let's get right to china expert and the
great u.s china tech war author gordon
chang first of all
these these drills in the south china
sea is is china just testing us or are
they actually preparing for an invasion
of taiwan well both and clearly this is
getting ominous because the wall street
journal yesterday reported that china is
trying to sanction proof its senior
officials now they wouldn't do that
unless they were thinking they were
going to do something which we would
impose sanctions on them like invading
taiwan or some other nation so the
chinese military is always constantly
trying to improve itself to get itself
more ready and clearly you know they're
thinking about invading somebody now
they don't have an endless supply of
money particularly after these latest
lockdowns that they've had in shanghai
and beijing and elsewhere in the country
which have really slowed the economy
down hasn't it i mean they're they're in
a very tough situation of course we can
we can never trust their figures the
figures that come out of the government
because they're they're all cooked but
are they having economic troubles right
now april they had year to year
contraction maybe march as well um this
economy in china is going downhill very
fast you know we we see for instance
retail sales down 11.1 percent year on
year in april and that's a lot but when
you start looking at the property
numbers you know down 29 down 31 on
sales and also on new construction
starts this is the heart of the chinese
economy it counts for somewhere between
25 and 30 percent of gdp about 70 of
chinese wealth are invested in
department units this is something that
china can't deal with because they've
got a debt crisis and they're still
pulling strings in north korea by the
way we just uh heard that there are
suspicions that there may be an another
nuclear test from north korea or some
other provocation from them
spurred on by china right absolutely
because biden is trying to present his
trip as sort of rallying the region
against china well what is china doing
it's saying let's change the nature of
the conversation by having north korea
doing something provocative either a
missile launch or a nuke detonation so
basically we're going to talk about
north korea and china goes sort of
scot-free while biden is in south korea
and japan
another group that scot-free are the
corporate quizlings i would call them
from the united states that that are
going back to uh
providing cover for china and i'm
thinking in particular the nba the nba
is going back the basketball uh
association's going back what's what's
the latest on that well their playoffs
are being aired in china for the first
time and we're seeing you know they've
been off air for three years in china um
the nba owners they they a lot of the
value of their franchises relates to
their business in china and also they've
got investments in china and espn has
done this enormous investigation of it
and it really shows you how china is
able to own a critical sports uh in the
united states
and this is going to be it's sector by
sector as well because we've had all of
these reports david about how china is
so important to defense contractors or
the consulting industry this is really
serious for us by the way thank god for
in his freedom uh his voice speaks
loudly particularly now finally i got
i'm i'm hitting all the sensitive areas
here the vatican and i'm i'm a catholic
so i i love the vatican but the fact is
is the vatican continues to play
footsies with the communist party of
china even as cardinal zen the great
cardinal zen in hong kong was arrested
recently now he's been let out maybe
some of that has to do with the vatican
but the vatican allows the communist
chinese party to the chinese communist
party to help them pick bishops for
goodness sakes in china so even even an
institution like the vatican is playing
footsies with the communist party there
yeah the vatican has this 2018 agreement
with china which was extended it's going
to come up for extension at the in
october this year and clearly it's only
been to the benefit of the communist
party not to the benefit of religion or
to the catholic church and then you have
as you say cardinal zen was detained in
hong kong under the national security
law he's 90 years old by the way that's
that's the sign of a real bully going
after a 90-year-old and and clearly you
know you had the vatican issue
statements which were milk toast at best
really disappointing and jimmy lye
what's the very latest on on jimmy lie
he's he's been in jail now for over a
year right right and and he's been hit
with another charge under the national
security law
he's going to be in jail for the rest of
his life unless the united states can
spring him free all right
stay with us for a second gordon i just
i just want to focus your attention to
the red on the screen again we started
the day with green on the screen as you
can see now uh the dow jones is at
354 points to the negative the nasdaq is
down as well s p is very close to bear
territory if it hasn't hit it already
have we hit bear territory yet yesterday
not quite uh but we are we are very
close to that level
3849 in the s p that's a loss of about
one and a third percent uh and the
nasdaq is close to a two percent loss uh
we are seeing losses on all of the uh
the areas of the stocks that have been
hit harder particularly uh the nasdaq as
usual we're we're getting close to that
ten thousand level i'm just wondering
gordon as as the economy
seems to be slipping into a recession
and we're going into bear territory for
for a lot of our our indexes here do you
think that that china can take advantage
of this moment for the united states or
are they in enough economic trouble
themselves so they're worried about
their own future because their their
economic future is very much intertwined
with ours yeah beijing is hysterically
worried and the reason is fed raising
rates
that's causing outflows of capital and
seven percent drop in the remnb so their
number one
problem or at least their potential
number one problem all the time is
capital outflow they've been able to
manage it for the last three or four
years but now they're starting to lose
control of that again is more and more
money that is to say to put it in in
plain language uh chinese people that
have cash are getting rid they're
they're they're getting it for dollars
they're they're trying to move it out of
the country they've tried to hold that
back but holding out holding back
capital flows is almost an impossible
task for a government yes and even
though china has strict capital controls
and in effect has controls on the
current account although they're not
formal but they are informally enforced
the problem here is that all this money
is coming out of china because of the
difference in rates you know why
wouldn't you invest in u.s debt when
it's paid so much more than china which
is a much much greater risk we we often
bang on on the fed for not doing enough
but they're doing a lot more than what a
lot of countries are doing around the
world and that's why the dollar is
strengthening as a result and that's why
the the chinese currency is getting
weaker and that's why the flows are
coming into the u.s dollar and it's not
only the chinese currency getting weaker
it's dropping uncontrollably at times
and that means that the chinese central
bank is losing the ability to manage the
situation and that's why you're having
so much pessimism as much as a reason
for pessimism in the u.s and i can
understand it the problem in china is so
much worse they don't have control over
it they don't have an independent
monetary policy they're tied to the u.s
dollar and whatever the fed does for u.s
purposes you know it really hurts china
and china can't do anything about it but
china is now seeing the president of the
united states in in their territory in
asia right now uh they they must look at
his numbers his poll numbers and and be
happy to see because they're happy when
u.s leadership is down i want to stand
behind our leaders when they're they're
in in enemy territory and i would call
that enemy territory right now at least
adversarial territory
how much are they putting their hopes on
biden making more mistakes
i think that that's really their primary
strategy right now unfortunately and
because they saw the chaos and the
withdrawal from afghanistan they saw the
failure to deter russia on ukraine and
they're probably thinking that there
would be a failure to deter china should
it go after one of its neighbors like
taiwan and as well they saw yes they saw
the sanctions on russia but they saw
that those sanctions were not complete
and the chinese actually believed that
no one would dare to impose sanctions on
the chinese because the chinese believe
well we're so powerful we're so
important and we're chinese so you can't
touch us i mean that's wrong i think
that they misperced the situation but
the point is not whether they're right
or wrong in assessing the situation
what's important is their mentality are
they are they going to be at all
successful getting rid of the trump
sanctions they they want to get rid of
it biden has leaned in that direction
still not sure how it will all end up
what do you think yeah i think that and
and i'm being i don't know but i'm being
very pessimistic and i'm thinking that
the buy demonstration will indeed take
those tariffs off gordon thank you very
much for being here appreciate it