JUDGE ANDREW NAPOLITANO.
WE KICK OFF WITH THE U.S./CHINA
RELATIONS.
WE'VE GOT TRADE TALKS HAPPENING
THIS WEDNESDAY BETWEEN THE TWO
COUNTRIES, SET TO HAPPEN ON THE
31st, RESUMING THIS WEEK,
COMING AFTER CHINA ANNOUNCED
LAST IT
LAST WT
LAST WEEK IT WILL START GRANTING
MORE LICENSES TO U.S. BANKS IN
2019.
LAST WEEK I SPOKE TO FANG XI'S
HI ALONG WITH AXEL WEBER ABOUT
WHAT IT MEANS FOR CHINA BEING
MORE OPEN AND UP.
>> CHINA RIGHT NOW SEEMS TO
FOCUS ON MACRO DEMAND
MANAGEMENT, THE SUPPLY SIDE
POLICY HAS NOT BEEN STOPPED AND
WE CONTINUE TO PUSH FORWARD FOR
SUPPLY SIDE, WHAT WE CALL SUPPLY
SIDE STRUCTURAL REFORM.
I'LL GIVE YOU A FEW EXAMPLES.
OPEN UP THE FINAL SECTOR FOR
MORE INTERNATIONAL COMPETITION
IS ONE EXAMPLE.
>> WE WERE THE FIRST BANK
OFFERED A 51% STAKE IN A JOINT
VENTURE AND WE'VE EXECUTED THAT
IN DECEMBER AND WE NOW ARE THE
MAJORITY OWNER.
WE ALREADY HAD MANAGEMENT
CONTROL AND WE'RE NOW FREE TO
INCREASE THAT STAKE FURTHER.
I THINK EVENTUALLY AS WE INVEST
IN CHINA, AND SINCE OUR MAJOR
PARTNERS ARE THE MUNICIPALITIES
OF BEIJING AND SHANGHAI, THERE
IS LIKELY GOING TO BE SOME
DILUTION OF OUR PARTNERS.
THE MORE WE CAN CONNECT STOCK
MARKETS, THE MORE WE CAN BE
SUPER CONNECTORS TO BRING
INTERNATIONAL INVESTORS INTO THE
CHINESE ECONOMY AND HELP CHINESE
CHINESE ECONOMY AND HELP CHINESC
CHINESE ECONOMY AND HELP CHINESI
CHINESE ECONOMY AND HELP CHINESE
INVESTORS INVEST IN THE REST OF
THE WORLD.
MARIA: JOINING ME NOW IS GORDON
CHANG.
DO YOU THINK THEY'LL OPEN UP
MARKETS TO FOREIGNERS?
>> I THINK THEY HAVE TO.
THEY TALKED ABOUT THE SLOWING TO
6%.
IF YOU LOOK AT THE NUMBERS FOR
DECEMBER, LOOKS LIKE ACTUALLY
THE ECONOMY WENT INTO
CONTRACTION.
SO THEY HAVE NO CHOICE BUT TO
GET FOREIGNERS IN BECAUSE THEY
WOULD RATHER HAVE THE FOREIGNERS
BEAR THE COST OF CHINA'S
PROBLEMS RATHER THAN DOMESTIC
INSTITUTIONS.
THEY'VE DONE THIS BEFORE.
MARIA: IF WE WERE TO SEE A DEAL
WHERE CHINA BUYS MORE GOODS FROM
THE U.S., WE KNOW THAT THEY
DON'T WANT UNREST, THEY CAN'T
DEAL WITH PROTESTS THERE, THEY
WANT A DEAL WITH THE UNITED
STATES.
BUY MORE GOODS, PERHAPS OPENING
UP MARKETS TO FOREIGNERS, IS
THAT ENOUGH?
BECAUSE THAT DOESN'T ADDRESS THE
MORE IMPORTANT ISSUES I.P. THEFT
AND FORCED TRANSFER OF
TECHNOLOGY NOT TO MENTION
ESPIONAGE.
>> IT CERTAINLY DOESN'T.
THIS DEAL TO BUY MORE THAN A
TRILLION DOLLARS OF U.S. GOODS
OVER SIX YEARS, IT'S NOT GOING
TO SURVIVE A MOMENT OF A WTO
CHALLENGE ON NONDISCRIMINATION.
YOU HAVE 162 OTHER MEMBERS OF
THE WTO WHO CAN SAY I WANT THAT
SAME DEAL.
ALSO, A LOT OF PEOPLE ARE
STARTING TO SAY THAT YOU CHINA
INTERNALLY COULD NOT ACTUALLY GO
FORWARD ON A DEAL LIKE THAT
BECAUSE IT WOULD TURN THEIR
CURRENT ACCOUNT SURPLUS INTO A
VERY DEEP CURRENT ACCOUNT
DEFICIT WHICH THEY CAN'T AFFORD
RIGHT NOW.
AND THE MOST IMPORTANT THING IS
WHAT YOU POINT OUT, AND THAT IS,
LOOK, WE DO NOT WANT TO BECOME A
THIRD WORLD ECONOMY SELLING
PRIMARY PRODUCTS IN ORDER TO BUY
CHINESE SUPER COMPUTERS.
SO THIS IS IN MY VIEW A
NONSTARTER.
NOW, I AGREE WITH YOU, IT WILL
GET DONE SOME SORT OF DEAL BUT
THAT DEAL'S GOT TO FALL APART IF
FOR NO OTHER REASON THAN OTHER
COUNTRIES ARE GOING TO COMPLAIN.
MARIA: WHAT'S CONCERNING TO ME
IS WHAT CHINA HAS BEEN DOING IN
TERMS OF ESPIONAGE.
YOU I HAD DEVIN NUNES ON THE
PROGRAM YESTERDAY.
THEY'VE BEEN DOING AN
INVESTIGATION INTO CHINA.
AND WHAT THEY FOUND IS CHINA IS
BASICALLY SAYING TO SEVERAL
COUNTRIES, AFRICAN COUNTRIES,
THEY DID IT WITH POLAND,
EUROPEAN COUNTRIES AS WELL,
LOOK, WE WILL BUILD YOUR TELECOM
INFRASTRUCTURE SYSTEM.
NO PROBLEM.
WE'LL BUILD THE WHOLE SYSTEM AND
IT'S FREE.
NOTHING IS FREE.
WE KNOW NOW THAT THEY HAVE BEEN
TAPPING INTO INTELLIGENCE AND
PERHAPS THE U.S. AND POLISH
OFFICIALS ARE WORRIED THEY'RE
ACTUALLY TAPPING INTO NATIONAL
SECURITY CONVERSATIONS.
>> THE HEADQUARTERS WAS BUILT
FOR THE AFRICAN UNION.
THEY FOUND OUT THAT EVERY NIGHT
ALL THE DATA FROM THE COMPUTERS
AT THE HEADQUARTERS WERE BEING
TRANSFERRED TO CHINA.
THIS IS SOMETHING WHICH IS NOT
THEORETICAL.
THEY'VE BEEN DOING THIS ALL OVER
THE PLACE.
CLEARLY, THEY'RE GOING TO DO
THIS TO POLAND, THEY'RE GOING TO
DO IT TO ANY COUNTRY THAT HAS
HUAWEI, 5G EQUIPMENT.
THAT'S WHY THE CONSORTIUM, FOUR
OF THE FIVE I'S SAID NO 5G
EQUIPMENT FROM HUAWEI.
MARIA: HERE'S DEVIN NUNES
YESTERDAY ON SUNDAY MORNING
FUTURES.
CHINA MIGHT HAVE ACCESSED ALLIED
INTELLIGENCE, SHARED WITH POLAND
AND PASSED IT ON TO MOSCOW.
>> WHAT THE CHINESE ARE DOING,
THEY HAVE COMPANIES THAT ARE
ESSENTIALLY OWNED BY THE PARTY,
THE COMMUNIST PARTY.
AND ESSENTIALLY THIS IS A
DICTATORSHIP.
THERE'S VERY FEW PEOPLE THAT OWN
THESE COMPANIES.
THEY WEAPONIZE THEM.
SO WHEN ALL OVER THE WORLD YOU
HAVE CHINESE TECHNOLOGY
SPECIFICALLY AS IT RELATES TO
INFRASTRUCTURE ON COMMUNICATIONS
INFRASTRUCTURE.
THEY'LL GO IN AND THEY BEAT
EVERY OTHER P COMPANY AROUND THE
WORLD AND THEY'VE DRIVEN A LOT
OF COMPANIES OUT OF BUSINESS
BECAUSE THEY COME IN AND
UNDERCUT.
THEY WANT TO HAVE CONTROL OVER
ALL THE COM SYSTEMS, THE
COMMUNICATIONS SYSTEMS ALL OVER
THE GLOBE.
MARIA: I THINK IT'S GETTING
SCARIER.
IT'S NOT GETTING EASIER WITH
CHINA.
>> NO.
YOU KNOW, WITH 5G, THIS IS GOING
TO GET DATA FROM EVERYTHING IN
YOUR HOUSEHOLD.
EVERYTHING AT WORK.
SO THIS IS GOING TO BE CHINA
KNOWING ALMOST EVERYTHING IN THE
UNITED STATES, IF YOU HAD HUAWEI
EQUIPMENT IN OUR BACKBONE.
AND THERE IS SOME HUAWEI
EQUIPMENT ESPECIALLY IN RURAL
AREAS BECAUSE HUAWEI UNDERCUTS
AND THEY CAN UNDERCUT BECAUSE
THEY STOLE CISCO TECHNOLOGY,
THEY'RE CONTINUING TO STEAL
TECHNOLOGY MANY WHEN YOU DON'T
HAVE R&D COSTS EXCEPT FOR THE
COST OF THEFT, THEN OF COURSE
YOU CAN UNDERCUT EVERY OTHER
COMPANY IN THE WORLD.
MARIA: WHAT ABOUT THIS NEW
WORRY ABOUT I.P. THEFT THAT
PEOPLE FEEL THAT THEY CAN'T
EVEN-THERE'S A CULTURAL THING,
THEY'RE NOT GOING TO CHANGE.
I MEAN, EVEN IN DAVOS, THE VICE
CHAIRMAN BASICALLY SUGGESTED
THAT THERE'S NOTHING ANYBODY CAN
DO AT THIS POINT IN TERMS OF
I.P. THEFT.
WILL THE U.S. BE ABLE TO MOVE
THE NEEDLE ON THAT?
>> IF WE HAVE POLITICAL WILL.
THE CHINESE ECONOMY IS WEAK AND
PRESIDENT TRUMP WITH TARIFFS AND
OTHER MEASURES CAN ACTUALLY
FORCE THE CHINESE INTO A POINT
WHERE THEY ACTUALLY HAVE TO STOP
THIS.
UNTIL TRUMP IS WILLING TO USE
EXTRAORDINARY MEASURES, THE
CHINESE ARE GOING TO CONTINUE TO
STEAL.
WHETHER IT'S CULTURAL OR NOT IS
A VERY BIG ARGUMENT.
WHEN YOU HAVE THE MADE IN CHINA
2025 INITIATIVE OF PRESIDENT XI
JINPING TO DOMINATE 11
TECHNOLOGY SECTORS, OF COURSE
THEY'RE GOING TO STEAL BASE THEY
CAN'T MEET THOSE TIME OBJECTIVES
WITHOUT THEFT FROM THE UNITED
STATES.
MARIA: FORECAST WHAT YOU'RE
EXPECTING ON WEDNESDAY WITH
THESE UPCOMING TALKS.
>> A LOT OF NICE LANGUAGE OUT OF
LARRY KUDLOW AND STEVE MNUCHIN.
I THINK THEY WILL SIGNAL THERE
WILL BE A DEAL TO BUY AND A LOT
OF OTHER PEOPLE AROUND THE WORLD
ARE GOING TO SAY WHAT ABOUT ME.
THERE IS THE WTO RULES.
THIS DEAL THAT WE COME TO IS
GOING TO FALL APART ALMOST
IMMEDIATELY.
MARIA: YOU'RE NOT EXPECTING
SUCCESS HERE?
>> SUCCESS IN THE LONG-TERM FOR
THE UNITED STATES, YES, BUT IN
THE SHORT-TERM, THIS DEAL IS
GOING TO BE UNSUSTAINABLE
BECAUSE THE CHINESE CANNOT
ACTUALLY IMPLEMENT IT.
THE WTO MEMBERS WILL CRITICIZE
IT AND IT'S NOT GOING TO DO WHAT
THE UNITED STATES NEEDS TO DO