How Will China Emerge From the COVID-19 Crisis? >> Ed Harrison here for Real Vision. We're about to listen to George Magnus, who is the Oxford University, China's Center research associate. We're going to be talking to him about China. We're going to take on the full kit and caboodle in terms of trade policy, domestic economy, in terms of export-led economy. It will be a very exciting discussion with him, I'm really looking forward to what he has to tell us about the priorities inside of China and also the priorities with regard to China in the West. It should be a great interview, I hope you enjoy. George Magnus, good to talk to you. You are the research associate at the China's Center at Oxford University. So you know a lot about China and I've talked to you many times in the past and really looking forward to having you back on the Real Vision platform, especially because today is a day where stock markets are up, China is one leading the charge in the aftermath of the July, 4th celebration here in the US right before markets open, and all seems to be well. Is all well with China and everything that you're seeing? >> Well. Good to talk to you Ed. I suppose it's all relative. I mean, compared with where China was just a few months ago, yeah, it does look good. The stock market is being one of the top performers this year. It had a great day today, as you said and yeah, I suppose in many ways the two things just to kick off our discussion really, the first is the economy is coming back reasonably well, not uniformly or ubiquitously well, but production is up to beyond levels that we had in Chinese new year in January. Demand is recovering not quite as rapidly, but it's not doing too badly, service industry to a particularly badly hit, travel, tourism, recreation, culture, these things, I think this is all very familiar now. Some of that is coming back a bit, but of course the People's Bank of China has also been quite generous in terms of liquidity provision and a couple of problems in smaller banks, which they quickly tried to stifle and muffled quite successfully and yeah. So I think the stock market, to the extent that it means anything in China relative to the economy, is just basically telling us that retail is getting involved again. Certainly the government and the main propaganda, the news outlets which of course is state controlled are choking up equity markets in China a little bit, so it's just got a little bit of a ring from 2014-'15 as well. So yeah, for the time being, it looks like it's going okay. >> There are lot of threads in what you just said, but the interesting bit I found, the most interesting bit was when you talked about the production at levels higher than January, but also at the same time, actual demand not quite there yet. So it sounds like they're producing for the future and two things come to mind. One is, is that sustainable and then the second is how much of that is due to domestic demand versus external demand in terms of what they're thinking about going forward? >> The foreign side of this is still pretty important. I think we're acclimatize now to fact that China is no longer an export-led economy in the way that it was in the 2000. So current account is pretty small. In fact, first quarter this year actually, they ran small deficits because exports were particularly badly hit, but even though China is not an export-led economy, the foreign trade side of what goes on in China's still quite important, particularly for the South Eastern and Eastern provinces, and after what was a pretty torrid first quarter, it looks like with Western demand for medical equipment and masks, and ventilators, and pharmaceuticals and medicines and goodness what else? It looks like the Chinese producers have been doing pretty well. So there has been a bit of a come back a little bit on the export side, but the main thing really is the production side which is doing well, but to reinforce the point which you asked me really, there is this dichotomy really between obviously supply and demands at the production side of the economy seems to be growing like gangbusters. The demands side not quite so great, so that could be building up an inventory problem later this year. It's quite possible. A lot of the retail and culture recreation side of the economy still really isn't fairing that well. People are still a little bit nervous even though, there is a cluster of outbreaks of COVID have come back, they're pretty much in control of it I should say, but people are more anxious, their behavior isn't really back to normal. So I think that this is potentially an issue and employment is something which I think we should all keep our eyes on in China. I mean everywhere but in China as well. So every single State Council and National Reform Development Commission meeting and all the main state agencies, ever since the beginning of 2019, every single meeting is dominated by jobs and the government has been absolutely adamant this year, including at the delayed National People's Congress in May, that employment was the top top priority. Remember, there's a lot of migrant workers were laid off or told not to come back to work, many of those have now by June, July, have gone back, but still perhaps up to about 15 or 20 percent of migrant workers still not back on the job as it were. Every summer, 9.5 million graduates come through the university pipeline. I may have the same issues that obviously a lot of Western countries do about, will they find sufficiently well-paid jobs that meet their aspirations, will they end up working in the gig economy under selling themselves and so on, these things are really big issues for China as you can imagine, because the labor market works in a rather different way. So a lot of Chinese economists think it might take two years if they're lucky. It might take two years for the employment of the labor market to basically recover its poise, but of course, in the next two years, my view is that China's economy is just going to continue to slow down, so I think this problem gets worse rather than better. >> All right. Hanging over all of that actually as you say that is the two things, the virus obviously, and the political situation. I don't know which one is more important, which one we should go into first, but the overall thought I had as you were talking about the economy and you were talking about tourism, and a bunch of other things, I thought to myself, China's a really big country, and just like the United States really to a certain degree, they can create a moat to themselves, and I feel like at a transitional point in terms of where China is, in terms of its economic model and how it has been perceived outside as a result of the virus. What are your thoughts on those two issues in terms of which one is more important going forward, the political side or the viral side in terms of driving those outcomes like the ones about the employment issue that you're talking about? >> Yeah. I suspect the pandemic consequences. I'm not trying to understate you at all, but I don't see them as basically being permanent up to a point. So I think that before long. Hopefully before long, either the virus is going to become a nuisance rather than something that we all fear, and don't go out because of whatever, it'll become awkward, it'll become a nuisance. Maybe there will be a vaccine in a year or 18 months, two years, so I don't see these as being long-lasting, but there are other consequences of the pandemic which I think could have much more durable consequences. So one of the things as I think probably everybody knows here in Washington they call it decoupling, in Beijing they call it self-reliance, it's really opposite sides of the same coin, and the consequences of the pandemic. Maybe it was just really to accelerate something that was going on anyway, but I think that these things are really difficult to predict, but whilst I don't really anticipate at this juncture that there will be a complete seizure in terms of commercial relations between the United States and China or the Western world and China, I mean pending outright conflicts, because I think that interdependence is still quite at a very very high level, but I think that a lot of companies must be rethinking their future strategies, and I think looking at the survey evidence that we get from the American Chamber of Commerce or the EU Chamber of Commerce in China, and what companies are basically saying, maybe not all companies because actually if you run a business in China and you want to sell to the rising middle class over the next 25 years, then you have to be there and I don't think those companies are going to quit or leave, but I think a lot of companies basically that have the middling for these China centric supply chains, will be looking at alternatives, maybe not to leave China, but to diversify, to have more than sole source suppliers. So maybe they go to Japan or to Korea, or to Malaysia, or in the case of US companies, they could relocate some of their supply chains back to Mexico. So we see this really in the survey evidence that there's a statistically significant, although by no means overwhelming majority at all, but a statistically significant number or percentage of companies, if they're not doing this already, they're looking at doing this in the next 5-10 years. So I do think that will be permanently, because companies won't make these decisions for six months, it'll be for the foreseeable future. So that thing I think will affect China. I think the more hostile commercial environment affecting trade, investment, and lending. These things I think also very difficult to quantify, but I think they will also impinge on China. If the United States in particular, I would say, should actually want to leverage its financial clout over China, either with respect to companies that are and facilitating the suppression in Xinjiang Province, or because of the legislation that's going through the Congress over Hong Kong. If financial sanctions were to apply to individuals or banks, and that's taking the level of confrontation up to a new level, I think. So these kinds of things I think are more important really. That this is the political consequences of the pandemic, rather than the specific measurable things that we measure in economics quarter to quarter. >> Brian, I think that makes a lot of sense. So putting the two together with the pandemic as the accelerant. I saw an astonishing piece this weekend in the Sunday Times. I don't know if you saw that, it was talking about the virus, and Wuhan Province, and the origin. There was some slight overtones of Chinese media suppression of what's really going on, etc. I thought it was somewhat sensationalistic, and it's somewhat emblematic of the times that we're living in terms of the politicization of the relationship between the West on the one hand and China on the other hand. As you were talking, I was thinking about this in terms of Donald Trump, the President. You were talking about the weaponization of the US dollar through the banking system, etc. Now, Donald Trump's on his back foot domestically, but were he to understand that he only has a few months left until he's out of office, that could mean that he might need to accelerate his movements against China. Do you think that that is a potential threat? Those activities that you were talking about, weaponizing the dollar in the banking system potentially as a political salvo at the end of Donald Trump presidency. >> Well, I think there are a couple of things about this. So the first is particularly following John Bolton's revelations in this book. I don't really know what to think about. Maybe we just don't know what to think about, President Trump might do next anyway, and whether he basically has a secret admiration position playing role, whether current political circumstances demand that he ups the ante. I think it's quite difficult to predict. Though having said that, that whatever happens probably after November for the basic thrust of American policy towards China, probably not going to change very much. Maybe stylistically it'll change, may be it could change if the presidency changed, maybe the approach to allies would be different. But I think the threat of a weaponizing capital is probably going to remain. Whether it actually comes to that or not is hard to say, because if you just wanted to reason this from the point of view of logic, and in whose interests would it be to impose [inaudible] with sanctions against Chinese individuals or Chinese banks. If it was ever an issue, I got to remember, in the old Soviet Union and certainly with Russia today, it's not an issue because Russia is simply just not have big enough economic power, and doesn't really matter that much, relatively speaking, but China is. So the question is, who would be the winner? Who would be the loser? Probably everybody would lose, because if you started to sanction banks in Hong Kong for example, give them that order, restrict their access to US dollars or for exchanging US dollars for Hong Kong dollars or what have you, I don't think that could be restricted to just Chinese institutions. I think it would have dynamic financial market consequences in which American banks and other foreign banks would become drawn in as well. So it's difficult to tell where would that end? It's really the nuclear button in finance to do that. So isn't something that has appeal from political points of view? Absolutely, because that would hurt China in a way in which a few tariffs can be basically brushed off as being political peak, but really nothing that's really going to destabilize the Chinese economy. But finance or restricting access to US dollars would have a dramatic effect. >> How much of that do you think this whole concept of potentially hurting China is based upon human rights in areas like the Uyghurs and Hong Kong, and how much of it is a competitive situation where it's become obvious that China is a player on the global stage and the US is worried? >> Well, these two things have become not necessarily constructively conflated. So the idea about linking sanctions against China or penalties to human rights and/or to their national security law in Hong Kong. Because the UN Congress has basically stepped up to take the lead in terms of legislating in both cases, subject to reviews and presidential approval and so on. We should look at that in one corner as it were, and the political on its own. My view is that it's not a good idea for the United States or anybody else to basically look at sanctions from the same point of view, from a commercial point of view, because we might not like the idea that Huawei is a world leader in 5G telecommunications infrastructure. We should basically redouble our efforts to make sure we're good on that too, if not better, rather than new sanctions. It's not a good message for us internally, leave alone externally, and actually it doesn't improve our relative standing or our comparative advantage. So we have to do both. We have to be very conscious of things that we think are important from our point of view of values, standards, beliefs, governance criteria, and so on, and act accordingly. Where we feel that unfair advantage is being exploited by Chinese companies, we have a right to combat that in some way, or certainly to demand reciprocity with China's though, and if you do this, we'll do this and so on. But actually, none of that should obfuscate from serious attempts that we must make to bring our technology, and educational systems, and economic systems up to scratch and to be able to make sure that we can perform top liability. >> Well, the latest that I heard in terms of the Huawei of fiasco, if you will, is the UK is looking to strip Huawei out of UK networks by the end of the year. This is what I'm understanding with regard to the UK government's plans going forward. What's the latest in the UK about Huawei? How much of it is a Five Eyes driven policy? How much of it is a US driven policy? >> Well, whilst it was just a US driven policy, the British government under Prime Minister Boris Johnson, they actually took a decision to basically open up the telecommunications or a 5G roll out to at least in part to Huawei. They imposed a cap on it. I don't really get the technical bits of this greatly, but it was limited involvement, just the way they put it, up to about a third, and then other companies, the rest and so on. But this is a more recent shift. We are expecting a decision on this quite soon. Today, in fact, one of the former heads of MI6 Intelligence Agency, Sir John Sawers, basically wrote an opinion piece in the Financial Times, essentially anticipating this reversal of policy and arguing why it's justified. He previously having been a supporter of a government's policy, so to be honest, we can argue now about whether the intelligence community in the United Kingdom was leading members of it were right or wrong to basically think that so much has changed in China in the last six months. My view is nothing much has changed, might've gotten worse, but we knew what it was like before. Be that as it may. There clearly is a shift going on, which I think is a product really of not specifically. I'm sure that behind the scenes, US officials have been badgering their UK counterparts to be toe of the line, etc. But I think what's really happened is a deeper appreciation on the part of the British government, and by its own lawmakers in British Parliament, who are almost by a large majority in favor of a tougher line on China now. But it's been conditioned really by the whole pandemic experience, WHO experience, Hong Kong. So it's a big shift of view in the United Kingdom. >> So it does seem like when you talk about the conflation between human rights, Hong Kong, and commercial interests, this is definitely come into play. The pandemic has accelerated terminating China thinking in the US, UK, but also Five Eyes, so I would say Canada, New Zealand, Australia. My question is, especially when the only competitors, the Huawei, that I understand are in Scandinavia. What happens to the rest of the world that's aligned with the United States, like Germany, Finland? Nokia and Ericsson are the two companies in particular who are always competitors in 5G. Do you see the EU moving in the same direction or is this something that is specific to the Anglo-American world? >> It was slightly more complicated in the EU. But again, the ground is shifting slowly. Earlier this year or last year actually, I think the EU radically, they did like 180 degree shift because there's an EU-China dialogue which takes place, it's not quite at the level that the US-China dialogue used to be. Nevertheless, it happens. In 2018, they still talked about China as a strategic partner. Since last year, certainly they talk about China as a systemic rival. The new president of the EU commission and other officials of the EU Commission, plus leading officials in Germany and in France in particular have voiced great skepticism within the last two or three months about China's involvement in local technology companies not playing by the rules in making a mockery of the prevailing legislation or agreements governing Hong Kong and so on. It's harder, of course, in the EU because you have to get 27 countries lined up behind a policy. But if the French, and the Germans, and the Brussels administration basically have bitten the bullets on their switch, it looks to be that it is moving that way. Germany is still somewhat ambivalent because there's a big corporate lobby there, there is change going on. I don't know whether this is going to happen or not, but my view would be that if you had a US administration after November, which was, shall we say, more collegiate and inclusive as regarding allies and alliances, I think it would do a lot to turn EU members to torque them in the way that they seem to be shifting already. >> Interesting. Yeah. As you were saying that one thing that occurred to me is when you think about Germany in particular, you think about Germany's turn toward China in terms of an export demand-driven type of system after the European debt crisis, then obviously it is influencing the German corporates. If you say analogously, China has assume thinking in terms of we used to be export-driven, now we have to look at a way from the West. Potentially, they could still be somewhat export-driven and corral their resources in the Asia-Pacific region, get countries on side with China, create a larger Chinese sphere of influence, if you will, from an economic perspective. Is there any talk about that happening with China deepening its relationship, the Belt and Road type of thing within Asia itself? >> Since you mentioned the Belt and Road, it's not quite living up. I'm not surprised why, it's not quite living up to the hype that we heard a lot of in 2016 to '18. But it's a signature part of President Xi Jinping's foreign policy. It's not as coherently top-down thought out as I think some people like to think, but it fulfills a number of different purposes for China, it's designed to protect supply routes to China, they're building out what the Indians call the String of Pearls around the Indian Ocean of ports and naval facilities to protect oil shipment routes through the Malacca Straits and up to the coastal provinces of China. It fulfills a function in terms of exporting a little overcapacity of steel, another heavy industry products from China. It's a very useful way, at least this is what the Chinese think, to basically build infrastructure in Africa, Asia, parts of Latin America, Eastern Europe and then basically use that as a platform to sell Chinese products and market Chinese brands. When we were talking before about waterway and about whether the Five Eyes of Europe and so on would go along with it. But whatever "we" in the West decide to do with Chinese technology companies obviously, there's a whole third world or emerging world out there which is open season for basically Chinese companies for American, European, Japanese, Korean companies to compete over. For the Chinese, I think the Belt and Road is including Asia is very important in terms of economic reach in the future. I think in Asia, it's interesting really, because I think Asia represents a very curious mixture of opportunities and risks for China because most Asian countries, even from Japan all the way down to Australia actually, they see obviously their economic interests as having been firmly rooted in Chinese economic emergence and eruption and so on. We don't really know how continuously that will go on in the future because they may be roadblocks to growth and there may be constraints on Chinese economy in the future that we didn't have before. But be that as it may, China certainly is seen as being integral to the economic outlook. But from a political insecurity point of view, mostly I would say still, Asian countries look to the United States as being their backstop is basically United States security is still default. Now that it could change obviously nothing is necessarily forever but this conflicted situation which a lot of Asian countries find themselves in I think is quite awkward. I don't think it's like that maybe for the Australians, or the Japanese, or the Indians anymore but for smaller Asian countries, ASEAN countries and so on, it's difficult. You have to make this tradeoff. But I'm hopeful. I say hopefully not with any insider knowledge about it. But I was just reading recently about a change of heart in terms of Indonesia where there has been a shift in government policy to be more welcoming to companies that want to diversify out of China or away from China and establish because Malaysia has been a beneficiary for example. But Indonesia so far has not been in the forefront but looks like it wants to join that fold. Yes, of course, Asia is China's backyard from an economic point of view. But remains to be seen actually, how open that back yard will be. >> Interesting. Immediately I think about the Chinese domestic economy from there, it's not immediately obvious that they're going to benefit from a larger Asia Pacific type of strategy. Then obviously, it's the domestic side. You were talking about the domestic side. I think that the thing that comes to mind for me as you were talking about continued slowing of the domestic economy. I want to get into that. What is it that is causing the slowing? How much is debt? Especially private debt a part of that. What are the nuances in that? >> It was all of our discussion actually should basically absent 2020 and 2021. These numbers are going to be all over the place. We've had a big crunch in Chinese growth in the first half of this year. Probably, next in 2021, don't be surprised if you saw a double-digit GDP again. But if you average it out, whats happened between 2020, 2021, most probably the number will end up with something that's about six percent which is where the growth target probably would have been set had they done that in May but they abandoned the target for this year as most people know because of the inevitability of not compensating for the effects of COVID and so on. The feeling that I have certainly looking at China over the next five years, 10 years, or so is a number of headwinds which I've detailed in the book that I wrote a couple of years ago which came out in paperback last year as well. Red flags which is first of all, the debt situation. We know from Rogoff and Reinhart and numerous other economists that are waxed about this since 2007, 2008. Debt is a constraint at the very least that is a constraint on growth over the medium term. That's the place where I start with. I think that not withstanding the fact that between 2017 and 2019, China did take, will be childish not to give them a round of applause for this, but they did take quite seriously the idea of trying to reduce egregious forms of risk-taking in the financial sector, which had been rampant in previous few years. That brought down the pace of credit creation and the growth of debt quite significantly. The shadow banking sector, for example, shrunk by about 20 percentage points of GDP between about 2017 and 2019. Part of that was risked being brought back on balance sheet. That probably it was just risk being cut out altogether. So there were two and a half years roughly of relative stabilization of debt to GDP, but since the end of last year and certainly during the first half of 2020, it's gone, if it's not a moonshot, then it's risen again quite rapidly. If you look at the broadest measures of aggregate financing, as they call it in China, to May the rate of growth over the last six months was about 14 percent per annum, over the last six months about 18 percent per annum. You're talking about credit growing high double digit number again, and GDP growing at low single digit. So obviously the debt ratios are going to get worse. The funding problems that a lot of smaller banks, about 4,000 small banks in China, many of which have quite seriously stretched funding situations, very reliant on overnight funding, short-term funding. About six or seven banks had to be rescued or taken over last year. This year we've had at least four banks that have had a run on their deposits which have had to be stabilized by local authorities. I think the financial system is still vulnerable, although not necessarily Lehman inclined, because no major banks are going to be allowed to go bust. It will take a long time for China to get control over indebtedness and I think if it doesn't, then it's going to retard the re-balancing of the economy and it will continue to lean on growth in a very merry material way. Is not the only constraint, but it's one of the most urgent ones. >> As you were saying that I just thought about the Minsky moment because I think that you are very much responsible for making that term of a catchphrase for the Lehman crisis. As you were saying, you were talking about Lehman, I was thinking to myself about contingent liabilities. That is, is that one of the reasons that Lehman happened is it because the United States decided actually Lehman is not a contingent liability of the United States government, wouldn't let it fail. Then we saw what the consequences were. How much of what's going on in these banks that you were talking about and also with regard to private debt in China, would you consider to be contingent liabilities of the Chinese central government? >> Well, you could say the entire banking system is a contingent liability because early module with banks stayed out. So in that sense to the extent that the government or local governments are called upon to rescue banks, take home their liabilities as part of a module, basically hive off some of the assets into so-called asset management companies which are also state agencies. The whole thing is a contingent liability. Obviously because of the accounting regulations which the Chinese government is in control of, they could of course, they can extend and pretend in ever green loans in liabilities for quite a long time. But sooner or later, I think one of the arch proponents and gurus of the Chinese financial system is economists and I'm sure everybody's heard of called Michael Pettis who teaches at Peking University. He always says, "Somebody always has to pay for debts you can't just [inaudible] exist." So whether the government's balance sheet deteriorates as a consequence of this and taxes have to go up in the medium term or whether we get just extended period of financial repression and low interest rates for households or corporations basically have to end up shouldering some of the burden of adjustment. Eventually somebody pays for it and it's a constraints on the capacity of the economy to grow. I know it's very fashionable to look at inflation anywhere, but I'm one of the band of brothers and sisters really that I think that we may be on the cusp of when I say a new dawn of inflation, I don't want to be overly alarmist, but monetary financing plus supply checkpoints, a good recipe for a different kind of inflation environment in the next 10 years. So it could be that in China too, that this comes about as well. >> As you were saying that I was thinking to myself, that corollary what you're saying is basically growth has to slow down over time. If they want to get this situation under control from a debt perspective and there's contingent liabilities and you socialize the losses however you do it as Michael Pettis would say, then that means growth slows. If you look at 2008-2010, the United States and the rest of the world was very much dependent on Chinese growth to move forward. So if Chinese growth is slowing down and we have a pandemic that's happening right now amidst what I would say is aggressive monetary stimulus, where does that leave the rest of the world in terms of where it's going to get its growth from? >> Well I was being slightly skeptical about this view that it's one of those things, it's become a little bit like after the night, the sun shines. So we know that night follows day, day follows night and the consensus' grown up that we will become dependent on Chinese growth. But actually, if you think about China that has for years been running current account surpluses, by definition, that dependence, China may have accounted for numerically a very high proportion of global growth. But to the extent that it runs current account surpluses rather than deficits, it's actually not a huge contributor to the dynamism of growth in the rest of the world. In that sense America's current account deficits actually do more because other countries have the opportunity to import or to export more than they import. That may be quibbling a little bit, but yes, I think the point is that if you've been a commodity producer, if you are an Australian coal producer or Chilean copper producer, or if you happen to be the sharp end of supplying the Chinese economy with badly needed products, raw materials or intermediate goods, or capital goods, then if you're now looking at a China that's going to grow it, should we say, over the next 10 years by three or four percent per annum rather than six or seven percent, that's a very different environment. The same goes for the supply chain operations in China where a lot of China's inputs of semi manufacturers that are assembled in China then re-exported. Basically will be affected by just the lower tone of growth in the world. We can already see this in world trade situation. So for 35 years, world trade grew twice as fast as GDP up until about 2008. Then from 2008 until the pandemic it was more or less in line with GDP. Now we've got a situation where it's not just the world trade is under pressure from economic growth and lower productivity, but also because trade restrictions, trade war, who knows where this is going once phase one is out of the way and so on. So these things will make for a much more constrained commercial environment. I mean, in a way, it makes more appealing the idea about regional trade associations, free trade associations like this succession to TPP, for example, which interestingly enough recently [inaudible] Li Ka Shing basically said that it might be an interesting idea for China to inquire about joining the CPTPP, which would be rather what it would be interesting. I think it's very unlikely. I think the Japanese, Indians and Australians would have great reservations about that. But the fact is that I think it should give us all cause to think about whether this bilateral trade, Milwaukee is really worth the candle. It's actually counterproductive I think in terms of global welfare. >> The last thing I was going to ask you about because I've given short shrift to the domestic economy, as you were saying that I was thinking about jobs. If trade is going to go down, obviously, and the Chinese are thinking about jobs in the future, you are saying that it's all about jobs in terms of where they are coming. What are the Chinese thinking in terms of Five-Year Plans, both in terms of jobs and in terms of trade, and the political fight with the United States, what's the shift in terms of where their emphasis is going to be going forward, given the political dynamics, the trade dynamics, and the growth dynamics? >> Good question to ask, especially in 2020, because the old Five-Year Plan, which was from 2016-2020, obviously is over now and the new one will be drafted in this year. Probably I would say if sometime after the summer, summer fall, sometime around then, we may see the first drafts of the 14th Five-Year Plan, which will take us up to 2025. Now, we already know a little bit about how China thinks about its future. So many people would remember there were used to be a lot of rhetoric about a strategy called Made in China 2025, which interestingly enough, has not featured in any official rhetoric or newspaper that I've seen or read in China, ever since the trade war began. I think because Beijing knows that it's like a red rank to an American bull to talk about Made in China 2025. But for those who don't know or don't remember, Made in China 2025 basically list 10 sectors in which China wants advanced technology sectors, including electric vehicles and quantum computing, and semiconductors and goodness as what else, in which Chinese companies, national champions should have 70 percent market share. Yeah. That policy came out in 2015. Then two or three years later when the Chinese got a little bit spooked by, I forget his name now, but he was the guy that basically beat the Computer Go. I think he was a South Korean champion or something. They basically made AI. They joined AI to the MIC 25. So they want to be a world leader or primary leader in AI as well. So we know that probably the next Five-Year Plan will make a huge song and dance about advanced technologies, about artificial intelligence, about 5G telecommunications, green energy, they care about. I mean, it's a little bit equivocal to be honest. You know, China's often hailed as being the champion of climate change, policies and green energy. But actually they build a lot of coal-fire power stations and they build road countries. When it suits them at home, they'll boost coal production as they have done this year in order to basically meet targets and so on. So yeah, it's a mixed mocks really. But they do care about it. They know that it's a very sensitive thing for Chinese citizens. So we should expect to see more about that as well. Yeah, and my guess is that the 14th Five-Year Plan will probably, whether it says so in so many words or not, I don't really know, but I'm sure that the emphasis on policies of self-reliance will be quite strong, including for a particular semiconductors. I mean, semiconductors is like the oil of the 21st century. I mean, you can't do anything in technology without having sophisticated high-end semiconductor capacity, which China has had a policy about for like 20 years. But they still haven't really made as much progress as I think they hoped they would have done and are still reliant for about 40 or 45 percent of their value semiconductor imports from American, Korean, Taiwanese companies. So whether they can break that logjam in the next five years. Different science and tech people have different views about, but they'd been trying for 15 years or so and hasn't really worked for them properly yet. Some people think it might still be a struggle, but that's the kind of thing we should expect to see. We can do it ourselves. We don't need to rely on the Americans. >> That makes a lot of sense. In here, I think that the interview cannot be over without mentioning Liverpool and the 30-year reign of no championships. I know you're a big Liverpool supporter, what are your thoughts on you're going globe and getting the championship back? >> Well, it happened under the weirdest of circumstances because we actually got the title when your team Chelsea beat the reigning champions, Manchester City. So we got the title without the ball, but Liverpool did fantastic. They were just light years ahead of Manchester City, the next team in the league this year. With the pandemic and no crowds at soccer stadiums, it's kind of a strange and nobody could really get together to celebrate in a way that teams do. But and fans do. But it's been great and so I hope we'll do it again next year. >> Well, congratulations to you. We will hopefully challenge you next year. I think it'll be an exciting year. Chelsea, the Chi habits is someone that we're thinking about picking up. We need some defense. But I think that will be looking good on the Lampard next year. I could talk to you all day about soccer, but I really appreciate your thoughts on China and I hope to talk to you again very soon, George. >> It's George, yeah. >> Hey, there. Since you got to the end, I'm guessing you like the video and that's probably because we don't just turn on a camera and film. We work really hard on getting the narrative flow just right. That's why many finance companies are actually now hiring Real Vision to make videos for them. One of our recent client videos just hit a 100,000 organic views on YouTube and there were no kittens in site. So if you want to find out how Real Vision can make a video for your company, just email us at customvideo@realvision.com.