorrow
could develop the technology

676
00:34:46,960 --> 00:34:50,120
that could be used by China or
the, you know, the Chinese

677
00:34:50,120 --> 00:34:53,440
military to gain increasingly
become more and more dominant as

678
00:34:53,440 --> 00:34:56,440
a military, a player military
eventually become a military

679
00:34:56,440 --> 00:34:59,520
superpower in the world, that
one that rivals the United

680
00:34:59,520 --> 00:35:03,160
States and its Western allies.
So, so you've got all of that

681
00:35:03,160 --> 00:35:04,960
playing outside Mojave.
See, that's all true.

682
00:35:04,960 --> 00:35:06,840
And, and let me stop at the last
point.

683
00:35:06,960 --> 00:35:10,000
There's what I like to
constantly remind folks of China

684
00:35:10,000 --> 00:35:11,960
decoupling from the West, which
I talked about earlier.

685
00:35:12,160 --> 00:35:15,520
So there's there's decoupling
happening across the board.

686
00:35:15,520 --> 00:35:17,600
It's happening in in various
shapes and forms.

687
00:35:17,800 --> 00:35:19,440
And it's not just a western LED
thing.

688
00:35:19,520 --> 00:35:22,600
It's actually, you've got the
the Chinese policy makers and Xi

689
00:35:22,600 --> 00:35:27,080
Jinping himself saying we need
to lessen our reliance on on the

690
00:35:27,080 --> 00:35:31,200
West, especially in the domain
of of various technological

691
00:35:31,200 --> 00:35:32,360
goods and inputs that they rely
on.

692
00:35:32,720 --> 00:35:36,200
Is is anywhere in the world ever
going to be as cheap as China in

693
00:35:36,200 --> 00:35:38,400
the future?
Is there ever going to be an

694
00:35:38,400 --> 00:35:43,600
alternative?
Probably not because it's, it's

695
00:35:43,720 --> 00:35:46,000
probably going to be very hard
to find another country in the

696
00:35:46,000 --> 00:35:50,400
foreseeable future that is both
has as large a, a communist

697
00:35:50,440 --> 00:35:56,720
country and at a place where you
could just have rates as low as

698
00:35:56,720 --> 00:35:59,360
possible.
Which by the way, is a kind of a

699
00:35:59,360 --> 00:36:01,560
problem, right?
It's as we think about labour

700
00:36:01,560 --> 00:36:05,080
rights around the world and as
you think about things that are,

701
00:36:05,120 --> 00:36:08,320
you know, you know, you know,
you know, standard of working

702
00:36:08,320 --> 00:36:09,920
and so forth.
It's not the greatest thing,

703
00:36:09,920 --> 00:36:11,800
right?
So, so they, it comes and

704
00:36:11,800 --> 00:36:15,760
someone pays the cost for those
very, very cheap goods that that

705
00:36:15,760 --> 00:36:17,160
we've been able to benefit off
of.

706
00:36:17,160 --> 00:36:19,600
And I think that that's becoming
harder and harder to see.

707
00:36:19,600 --> 00:36:22,360
I think places like India, which
could again, be a little bit

708
00:36:22,680 --> 00:36:26,280
competitive, you know, I don't
think you could keep, you know,

709
00:36:26,280 --> 00:36:28,320
have labour there, ultimately be
as cheap.

710
00:36:28,440 --> 00:36:31,000
And there are all sorts of other
problems in these other places,

711
00:36:31,040 --> 00:36:33,800
lack of training, lack of
infrastructure and so forth.

712
00:36:33,960 --> 00:36:38,480
Well, one of the one of the the
products that has sort of hit us

713
00:36:38,480 --> 00:36:42,000
in the face with how how
noticeably cheaper it is China

714
00:36:42,000 --> 00:36:43,920
made than elsewhere is electric
vehicles.

715
00:36:44,360 --> 00:36:48,120
And we, we can see it in, in
Perth now BYD, they're they're

716
00:36:48,280 --> 00:36:52,240
popping up shops on, you know,
numerous corners where it used

717
00:36:52,240 --> 00:36:55,840
to be a, a western car maker.
And they're not.

718
00:36:55,840 --> 00:36:57,480
It's not like they're shitter
love you.

719
00:36:57,720 --> 00:37:00,880
People like BYDS better than
Tesla's and they're it's

720
00:37:00,880 --> 00:37:03,560
cheaper.
It's not yet like you're not

721
00:37:03,560 --> 00:37:06,400
sacrificing quality.
Either yeah, the quality reviews

722
00:37:06,400 --> 00:37:08,240
from everyone I've heard is top
notch.

723
00:37:08,240 --> 00:37:12,960
They are in no way inferior to
maybe in in brand status, but in

724
00:37:12,960 --> 00:37:18,600
no actual tangible way are they
cheaper in in quality to a

725
00:37:18,600 --> 00:37:21,880
western car.
Now on the on the topic of, you

726
00:37:21,880 --> 00:37:24,360
know, countries being friendly
with with one another, we've

727
00:37:24,360 --> 00:37:28,160
seen enormous tariffs on on EVs
and Australia smartly hasn't

728
00:37:28,160 --> 00:37:33,040
whacked them on because we're so
reliant on on China, but how

729
00:37:33,040 --> 00:37:35,560
long can that really last?
Obviously a lot of these

730
00:37:35,560 --> 00:37:37,760
countries that whack on the
tariffs are protecting

731
00:37:37,880 --> 00:37:42,360
industries of their own that
that seems in, in my kind of

732
00:37:42,360 --> 00:37:46,000
view to have a, a finite date in
which, you know, that their OEMs

733
00:37:46,000 --> 00:37:48,600
have to get to a, a standard
where they're just producing a,

734
00:37:48,640 --> 00:37:50,240
a better vehicle.
But what what's your view on

735
00:37:50,240 --> 00:37:54,360
that Chasad?
Yeah, look, I think so Chinese

736
00:37:54,360 --> 00:37:56,640
TV is right.
It's a classic story of how

737
00:37:56,640 --> 00:38:02,240
China is able to dominate
global, you know, industries

738
00:38:02,240 --> 00:38:03,400
across the world.
And.

739
00:38:03,400 --> 00:38:07,040
And So what do they do?
They provide so much subsidies,

740
00:38:07,040 --> 00:38:11,400
so many subsidies for so long
that it becomes incredibly dirt

741
00:38:11,400 --> 00:38:15,080
cheap to produce this product,
in this case, E VS it for, you

742
00:38:15,080 --> 00:38:18,920
know, it allows for a lot of
companies to prop up to do the

743
00:38:18,920 --> 00:38:22,240
same thing, this steal a little
bit of technology from from

744
00:38:22,240 --> 00:38:23,760
Tesla.
And then they continue to, you

745
00:38:23,760 --> 00:38:26,040
know, they work on that and
improve on that and so forth.

746
00:38:26,680 --> 00:38:29,360
And two things have happened as
a result of what you just

747
00:38:29,360 --> 00:38:31,280
described there.
They've flooded the world with

748
00:38:31,280 --> 00:38:33,960
with, with their cheap cars,
which as you correctly said, are

749
00:38:33,960 --> 00:38:38,600
not, you know, necessarily worse
quality and, and they happen to

750
00:38:38,600 --> 00:38:40,560
be a fraction of the price U.S.
dollars.

751
00:38:40,560 --> 00:38:44,000
You can sell a car for $10,000
that is very cheap.

752
00:38:44,800 --> 00:38:47,560
I mean.
You're right.

753
00:38:47,680 --> 00:38:51,080
It's, it's insane.
And it's also, of course,

754
00:38:51,080 --> 00:38:53,440
created the alternative problem
where domestically now you've

755
00:38:53,440 --> 00:38:57,240
got Chinese EV makers who are
just struggling because there's,

756
00:38:57,240 --> 00:38:59,160
there's so many, there's so
many, there's so much

757
00:38:59,160 --> 00:39:01,840
competition and everything is so
cheap that the bottom line is

758
00:39:01,840 --> 00:39:04,360
hurting for them.
So what do you do about that if

759
00:39:04,360 --> 00:39:06,360
you're United States or if
you're, if you're, if you're

760
00:39:06,360 --> 00:39:08,920
Europe?
Because no matter how many

761
00:39:08,920 --> 00:39:12,840
subsidies you levy on, so the
$10,000 car with 100% subsidies,

762
00:39:12,840 --> 00:39:16,240
subsidies becomes a $20,000 car.
And you know, with two 100%

763
00:39:16,240 --> 00:39:19,640
subsidies, you know, so on and
so forth, But your own producers

764
00:39:19,640 --> 00:39:24,560
still cannot compete.
So you're, you're, you're stuck

765
00:39:24,560 --> 00:39:28,080
in a difficult place because if
you want your consumers to have

766
00:39:28,080 --> 00:39:31,800
access to a cheap product that
is good and he wanted to be

767
00:39:31,800 --> 00:39:35,400
produced by and large with, by a
local producer, whether maybe

768
00:39:35,400 --> 00:39:37,440
they still do it in a different
jurisdiction.

769
00:39:37,760 --> 00:39:40,520
You still have to throw a lot of
money at them.

770
00:39:40,520 --> 00:39:43,440
You have to heavily subsidised
them if you're a western market

771
00:39:43,680 --> 00:39:46,160
to do that.
So, so that's the the struggle

772
00:39:46,160 --> 00:39:50,520
now that I think, at least from
an American standpoint, American

773
00:39:50,520 --> 00:39:52,600
policy makers are going to be
facing the Biden administration

774
00:39:52,600 --> 00:39:55,520
put on those those tariffs, but
they're not in themselves going

775
00:39:55,520 --> 00:39:57,160
to be good enough.
The Chinese say, OK, forget

776
00:39:57,160 --> 00:40:00,040
about it, let's get into Mexico
and just produce the cars in

777
00:40:00,040 --> 00:40:01,240
Mexico.
And sure, they'll be a little

778
00:40:01,240 --> 00:40:03,520
bit more expensive, but they'll
still be considerably cheaper

779
00:40:03,680 --> 00:40:06,040
than what any other American car
manufacturer can do.

780
00:40:06,360 --> 00:40:08,680
So, so now you get into this
other tussle of how do you

781
00:40:08,680 --> 00:40:10,920
define what's a Chinese car
versus a Mexican car?

782
00:40:11,240 --> 00:40:14,680
All that's to say, it is very,
very difficult and very, very

783
00:40:14,680 --> 00:40:18,040
complicated.
You know, to do so, of course,

784
00:40:18,160 --> 00:40:21,800
keep in mind we don't have
Chinese EVs in the United States

785
00:40:21,800 --> 00:40:25,040
today.
So, so once you let them in, it

786
00:40:25,040 --> 00:40:27,320
might be hard to, you know,
force them out.

787
00:40:28,080 --> 00:40:30,600
But if you don't let them in,
your consumers are worse off,

788
00:40:30,880 --> 00:40:34,080
but your domestic car
manufacturing industry is happy.

789
00:40:34,080 --> 00:40:36,080
And you're, and you're, and that
part of the electorate and the,

790
00:40:36,120 --> 00:40:37,400
and the labour market, of
course.

791
00:40:37,640 --> 00:40:40,320
And those workers and those
unions are certainly going to be

792
00:40:40,600 --> 00:40:42,600
very happy.
So it's, it's this, it's this

793
00:40:42,600 --> 00:40:45,480
political tightrope of, of in
many ways that you have to walk.

794
00:40:46,960 --> 00:40:53,040
China put forward the, the goal
of net 0 by 2060 I I believe and

795
00:40:53,280 --> 00:40:57,520
EVs is 1 component, but it also
ties in very strongly with what

796
00:40:57,520 --> 00:41:00,760
you said earlier with a, a
national security and a China

797
00:41:00,760 --> 00:41:02,920
sort of independence kind of
focus.

798
00:41:02,920 --> 00:41:06,920
What do you make of that, that
goal and and their journey to

799
00:41:06,920 --> 00:41:09,400
get there with the, we've also
seen them go pretty hard at at

800
00:41:09,400 --> 00:41:11,960
nuclear and other sort of
sources to really wean down

801
00:41:11,960 --> 00:41:15,200
there their reliance on on all
other countries.

802
00:41:15,200 --> 00:41:17,320
Have you got a sort of
differentiated view on their

803
00:41:17,320 --> 00:41:21,760
journey to get there?
Look, I don't have a a view on

804
00:41:21,760 --> 00:41:25,360
this one, but I will say that,
you know, one of the things that

805
00:41:25,360 --> 00:41:28,800
we are certainly seeing though
over the last few years is that

806
00:41:28,800 --> 00:41:35,600
that reliance on coal is pretty
high and there is a lot of coal

807
00:41:35,600 --> 00:41:39,160
being produced in China.
And when it's cheaper for them

808
00:41:39,160 --> 00:41:42,360
to import it, they certainly are
importing it and a pretty high

809
00:41:42,360 --> 00:41:46,120
quality, you know, quantities.
So if, if you are a trading

810
00:41:46,120 --> 00:41:48,600
coal, if you are interested in
understanding where China's

811
00:41:48,920 --> 00:41:51,640
would that trend has been in
terms of coal, coal production

812
00:41:51,640 --> 00:41:55,360
for as it feeds into not only
just steel, because China's also

813
00:41:55,360 --> 00:41:59,560
producing a tonne of steel, so
much steel that they're just, as

814
00:41:59,560 --> 00:42:03,040
I said earlier, just pushing it
abroad, exporting it abroad.

815
00:42:03,040 --> 00:42:05,680
That's been a driver of, of
growth for them, their export

816
00:42:05,680 --> 00:42:09,120
growth, but also just for
domestic energy purposes.

817
00:42:09,840 --> 00:42:13,160
So, so I'm not an energy these
specialists, I don't have a call

818
00:42:13,160 --> 00:42:16,280
or a view on their net 0
emission targets for, you know,

819
00:42:16,440 --> 00:42:20,440
for the future.
But I think we have to keep in

820
00:42:20,440 --> 00:42:22,760
mind that the certainly their
reliance on on the fossil fuel,

821
00:42:22,760 --> 00:42:25,120
certainly their reliance on coal
remains pretty serious and

822
00:42:25,120 --> 00:42:28,800
pretty severe.
On, on the matter of steel,

823
00:42:28,800 --> 00:42:31,760
that's that's another one where
we've seen tariffs kick up just,

824
00:42:31,760 --> 00:42:35,960
I think last week and send the,
the Canadians ratchet up defence

825
00:42:35,960 --> 00:42:38,600
because China, I think in their
words, is just drowning the

826
00:42:38,600 --> 00:42:41,680
world in steel.
What does that kind of lead to?

827
00:42:44,000 --> 00:42:45,320
Yeah.
That's, I mean that's been one

828
00:42:45,320 --> 00:42:47,720
of the things we've been
tracking for the last, you know,

829
00:42:48,760 --> 00:42:52,240
over the last year we've seen,
you know, especially over 2023,

830
00:42:52,240 --> 00:42:54,920
we saw a lot more steel
production than was expected

831
00:42:55,240 --> 00:42:57,600
coming out of China.
Beginning of that last year, the

832
00:42:57,600 --> 00:42:59,560
idea was that Chinese steel
production was actually going to

833
00:42:59,880 --> 00:43:02,600
continue to decline for a third
year and that that didn't

834
00:43:02,600 --> 00:43:07,480
happen.
So, and ultimately we found that

835
00:43:07,840 --> 00:43:09,960
a lot of that steel was making
its way over abroad.

836
00:43:10,560 --> 00:43:13,760
Most recently, we're again
actually seeing, we have seen a,

837
00:43:13,760 --> 00:43:19,760
a, the seasonal kick kick up in
Chinese steel production over

838
00:43:19,760 --> 00:43:22,560
August, over September, even
though it was muted earlier in

839
00:43:22,560 --> 00:43:23,960
the year.
Sort of, you know, you, you had

840
00:43:23,960 --> 00:43:26,200
sort of this decline taking
place in Chinese steel

841
00:43:26,200 --> 00:43:27,480
production.
Now we'll see if it continues

842
00:43:27,480 --> 00:43:29,280
through the rest of the, the
year.

843
00:43:29,280 --> 00:43:32,760
But the bottom line is that in
an overall economic environment

844
00:43:32,760 --> 00:43:35,880
where there is a slowdown, there
has been this doubling down on

845
00:43:35,880 --> 00:43:38,800
the industrial side of the
economy and specifically on the

846
00:43:38,800 --> 00:43:41,640
commodity side of the economy,
where you may be losing money

847
00:43:41,640 --> 00:43:44,320
and you may not be making a
tonne of money along the way and

848
00:43:44,320 --> 00:43:45,920
you may be having to cut down
prices.

849
00:43:46,560 --> 00:43:48,080
But the plants are pumping it
out.

850
00:43:48,400 --> 00:43:52,680
The regional and provincial
political authorities are, are

851
00:43:52,680 --> 00:43:56,200
not forcing the steel plants to
cut back on production.

852
00:43:56,200 --> 00:43:58,920
And ultimately, you know,
whether it's through a

853
00:43:58,920 --> 00:44:02,320
combination of subsidies or
other means, you know, people

854
00:44:02,320 --> 00:44:04,920
are being kept employed, which
is important.

855
00:44:05,760 --> 00:44:09,200
And, and that and the, and the
excess product because there's,

856
00:44:09,200 --> 00:44:12,080
there's nowhere near the demand
domestically.

857
00:44:12,080 --> 00:44:15,000
Then, then, you know, then the
output that you're getting is,

858
00:44:15,000 --> 00:44:18,240
is finding its way in foreign
markets and you're finally

859
00:44:18,240 --> 00:44:24,120
getting the political sort of
response for it as, as you know,

860
00:44:24,160 --> 00:44:27,000
as, as is predictable.
The real question, of course,

861
00:44:27,000 --> 00:44:29,520
is, you know, where, where do we
get in this cat and mouse game,

862
00:44:29,520 --> 00:44:31,840
right?
Are subsidies, as are are are

863
00:44:31,840 --> 00:44:35,800
tariffs going to eventually be
high enough to cause enough pain

864
00:44:36,040 --> 00:44:39,720
to where you see China change
tack or ultimately the IT is

865
00:44:40,000 --> 00:44:42,480
fundamentally so cheap for them
to do this that their, their

866
00:44:42,520 --> 00:44:46,680
ability to withstand the pain is
is way, way, way higher than

867
00:44:46,680 --> 00:44:50,760
perhaps even the political will
in these countries for raising

868
00:44:50,760 --> 00:44:53,080
tariffs.
So, so that's the battle that's

869
00:44:53,080 --> 00:44:57,800
about to play out, especially as
we look to 2025 onwards and we

870
00:44:57,800 --> 00:45:00,720
get towards this, you know,
renewed trade war.

871
00:45:00,720 --> 00:45:02,840
Especially.
I think you get this round two

872
00:45:02,840 --> 00:45:06,640
of AUS China trade war going
into effect and we begin to find

873
00:45:06,640 --> 00:45:09,120
out how much pain can the
Chinese side withstand and just

874
00:45:09,120 --> 00:45:12,520
how and what it is and how much
and how many tariffs and how

875
00:45:12,520 --> 00:45:15,320
quickly can an American
president really started levying

876
00:45:15,320 --> 00:45:18,120
tariffs on whether whether it's
a Trump administration or or a

877
00:45:18,120 --> 00:45:21,880
Harris administration.
Is it too simplistic to to think

878
00:45:21,880 --> 00:45:26,560
that the reason there's so much
more steel exports in in the the

879
00:45:26,560 --> 00:45:30,360
past few months and year or so
is because they don't want to

880
00:45:30,360 --> 00:45:32,480
consume it or need to consume it
in country?

881
00:45:34,040 --> 00:45:35,920
Yeah, that's, that's a big chunk
of it, right.

882
00:45:35,920 --> 00:45:38,680
So, so they're producing.
So they're producing a lot

883
00:45:38,760 --> 00:45:41,400
regardless of what's going on
domestically because it's one of

884
00:45:41,400 --> 00:45:44,200
the areas that is, it is one of
the areas they have doubled down

885
00:45:44,200 --> 00:45:47,840
on industrial, you know, the
industrial sector writ large,

886
00:45:47,840 --> 00:45:50,880
manufacturing absolutely off
goods like, you know, whether it

887
00:45:50,880 --> 00:45:53,840
be apparel or cars or whatever
you make.

888
00:45:54,040 --> 00:45:57,400
But commodities manufacturing
is, has been a big part of of

889
00:45:57,680 --> 00:46:01,600
the story, especially over 2023
and now into 2024.

890
00:46:02,560 --> 00:46:06,480
But yes, it's absolutely true
that the props, they have no

891
00:46:06,480 --> 00:46:08,640
reason to consume as much of it
because of what's happened in

892
00:46:08,640 --> 00:46:11,680
the property market, the
downturn in the property market

893
00:46:11,680 --> 00:46:14,480
and the, and the very, very low
levels of construction activity.

894
00:46:14,480 --> 00:46:17,800
And absolutely the low levels
of, of infrastructure

895
00:46:17,800 --> 00:46:20,760
development in China have meant
that the domestic need and the

896
00:46:20,760 --> 00:46:25,640
domestic demand for these
industrial metals is far more

897
00:46:25,640 --> 00:46:27,880
than what it used to be.
And so you're left with a lot of

898
00:46:27,880 --> 00:46:30,920
excess product that you are then
dumping abroad.

899
00:46:31,560 --> 00:46:37,840
So that if we look forward, say
to 202050, how do you think

900
00:46:37,840 --> 00:46:43,480
China compares in, in terms of,
you know, power in the world, in

901
00:46:43,480 --> 00:46:48,440
terms of its economy size, in
terms of GDP per capita with the

902
00:46:48,640 --> 00:46:51,680
US and other countries that you
might think are running pretty

903
00:46:51,680 --> 00:46:53,880
quickly?
So, you know, I think in the

904
00:46:53,880 --> 00:46:57,600
aftermath of COVID and, you
know, the slow down in the

905
00:46:57,600 --> 00:47:00,560
Chinese economy and then the
acknowledgement from the

906
00:47:00,560 --> 00:47:03,160
Communist Party that look, we're
looking at a future of slower

907
00:47:03,160 --> 00:47:05,040
growth and we're going to make
it more sustainable and so

908
00:47:05,040 --> 00:47:07,000
forth.
It became really, it's really

909
00:47:07,000 --> 00:47:13,320
fashionable both by on the, on
the, on the street and in the

910
00:47:13,320 --> 00:47:17,320
policy making world to sort of
have these doomsday predictions

911
00:47:17,320 --> 00:47:21,200
about China, that the Chinese
economy ultimately will, you

912
00:47:21,200 --> 00:47:25,760
know, get stuck in, in, in, in,
in period of stagnation.

913
00:47:26,760 --> 00:47:29,160
That they're going to, you know,
or that, you know, parts of the

914
00:47:29,160 --> 00:47:31,080
Chinese economy are just going
to simply fall apart.

915
00:47:31,480 --> 00:47:33,880
Or that there's going to be this
big Lehman moment that's going

916
00:47:33,880 --> 00:47:35,840
to take place and the financial
system is just going to

917
00:47:35,840 --> 00:47:38,360
absolutely crash.
And that's going to be the doom

918
00:47:38,360 --> 00:47:41,640
scenario.
And and the policy making side

919
00:47:41,640 --> 00:47:44,720
of the world, especially out in
DC has a similar viewpoint that

920
00:47:44,720 --> 00:47:47,880
that whereas today, you know,
we're concerned about China as a

921
00:47:47,880 --> 00:47:51,600
competitor of ours or as a as a
global rival, that I think

922
00:47:51,600 --> 00:47:54,200
they're just going to internally
implode because of all the

923
00:47:54,200 --> 00:47:56,680
various economic problems that
they have.

924
00:47:56,680 --> 00:47:59,040
And then the House of Cards is
going to collapse and so forth.

925
00:47:59,440 --> 00:48:04,080
I don't buy that at all.
So, you know, what I think is

926
00:48:04,080 --> 00:48:07,440
you get as an economy that
remains at the very least the

927
00:48:07,440 --> 00:48:11,920
world's second largest economy
that, yes, grew at a very slow

928
00:48:11,920 --> 00:48:14,720
pace.
Do I believe today that they

929
00:48:14,720 --> 00:48:19,520
magically pull off that great
economic transition that they

930
00:48:19,520 --> 00:48:22,080
that they foresee?
It's which I compared to sort of

931
00:48:22,080 --> 00:48:26,440
turning around a huge, huge,
huge, huge ship.

932
00:48:26,680 --> 00:48:28,840
I used to call it turning around
the Titanic.

933
00:48:28,840 --> 00:48:30,920
And then somebody interviewing
me says Shahzad.

934
00:48:30,920 --> 00:48:33,240
The Titanic sank.
So I said, you're right, I

935
00:48:33,240 --> 00:48:35,000
should have gone on that
because.

936
00:48:35,640 --> 00:48:41,640
People still going.
So, but it's still a kid to

937
00:48:41,640 --> 00:48:45,040
turning around a very, very
large vessel.

938
00:48:45,400 --> 00:48:48,920
And I don't think the successes
at all guaranteed.

939
00:48:49,120 --> 00:48:52,160
I don't think they're doing
things today that even give me

940
00:48:52,160 --> 00:48:54,280
confidence that they're going to
necessarily succeed.

941
00:48:54,520 --> 00:48:58,520
But I don't buy this idea that
China implodes and becomes sort

942
00:48:58,520 --> 00:49:01,880
of this very man, you know,
economy.

943
00:49:01,880 --> 00:49:03,800
I think you could get a
combination of things.

944
00:49:03,800 --> 00:49:06,760
You get an economy that grows at
a very low level, maybe even

945
00:49:06,760 --> 00:49:08,680
goes through some periods where
it doesn't grow at all.

946
00:49:08,960 --> 00:49:12,120
But then at the same time, they
have been able to make the right

947
00:49:12,120 --> 00:49:15,600
decisions in the area of
technological growth that they

948
00:49:15,600 --> 00:49:19,160
do have an important, if not a
dominant position in, in high

949
00:49:19,280 --> 00:49:21,560
end manufacturing of
technological goods that they, I

950
00:49:21,560 --> 00:49:24,520
think do get, end up getting
some amounts of, you know,

951
00:49:24,520 --> 00:49:28,920
indigenization of, of, of
advanced technology and and so

952
00:49:28,920 --> 00:49:30,080
forth.
I think, I think they, I think

953
00:49:30,080 --> 00:49:34,200
they'll likely accomplish some
of those goals and become this

954
00:49:34,200 --> 00:49:40,040
big important military
powerhouse around the world.

955
00:49:40,040 --> 00:49:43,880
There's they're still very large
being #2 is very impressive if

956
00:49:43,880 --> 00:49:47,560
that, if they remain that not
even being #3 is very impressive

957
00:49:47,840 --> 00:49:49,880
in this world.
So I think so.

958
00:49:49,920 --> 00:49:52,240
So, you know, we have to think
about a China from that

959
00:49:52,240 --> 00:49:55,840
standpoint, both, you know, from
an investing position as well.

960
00:49:55,840 --> 00:49:59,400
By the way, the overall slowdown
may not mean much.

961
00:49:59,400 --> 00:50:03,160
I think opportunities in China
increasingly lie below the

962
00:50:03,160 --> 00:50:04,720
surface.
And it's time to get very, very

963
00:50:04,720 --> 00:50:07,040
serious and sophisticated about
the Chinese economy.

964
00:50:07,320 --> 00:50:09,280
Because if you're just looking
at the overall GDP number and

965
00:50:09,280 --> 00:50:12,240
investing based on that, as used
as everybody who invested in

966
00:50:12,240 --> 00:50:14,520
China more or less did, you're
not going to make any money

967
00:50:14,520 --> 00:50:16,120
anymore.
You have to get very real about

968
00:50:16,120 --> 00:50:18,120
where are some money flowing
internally in China?

969
00:50:18,320 --> 00:50:20,440
What are the opportunity
industries of the common, you

970
00:50:20,440 --> 00:50:22,400
know, that are being created
because the Communist Party

971
00:50:22,400 --> 00:50:25,880
backs those industries and those
are the pick the, the favoured

972
00:50:26,520 --> 00:50:29,800
areas of growth and likely areas
where the opportunities lie,

973
00:50:29,800 --> 00:50:32,640
where there's, you know, ability
to make money.

974
00:50:33,240 --> 00:50:35,920
And I think same from a, from a
thinking about assessing the

975
00:50:35,920 --> 00:50:39,360
geopolitical risk and assessing
China's geopolitical entity.

976
00:50:39,480 --> 00:50:42,400
I think start focusing not just
on this overall picture, but

977
00:50:42,400 --> 00:50:43,560
really what they're getting
right.

978
00:50:43,560 --> 00:50:45,680
And then and then where the risk
factors are, where they might

979
00:50:45,680 --> 00:50:48,480
fall behind or may just fail
outright and not succeed.

980
00:50:49,840 --> 00:50:53,280
You made the comment earlier of
China wanting to become less

981
00:50:53,280 --> 00:50:57,640
reliant on the West and tying
this in with, you know, it's

982
00:50:57,680 --> 00:51:01,760
it's recent military dominance
and it's also been a powerhouse

983
00:51:01,760 --> 00:51:05,520
for for 2000 odd years or maybe
even longer, just very kind of

984
00:51:06,400 --> 00:51:09,720
inward focused.
Do you think over the coming

985
00:51:09,720 --> 00:51:15,160
decades they look more and more
inward and perhaps you know,

986
00:51:15,160 --> 00:51:18,920
reflecting on the, on the China
of the, the 1900s, they really

987
00:51:18,920 --> 00:51:23,000
try and wean themselves off all
sorts of reliance of the, the

988
00:51:23,000 --> 00:51:29,680
outer kind of world?
What it's the what they want to

989
00:51:29,680 --> 00:51:33,200
wean off is their reliance on
Western countries for things

990
00:51:33,200 --> 00:51:38,200
like, so they, they don't want
to rely on NVIDIA for chips or

991
00:51:38,200 --> 00:51:41,800
they don't want to rely on on
ASML for lithography technology

992
00:51:41,800 --> 00:51:44,640
and machinery, right?
It's it's, they want to figure

993
00:51:44,640 --> 00:51:47,000
out a way to produce the
advanced ships themselves.

994
00:51:47,000 --> 00:51:50,240
They want to figure out a way to
produce the machinery to produce

995
00:51:50,520 --> 00:51:53,040
the chips and and then take it
to other areas.

996
00:51:53,320 --> 00:51:55,920
You know, off of, you know, when
we, when we think of advanced

997
00:51:55,920 --> 00:51:59,000
technology, you know, they've,
they've already done it for

998
00:51:59,000 --> 00:52:00,440
obviously.
And in the EV they've, they've

999
00:52:00,440 --> 00:52:02,360
shown their dominance in the EV
world.

1000
00:52:02,560 --> 00:52:05,320
They've shown how they can do,
they've taken over the global

1001
00:52:05,320 --> 00:52:09,200
solar, the solar panel market,
obviously, right.

1002
00:52:09,440 --> 00:52:13,600
So they've shown us how they can
make, how they can do more that

1003
00:52:13,600 --> 00:52:15,840
it's that China is not just
there to produce your T-shirts

1004
00:52:15,840 --> 00:52:17,360
and your, and your, and your
sneakers.

1005
00:52:17,560 --> 00:52:20,200
They can be doing things that
are far, far, far more advanced

1006
00:52:21,160 --> 00:52:24,080
and, and important to national
security and military and

1007
00:52:24,080 --> 00:52:25,880
military superiority and so
forth.

1008
00:52:26,120 --> 00:52:29,560
So I think they, they pull, they
continue to pull back in those

1009
00:52:29,560 --> 00:52:34,120
areas, but but I don't think
they pull back in other areas.

1010
00:52:34,120 --> 00:52:37,360
I think you get a China that
continues to focus on building

1011
00:52:37,360 --> 00:52:40,800
alliances broad and building and
friendships abroad.

1012
00:52:42,200 --> 00:52:45,720
You know, do I, I think do they,
do you get a China that tries to

1013
00:52:45,720 --> 00:52:49,320
mimic typically what's the
United States done since since

1014
00:52:49,320 --> 00:52:52,480
World War 2 and, and and
thereafter where we are sort of

1015
00:52:52,480 --> 00:52:54,520
the, you know, the policeman of
the world and involved in

1016
00:52:54,760 --> 00:52:57,000
conflicts everywhere and and and
so forth?

1017
00:52:57,000 --> 00:52:58,720
No, I don't think so.
I think, I think that I think

1018
00:52:58,720 --> 00:53:00,640
that you probably get more
continuity than not.

1019
00:53:00,920 --> 00:53:03,400
I don't think there's any
urgency when it comes to Chinese

1020
00:53:03,400 --> 00:53:08,920
policymakers to get involved in
in hot hostile conflicts that

1021
00:53:08,920 --> 00:53:12,200
are there actually wars, whether
they are, you know, skirmishes

1022
00:53:12,200 --> 00:53:14,560
or insurgencies or hot wars or
so forth.

1023
00:53:14,560 --> 00:53:17,600
Yes, they want to place world if
they can bring people together

1024
00:53:17,920 --> 00:53:22,920
around a table and get them to,
you know, you know, hash out a

1025
00:53:22,920 --> 00:53:25,840
friendship agreement or maybe
restart a dialogue the way they

1026
00:53:25,840 --> 00:53:29,200
did with the Iranians and and
the Saudis and so forth.

1027
00:53:29,200 --> 00:53:31,840
Yeah, they want to be on the
table as a as a as somebody that

1028
00:53:31,840 --> 00:53:34,560
can negotiate deals and that can
create stability.

1029
00:53:35,080 --> 00:53:37,000
But you know, they're doing it
at a very low level because

1030
00:53:37,000 --> 00:53:38,720
they're the risk of failure is
very high and they're not

1031
00:53:38,720 --> 00:53:40,840
putting their stamp on it and
and putting the reputation

1032
00:53:40,840 --> 00:53:42,720
behind it either.
So they're going for the low

1033
00:53:42,720 --> 00:53:45,400
hanging fruit in many ways.
So I think they stay involved

1034
00:53:45,400 --> 00:53:50,120
globally in, in these, in, in
this manner, in these, in these

1035
00:53:50,120 --> 00:53:51,840
ways.
I don't see them turning inward

1036
00:53:52,000 --> 00:53:53,000
at all.
They can't afford to.

1037
00:53:53,000 --> 00:53:55,600
As a matter of fact, a big chunk
of their focus is outward.

1038
00:53:55,600 --> 00:53:57,680
It's projecting their power in
the South China Sea.

1039
00:53:57,680 --> 00:54:00,560
It's, you know, projecting their
power and, and, and, and, and,

1040
00:54:00,560 --> 00:54:03,080
you know, keeping open that
option of retaking Taiwan.

1041
00:54:04,000 --> 00:54:07,480
It is about, you know, showing
the Philippines and that, that

1042
00:54:07,480 --> 00:54:11,000
they're the bigger power and
they are boss and, and, and, you

1043
00:54:11,000 --> 00:54:14,240
know, sending that message
across to other nations in Asia,

1044
00:54:14,240 --> 00:54:16,640
which are, which may not be
particularly friendly towards

1045
00:54:17,200 --> 00:54:22,240
Chinese interests any longer.
Start.

1046
00:54:22,240 --> 00:54:23,880
I think I've exhausted all my
questions.

1047
00:54:24,400 --> 00:54:25,920
Oh yeah, I didn't have any at
the start.

1048
00:54:25,920 --> 00:54:28,240
So bloody JD was the man behind
this fight.

1049
00:54:28,240 --> 00:54:31,000
So now we are mate.
We can't thank you enough for

1050
00:54:31,000 --> 00:54:35,840
taking the time to educate us
Australians on everything China

1051
00:54:35,840 --> 00:54:37,560
mate, that was absolutely
sensational.

1052
00:54:37,680 --> 00:54:39,320
It was fantastic.
I'd like to just.

1053
00:54:39,320 --> 00:54:41,680
Find experts, but I don't have
to read anything.

1054
00:54:44,280 --> 00:54:45,440
Well, thank you so much for
having me.

1055
00:54:45,440 --> 00:54:47,120
This is great, great
conversation.

1056
00:54:47,320 --> 00:54:51,280
Good stuff JD, bloody mate.
In the woods, China.

1057
00:54:51,600 --> 00:54:53,080
We're learning more every day
mate.

1058
00:54:53,160 --> 00:54:55,320
Joseph definitely got to listen
back to that.

1059
00:54:55,800 --> 00:54:59,600
I did try and ask a nuclear
question, but it wasn't in the

1060
00:54:59,600 --> 00:55:01,160
wheelhouse.
I'm like, Oh well, I'll just go

1061
00:55:01,160 --> 00:55:03,800
get a coffee or something.
Not following Rolodex nuclear

1062
00:55:03,800 --> 00:55:04,360
question.
Nuclear.

1063
00:55:05,480 --> 00:55:08,160
Question, how can I bring this
conversation back to something

1064
00:55:08,160 --> 00:55:09,000
island?
I know.

1065
00:55:09,600 --> 00:55:11,160
Yeah, it's not good on your
comma.

1066
00:55:11,160 --> 00:55:14,200
Appreciate that mate.
China, who else is like, are you

1067
00:55:14,200 --> 00:55:17,520
going to give a good on you too?
Well, top of my list would be

1068
00:55:17,520 --> 00:55:19,560
MMS Maddie.
Top of the list every time.

1069
00:55:19,560 --> 00:55:22,480
And it's it's a sort of equal
top also with grounded cross

1070
00:55:22,480 --> 00:55:23,960
boundary energy.
The list goes on.

1071
00:55:23,960 --> 00:55:27,000
Actually, ground support,
they're right up there, mate.

1072
00:55:27,000 --> 00:55:29,760
CRE insurance.
Yeah, Greenland's equipment also

1073
00:55:29,760 --> 00:55:33,560
equal first K Drew MMTS.
Oh mate, Reese with told me the

1074
00:55:33,560 --> 00:55:35,000
Australian earthworks and
Pulwich.

1075
00:55:35,760 --> 00:55:37,640
And last but not least, Spark
Mate.

1076
00:55:38,080 --> 00:55:40,320
Oh, use it right, Odoru.
Money miners.

1077
00:55:40,440 --> 00:55:45,480
Odoru Information contained in
this episode of Money of Mine is

1078
00:55:45,480 --> 00:55:47,680
of general nature only and does
not take into account the

1079
00:55:47,680 --> 00:55:51,280
objectives, financial situation,
or needs of any particular

1080
00:55:51,280 --> 00:55:53,320
person.
Before making any investment

1081
00:55:53,320 --> 00:55:56,360
decision, you should consult
with your financial advisor and

1082
00:55:56,360 --> 00:55:59,520
consider how appropriate the
advice is to your objectives,

1083
00:55:59,720 --> 00:56:01,720
financial situation and needs.