WE KICK IT OFF WITH THE NEWS OUT
OF HONG KONG.
CARRIE LAMB WITHDREW THE
EXTRADITION BILL FORMALLY.
THAT BILL WAS THE CATALYST THAT
SPARKED THE PROTESTS THAT TOOK
OVER THE CITY.
IT ALLOWED HONG KONG CITIZENS TO
BE SENT TO MAINLAND CHINA FOR
TRIALS.
THE HANG SENG SOARED ON THE
NEWS, UP 4%, THE OTHERS ALSO IN
ASIA.
JOINING US NOW IS THE DIRECTOR
FOR CHINESE STRATEGY, MICHAEL
PILLSBURY.
THANK YOU FOR JOINING ME THIS
MORNING.
YOUR REACTION TO THIS NEWS THAT
SHE IS FORMALLY WITH DRAWING
THIS BILL.
>> IT'S VERY GOOD NEWS.
SHE WOULDN'T DO IT WITHOUT
PERMISSION FROM XI-JINPING IN
BEIJING.
THE OTHER DEMANDS, THE
DEMONSTRATORS HAVE MADE, THEY
WANT A POLICE INVESTIGATION FOR
BRUTALITY, THEY WANT SOME OF
THEIR COMRADES RELEASED FROM
JAIL, AND THE BIG DEMAND IS
UNIVERSAL ELECTIONS THAT CHINA
PROMISED IN 1980 AND PROMISED
EARLY IN 1984 AS WELL.
SO
SHE HASN'T MADE ENOUGH
CONCESSIONS BUT THIS IS A REAL
BREAKTHROUGH AND BODES WELL FOR
THE TRADE TALKS.
IF XI-JINPING APPROVES THIS KIND
OF CONCESSION FOR HONG KONG,
MAYBE HE'LL APPROVE THE
DELEGATION COMING HERE IN P
DECEMBER AND GETTING BACK TO
WHERE THE BE
WHERE THE PE
WHERE THE PRESIDENT WAS IN APRIL
WITH 90% OF THE DEAL DONE.
MARIA: SO FAR WE HAVE NO
DETAILS ON ANY MEETING BETWEEN
XI-JINPING AND PRESIDENT TRUMP
IN SEPTEMBER.
>> WELL, IF YOU READ THE
PRESIDENT'S TWEETS CLOSELY, FROM
YESTERDAY, HE'S SAYING THEY'RE
PROBABLY GOING TO TRY TO WAIT
HIM OUT 16 MONTHS AND HOPE FOR A
DEMOCRAT TO WIN.
THAT'S WHAT THE CHINESE TELL ME.
THE T
THE PAT HAS
THEPRAT HAS
THEPRES HAS
THEPRESIDAS
THEPRESIDENT HAS TOLD ME I'M WRO
THEPRESIDENT HAS TOLD ME I'M WRG
THEPRESIDENT HAS TOLD ME I'M WR.
THEIR ANALYSTS SEEM TO BELIEVE A
DEMOCRAT WILL WIN SO THEY'LL GET
A BETTER DEAL.
MARIA: WHAT DO YOU THINK THE
DEAL SHOULD LOOK LIKE?
AT THIS POINT THE PRESIDENT
OUTLINED THE BIG TICKET ITEMS.
HE ISSUED A STARK WARNING FOR
CHINA, VOWING TO RAMP UP
PRESSURE IF HE WINS THE SECOND
TERM.
THAT DELAYING NEGOTIATIONS WOULD
END IN, QUOTE, A MUCH TOUGHER
DEAL.
WE KNOW THE BIG TICKET ITEMS
WERE THE THEFT OF IP, THE FORCED
TRANSFER OF TECHNOLOGY.
CAN THE PRESIDENT DO A DEAL
WITHOUT THAT?
>> NO.
BUT THOSE AREN'T THE REALLY
BIGGEST ITEMS.
THE BIGGEST ITEMS ARE THE LEGAL
ENFORCEMENT SYSTEM, KIND OF HE
THREE-LAYER SYSTEM THAT BOD BOB
LIGHTHIZER OUTLINED TO THE
CONGRESS A FEW MONTHS AGO.
IF THERE'S MISCONDUCT AGAIN
AFTER THE DEAL IS SIGNED, THERE
WILL BE A SYSTEM BY WHICH
COMPANIES WHO ENGAGE IN
INTELLECTUAL OR GOVERNMENT
AGENCIES CAN BE PUNISHED AND
THERE WILL BE NO RETALIATION
FROM CHINA FOR THAT PUNISHMENT.
THAT'S A BIG PART OF THE DEAL,
MAKE IT LEGALLY BINDING.
THAT'S THE PROBLEM IN HONG KONG,
MARIA.
THE BRITISH THOUGHT THEY HAD A
TREATY WITH CHINA BACK IN 1984.
THE CHINESE UNDER OBAMA A
ANNOUNCED NO, THIS TREATY NO
LONGER IS IN EFFECT.
IT'S JUST A HISTORICAL DOCUMENT.
NOBODY CALLED THEM ON IT.
SO THAT'S KIND -- SO IF THAT'S
THE KIND OF THING THAT HAPPENS
WITH THE TRADE TALKS IT MEANS
WE'LL HAVE A PIECE OF PAPER THAT
CAN'T BE ENFORCED AND PRESIDENT
TRUMP WILL BE UNDER TREMENDOUS
CRITICISM FROM THE RIGHT AND THE
LEFT.
WHAT I'VE BEEN TALKING ABOUT IS
THE IDEA OF ESCALATION, MAYBE WE
NEED TO DO MORE TO GET THE
ATTENTION OF THE CHINESE.
THEY'RE NOT FEELING THE PAIN
YET.
THIS IS SOMETHING THAT'S
OBJECTIVE VERSUS SUBJECTIVE.
OBJECTIVELY, YOU AND YOUR GUESTS
CAN ALL TALK ABOUT OH, MY GOD,
CHINA'S FEELING SUCH PAIN, LOOK
AT THESE INDIES SEES.
BUT FROM WHAT I HEAR FROM THE
CHINESE, THIS IS NOTHING TO THEM
AND THEY'RE TALKING NOW ABOUT
GETTING READY FOR A 100 YEAR
MARATHON.
THEY'RE NOT FEELING ANY.
PAIN.
THERE ARE THINGS THE PRESIDENT
CAN DO THAT WILL REALLY MAKE
THEM FEEL PAIN.
MARIA: THIS IS THE 70th
ANNIVERSARY OF COMMUNIST CHINA
COMING UP, OCTOBER 1.
THERE'S HUAWEI PAIN.
THE CHINESE TECHNOLOGY GIANT
HUAWEI HAS FELT THE PAIN OF THE
BAN.
NOW IT'S ACCUSING THE U.S. OF
COMMITTING CYBER ATTACKS AND
COERCING EMPLOYEES TO GATHER
INFORMATION ON THE COMPANY.
WHEN YOU LOOK AT THE HUAWEI
SITUATION, THAT HAS BEEN A REAL
TIT-FOR-TAT AND PEOPLE FEEL THAT
THAT BAN, THAT LIFT, THE
BLACKLIST WAS ACTUALLY VERY
IMPACTFUL.
>> THE PRESIDENT'S ON THE RIGHT
TRACK OBVIOUSLY WITH HUAWEI AND
THE BLACKLIST OR THE ENTITY
LIST.
HOWEVER, HUAWEI IS ONE OF 100
GIANT CHINESE COMPANIES THAT
ENGAGE IN THE SAME KIND OF
WRONG-DOING.
TO GET AFTER ALL 100 OF THEM,
THERE'S A WAY TO DO THAT.
MANY OF THEM ARE LISTED ON THE
NEW YORK STOCK EXCHANGE AND THEY
HAVE A WAIVER FROM THE S.E.C.
THAT GOES BACK MANY YEARS.
THEY DON'T HAVE TO UNDERGO
AUDITING.
CHINA SAYS OUR LARGE COMPANIES
INTERNAL AFFAIRS ARE STATE
SECRETS, WE'RE NOT GOING OF TO
LET YOU AUDIT THEM.
THIS IS SHOCKING FOR THE AVERAGE
INVESTORS THAT SO MANY CHINESE
COMPANIES ARE ON WALL STREET
WITHOUT BEING AUDITED.
A STROKE OF THE PEN AND THAT
WAIVER WILL BE ENDED.
THEN ALL THESE COMPANIES HAVE TO
BE AUDITED.
THERE WILL OBVIOUSLY BE TROUBLE
FOUND IN THEIR BOOKS.
YOU'RE TALKING ABOUT A LARGE
SLIDE IN STOCK MARKET LISTING
PRICES FOR CHINA.
THIS IS ONE OF MANY THINGS THAT
COULD BE DONE.
THERE'S A SET OF STEPS THE
PRESIDENT COULD TAKE.
THE CHINESE ARE BETTING HE WILL
NOT DO THIS.
MARIA: THIS IS A REALLY
IMPORTANT POINT THAT YOU'RE
MAKING.
IF THE PRESIDENT TAKES THAT
EXTRA STEP TO TRY TO LOOK AT
ZERO IN ON THOSE COMPANIES THAT
ACTUALLY TRADE IN THE UNITED
STATES OR EVEN PUT ANY LIMIT ON
THE LISTINGS, CHINESE COMPANIES
GOING PUBLIC IN THE NEW YORK
STOCK EXCHANGE OR NASDAQ, THAT
WOULD BE A BIG HIT TO CHINA.
>> WE'VE
TH WE'VE
THEYE'VE
THEY'VVE
THEY'VEE
.>EY'VEE
.>>Y'VEE
.>> TVEE
.>> THEE
.>> THEY'VE GOT TO MEET THE SAME
ACCOUNTING STANDARDS.
MARIA: YOU EXPECT YOU'RE A
PUBLIC COMPANY, YOU HAVE TO MEET
THE ACCOUNTING STANDARDS.
>> SOME OF THESE COMPANIES, I
THINK 11 OR 12 OF THEM, ARE
STATE-OWNED ENTERPRISES.
THE VERY SO-CALLED NATIONAL
CHAMPIONS THAT HAVE BEEN DOING
THE TECHNOLOGY THEFT.
MARIA: THAT'S UNBELIEVABLE.
HUAWEI, ISN'T HUAWEI ORIGINALLY
NORTEST L NETWORKS.
THE CRUX OF THEIR BUSINESS IS
FROM NORTEL.
>> THEY'RE TECHNOLOGY THIEVES
FROM WAY BACK.
THEY ALSO HAD HELP FROM THE
GOVERNMENT, GETTING THEIR MARKET
SHARE.
THEY'RE THE NUMBER ONE
TELECOMMUNICATIONS COMPANY IN
THE WORLD.
THE FOR
THE ROR
THE REASON FOR THAT IS HOW MUCH
WE'VE HELPED THEM.
MARIA: MY TAKE-AWAY IS THAT
BEIJING KEEPS BREAKING THEIR
PROMISES.
THEY BROKE THEIR PROMISES TO
HONG KONG AND THE WTO.
WHY WOULDN'T THEY BREAK THEIR
PROMISES TO THE UNITED STATES
AND YOU'RE SAYING YEAH, THAT'S
WHY THEY RENEGED BECAUSE THEY
WOULDN'T AGREE TO THE
ENFORCEMENT THE U.S. WANTED TO
PUT IN PLACE.
>> IT'S NOT OFFICIAL, MARIA.
BUT THREE WHITE HOUSE SOURCES
TOLD REUTERS THAT THE CHINESE
RENEGING WAS REMOVING THE PARTS
OF THE AGREEMENT THAT HAD TO DO
WITH LEGALLY BINDING
ENFORCEMENT.
THAT'S THE CRUX OF THE MATTER.
MARIA: UNBELIEVABLE GL YOU
MARIA: UNBELIEVABLE.GL YOU
>> YOU KNOW THE CHINESE DENY
EVERYTHING.
MARIA: THEY WON'T EVEN ADMIT
IT.
THE EXTRADITION BILL FORMALLY
WITHDRAWN, YOU THINK IT'S GOOD
NEWS.
WHAT ELSE SHOULD WE LOOK AT IN
TERMS OF THE NEXT CATALYST.
>> THE NEXT CATALYST IS THE
DELEGATION COMING OR NOT COMING
TO WASHINGTON FOR ROUND 13 AND
WHAT THEY BRING WITH THEM.
IF THEY SAY OKAY, WE'LL LET SOME
OF THE LEGALLY BINDING LANGUAGE
GO BACK IN, THAT'S REALLY GOOD
NEWS.
MARIA: WE'LL LEAVE IT THERE.
>> THE OTHER BIG NEWS IS WHETHER
ESCALATION IS NEEDED OR NOT.
MARIA: ESCALATION.
>> THE PRESIDENT HAS A RANGE OF
OPTIONS HE CAN CHOOSE FROM.
HE COULD RAISE THE TARIFFS
HIGHER.
TARIFFS CAN GO TO 50% OR EVEN
100%.
MARIA: THAT'S GOING TO IMPACT
THE U.S. ECONOMY.
>> YOU'RE TELLING ME.
BUT DON'T FORGET THE PRESIDENT'S
POINT.
THIS SHOULD HAVE BEEN DONE 30
YEARS AGO.
MARIA: MICHAEL, IT'S GREAT TO