HINTED AT THE POSSIBILITY.
MARIA.
MARIA: GERRI WILLIS.
I WANT TO TURN TO CHIP CRISIS.
SEMICONDUCTOR SHORTAGE MAY CAUSE
THE AUTO INDUSTRY MORE THAN
PREVIOUSLY EXPECTED.
IT IS NOW EXPECTED TO COST THE
SECTOR $110 BILLION IN REVENUE
THIS YEAR.
THAT’S UP 81% FROM THE FIRM’S
INITIAL ESTIMATE OF 60 BILLION
BACK IN LATE JANUARY, JOINING ME
RIGHT NOW THE CHINA FACEBOOK CEO
LELAND MILLER, LELAND, THANK YOU
VERY MUCH FOR BEING HERE.
GREAT TO SEE YOU THIS MORNING.
I WANT TO GET YOUR TAKE ON CHIP
SHORTAGE AND CHINA REALLY WEIGHS
IN HERE.
>> WELL, LOOK, SEMICONDUCTORS,
CHIPS, THAT’S THE POLITICAL
ISSUE OF 2021, NO QUESTION.
WHAT HAPPENS A LOT IF YOU HAVE A
CON NATION OF TWO MAJOR ISSUES.
YOU HAVE THE GLOBAL
SEMICONDUCTOR SHORTAGE WHICH IS
PUTTING A PINCH ON AUTOMAKERS
AND OTHER COMPANIES WHO BADLY
NEED MORE CHIPS AND THEN YOU
HAVE A QUESTION WHICH IS A
NATIONAL SECURITY QUESTION, ONLY
A FEW COMPANIES IN THE WORLD
MAKE.
ONLY A FEW COMPANIES, ONE IN
PARTICULAR, ONE IS 100 MILES
FROM CHINA S. THERE A POTENTIAL
VULNERABILITY IN U.S. SUPPLY
CHAIN FOR NOT HAVING MORE
U.S.-BASED, U.S.-PRODUCED CHIPS.
YOU HAVE THE ISSUES, SOME OF
THEM HAVE TO DO WITH CHINA AND
THE QUESTION IS HOW DO YOU SOLVE
THEM WITHOUT CONFUSING THE TWO
ISSUES.
MARIA: YEAH, I WANT TO TALK
ABOUT THE HEAVY HAND OF CHINA
AND THERE’S A NEW NOTE BY
CORNERSTONE MACRO DETAILING HOW
CHINA’S HEAVY HANDEDNESS
ESPECIALLY SECTORS IN CHIPS NOT
ONLY PUTTING PRESSURE ON CHINESE
COMPANIES BUT MULTINATIONAL
COMPANIES.
FOR EXAMPLE, THERE’S A HEAVY
HAND WEIGHING ON TECHNOLOGY, ON
FINANCIALS, SO MUCH SO THE
VANGUARD GROUP STAFF THAT WAS
DIAL INTOED THE VIDEO CALL THAT
NANCY LAZAR GAVE ON THIS
SUBJECT, THEY SAID
7 TRILLION-DOLLAR MONEY MANAGER
WAS ACTUALLY ABANDONING ITS PUSH
FOR A MUTUAL FUND LICENSE.
I THOUGHT THAT WAS REALLY
INTERESTING GIVEN THE FACT THAT
SO MANY FINANCIALS THINK THAT
THE CHINESE MARKET OF
1.4 BILLION PEOPLE IS A REAL
GROWTH STORY GIVEN THE CCP AND
ITS HEAVY HANDEDNESS ON THE
COMPANIES ACROSS THE WORLD.
YOU SEE VANGUARD PULLING BACK ON
ITS -- ON ITS DESIRE TO HAVE
THAT LICENSE.
WHAT’S YOUR TAKE?
>> WELL, LOOK FOR 15, 20 YEARS
WE HAVE BEEN HEARING ABOUT CHOW
CHINA IS GRADUALLY OPENING TO
FOREIGN COMPANIES AND THERE HAVE
BEEN HEADLINES IN THE LAST, YOU
KNOW, YEAR OR TWO ABOUT
FINANCIAL SERVICES AND CREDIT
CARD SERVICES OPENING UP INSIDE
CHINA AND ON THE MARGINS THAT’S
TRUE BUT WE HAVE TO KEEP IN MIND
IN THE U.S.-CHINA RELATIONSHIP,
THERE’S RELATIVELY LEVERAGE FROM
THE CHINA SIDE ON THE U.S. SIDE.
CHINESE CONTROLLED, CHINESE
OVERSIGHT OF U.S. OR WESTERN
COMPANIES IN THEIR ECONOMY.
EVEN IF THEY WANT TO OPEN UP A
LITTLE BIT MORE WHICH IS AN OPEN
QUESTION, THERE WILL ALWAYS BE
THE LEVERAGE POINT THAT THEY
NEED TO UTILIZE, THAT MEANS THAT
FOREIGN CORPORATIONS, U.S.
CORPORATIONS WILL ALWAYS HAVE --
BE UNDER THE THUMB OF BEIJING
WHEN THEY ARE OPERATING BECAUSE
THAT’S ONE OF BEIJING’S BEST
POLITICAL LEVERAGE POINTS IN
PUSHING BACK AGAINST THE UNITED
STATES.
MARIA: YEAH, LOOK, I’VE BEEN
REPORTING FOR A LITTLE WHILE
HERE ABOUT HOW THIS NEXT LEG OF
THE ECONOMIC WAR THAT THE U.S.
IS HAVING WITH CHINA WILL TAKE
PLACE IN CORPORATE AMERICA’S
BACKYARD BECAUSE LOOK AT THE
TREATMENT OF THE AUNT ANT GROUP,
CONSUMER LENDING DATA.
LATEST FRONT ON BEIJING’S
CRACK-DOWN ON JACK MA, THIS IS
FROM THE FINANCIAL TIMES.
INDEED, THE VOLUME OF CHINESE
CAPTURED DATA IS ALREADY HUGE.
IT’S EXPECTED TO EXPLODE BY
2025.
BEIJING’S HEAVY HAND REACH IF
FOR DATA IS EMBLEMATIC OF
SQUASHING POLICY.
THIS IS ALL OF THE FINANCIAL
TIMES WRITING THIS AND YOU ARE
GOING TO SEE THAT ON OTHER
COMPANIES AS WELL EVEN IF THEY
ARE NOT CHINESE.
SHOULDN’T U.S. CORPORATIONS TAKE
A LOOK AT WHAT HAS TAKEN PLACE
WITH JACK MA AND THE ANT GROUP
OF AN AN INDICATOR OF WHAT WILL
HAPPEN TO THEIR OWN ABILITY TO
CONTROL THEIR OWN BUSINESS IF THEY ARE BASED IN CHINA?
THEY ARE BASED IN CHINA?
>> SURE, I MEAN, LOOK, WE ADVISE
MULTINATIONALS AND IS THAT
EVERYTHING THAT HAPPENS WILL BE
SUBJECT OF THE WHIMS AND THE
BEST INTEREST OF THE PARTY AND
AS LONG AS THAT’S TRUE, YOU HAVE
TO UNDERSTAND THAT THIS IS NOT
JUST A MATTER OF WIN-WIN
CORPORATION.
IT’S LOOKING AT IT THROUGH THE
LENS OF THE PARTY AND THERE ARE
TIMES IN WHICH FOREIGN
CORPORATIONS ARE DOING WELL OR
-- OR BEATING OUT CHINESE
COMPANIES, WILL NOT BE IN THE
INTEREST OF THE PARTY.
THIS IS SOMETHING THAT YOU
CANNOT ESCAPE LOOKING THROUGH
THIS LENS WHEN YOU’RE DOING
BUSINESS OVER THERE.
MARIA: NO, YOU CAN’T.
AND I’M JUST WONDERING ALL OF
THE WOKE COMPANIES THAT LIKE TO
CRITICIZE AMERICA HOW THEY COME
TO THE DECISION TO OPERATE IN
CHINA GIVEN WHAT’S HAPPENED WITH
THE UIGHURS LOCKED UP.
MINORITIES LOCKED UP.
LISTEN TO WHAT THE MINISTRY SAID
ON THURSDAY, MEMBERS TO HAVE
ETHNIC MINORITY GROUPS IN THE
U.S., QUOTE, WOULD BE ENVIOUS OF
THE LIVING CONDITIONS OF THE
XIXANG REGION IF THEY VISIT IT
TODAY SAID THE CHINESE FOREIGN
MINISTRY SPOKESPERSON.
OKAY, THE PROPAGANDA THAT THEY
TRY TO SELL TO US ABOUT WHAT’S
HAPPENING WITH THE UIGHURS IS
BEYOND.
THIS IS WHAT THIS PERSON SAID.
IF U.S. MINORITIES WOULD
ACTUALLY COME TO CHINA AND VISIT
THE XINXANG UIGHUR AUTONOMOUS
REGION I’M SURE THEY WOULD BE
ENVIOUS OF BEING CHINESE THIS
DAY AND AGE.
CAN YOU IMAGINE?
>> WELL, THIS IS THE WORLD WE
NOW LIVE IN SO I CAN IMAGINE
NOW.
BUT, LOOK, WHAT HAPPENING AND
THE CHINESE GOVERNMENT’S
REACTION TO IT A STEP UP FROM
WHAT WE HAVE SEEN IN THE PAST
FEW YEARS.
BEFORE WHAT WAS HAPPENING IN THE
CORPORATE WORLD WAS A POINT OF
LEVERAGE FOR CHINA AND NOW
THERE’S A LOT OF COMPANIES THAT
ARE REALLY BEING PUSHED BACK AND
SAYING, LOOK, YOU CAN’T
EQUIVOCATE OVER XIXANG ISSUE AND
FORCED LABOR, YOU HAVE TO BE ALL
IN FOR CHINA OR YOU’RE OUT.
AND THAT’S CREATED A MAJOR
HEADACHE FOR U.S. CORPORATIONS
FOR OTHER WESTERN CORPORATION
WHO IS THOUGHT THEY COULD SORT
OF KEEP THEIR HEAD DOWN
INDEFINITELY AND TRY TO DO
BUSINESS WITHOUT MAKING THIS A
-- ANYTHING BEYOND THAT.
MARIA: YEAH, BUT HOW DO YOU KEEP
YOUR HEAD DOWN, LELAND.
HOW DO YOU KEEP YOUR HEAD DOWN
IN AN ENVIRONMENT WHERE THE
CHINESE COMMUNIST PARTY HAS GONE
IN AND INVADED HONG KONG 24
YEARS TOO SOON.
YOU’VE GOT, YOU KNOW, THE GOOSE
STEP POLICE WALKING THROUGH HONG
KONG RIGHT NOW.
THE CHINESE POLICE WALKING ON
THE GROUNDS OF HONG KONG, THE
WORLD HAS NOT EVEN REACT TODAY
WHAT’S TAKEN PLACE AND THEY’VE
SAID MANY TIMES THE CCP HAS SAID
THAT THEY WANT TO REUNIFY
TAIWAN.
DO YOU BELIEVE THAT AT SOME
POINT THE CCP WILL INVADE
TAIWAN?
>> I THINK THE RISKS IN THE
TAIWAN STRAIT ARE SIGNIFICANTLY
MORE.
I DON’T THINK IT’S IN CHINA’S
INTEREST TO MAKE A MOVE RIGHT
NOW BUT I DO THINK AFTER ABOUT
TEN YEARS OF THIS NOT BEING, YOU
KNOW, A FRONTLINE ISSUE, ALL OF
A SUDDEN THE U.S. RELATIONSHIP
WITH TAIWAN, CHINESE THREATS
OVER -- OVER A POTENTIAL
INVASION OR SOME OTHER TYPE OF
PRESSURE ON TAIWAN, THESE ARE
SOME OF THE MOST IMPORTANT
ISSUES, SOME OF THE SCARIEST
ISSUES IN THE WORLD RIGHT NOW
AND PART OF THEM COME BACK TO
SEMICONDUCTORS BECAUSE THE CHINESE ARE STILL BEHOLD IN SOME
CHINESE ARE STILL BEHOLD IN SOME
WAYS TO TAIWAN EASE
SEMICONDUCTOR MAKERS.
PEOPLE WOULD BE CRAZY NOT TO
HAVE THIS ON YOUR RADAR.