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State of the U.S.-China relationship as countries compete economically | 60 Minutes

Mar 10, 2024
American CEOs used to swoon over China, its vast consumer group has been a magnetic draw for decades, but doing business there has become so complicated and risky with intellectual property theft and an expanded espionage law used to intimidate the business community that American companies have pressed the pause button. In addition, the

relationship

between the United States and China has become contentious due in part to Beijing's belligerent activity towards Taiwan and in the South China Sea, the incident of the last year's spy balloon and the list continues to make matters worse, the Chinese economy has hit a wall in exports. growth is slowing, the country is drowning in debt and youth unemployment has skyrocketed.
state of the u s  china relationship as countries compete economically 60 minutes
Entering China to tell that story is almost impossible for most Western journalists, but when the US ambassador, Nicholas Burns, invited us to come to a visit and an interview, we were granted visas. We spoke to him at his residence in Beijing, the story will continue in a moment, more money is leaving China for the first time in 40 years and then it is coming from American, Japanese, European, Korean investors, now, why is that and how problematic is it? For them, that is a real problem for this economy, they have 1.4 billion people here, they have to continue growing and foreign capital is important.
state of the u s  china relationship as countries compete economically 60 minutes

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state of the u s china relationship as countries compete economically 60 minutes...

Are you asking why I think there has been a contradiction in the messages from the government here in China to the rest of the world, on the one hand, they say we are open for business, we want Japanese CH American companies here, but on the other hand, they have rated six or seven American companies since the last raid in March, they have gone into American companies and shut them down. American companies include Banan Company and Mince Group. A company that performs due diligence for other companies that might want to invest here was attacked last year. Five of their Chinese employees were arrested and they.
state of the u s  china relationship as countries compete economically 60 minutes
There is still another firm cover. Vision was a raid. The message was not loud and clear. A report about it was published on

state

television. He accused Western consulting firms of espionage and theft of military and national security secrets. They want investment to come back and They are raiding American companies and they have passed an amendment to their anti-espionage law and it is written in such a general way that it could be that American businessmen could be charged with espionage for engaging in practices that are perfectly fine. legal and acceptable everywhere. Where else in the world collects data to perform due diligence on deals so you can decide whether to invest in a company or form a joint venture?
state of the u s  china relationship as countries compete economically 60 minutes
What do you think the Chinese fear these companies will discover? Do you know? I think they want to control data on Chinese people, Chinese companies, and so I think that's at the heart of the problem with American companies operating in that sphere. Ambassador Burns told us that's just one of the concerns. he finds out that there is still theft of intellectual property from American companies here, are all American companies afraid of that? Yes, all kinds of American companies began flocking to China in the early 1980s, after the country opened to the West under then-leader Dong Sha Ping and now.
American banks operate here Walmart has over 300 stores nationwide Shoppers here in Shanghai can buy Levis, browse an Apple store and get a caramel frappuccino Starbucks has 6,000 stores in China and a thousand stores in Shanghai and they want to keep building because coffee was a tea culture for hundreds of years and now it's becoming, at least among young Chinese, a coffee culture and they love Starbucks they love Starbucks and I'll buy them a cappuccino. I'll take one, thank you. Boeing is here and Tesla Fizer Chevron. Intel, but while some companies are thriving, many foreign companies are concerned about the business climate under President Xi Jinping.
If we trace China from Ma's death to China's opening to the world, we have seen a kind of closure. we have seen a centralization of party power, we have seen greater repression of the people of China here, which is a very significant trend in the last decade with her under her leadership, part of that trend includes the president, she is reversing many of market reforms that unleash China's economic miracle have been growing for 40 years the fastest growth rate in recorded economic history 8 n 10 Growth rates of 11% have lifted 800 million people out of poverty but what What is happening is that the growth rate is slowing down most economists now projecting that they will have 2 three 4% growth maybe even lower in the next they support their society if it is that low that will be difficult for them if there was so much growth Explosive if so many people came out of poverty, why?
You are moving away from what worked well. I think maybe they have conflicting priorities. The government here in China certainly wants the economy to grow, but they also have a national security mentality. They want to control the data. They want the right to control to be more important than the right to control. growth seems that way I think it is open to debate what you are hearing we are hearing the messages of both men it sounds like you yourself do not know the direction it is going what I sense here is that the greatest energy is with those in the National China government security side, good morning, how are you on a train trip from Beijing to Shanghai?
The ambassador noted that in the decades before the 11th president, China boosted its economy by investing in these high-speed trains, roads, factories and skyscrapers that light up. Shanghai is China's financial capital, but under President XI China lost more than $120 billion in long-term foreign investment last year due to a weakening economy and harsh government tactics that have left American companies insecure. about the future. American companies here have a lot of them that they just picked up and dropped off, because of this current business environment, you know it's interesting, not many, not many, not many, why not China is the second largest economy in the world, it's a large market, so some American companies have left, but most have stayed.
Some American companies are moving at least some of their operations to Singapore, Vietnam, Mexico, but they are not leaving China. The market is irresistible for American entrepreneurs. It's gigantic. They may not leave, but they are not investing. We are not making major investments until they can see exactly where the government is going because of the 1.4 billion potential consumers, some companies like Disney are increasing their investments. Welcome to Shanghai Disney Resort. They recently expanded their Shanghai Disneyland which, we're told, is thriving and aptar A $9 billion company based in Crystal Lake Illinois is another American company bucking the capital flight trend aptar Asia president shangu gang, an American citizen born in China, showed us one of his five manufacturing sites in China, we are manufacturing for some of the biggest US brands, actually US consumer brands, this factory makes devices packaging and dispensing for food, pharmaceutical and beauty products sold in Asia.
All our clients, like PNG, laa esela, all are here doing business in China for almost 30 years. They recently invested $60 million in a new Factory gang Shangu says that even in a slowing economy the company is doing well, American companies here, as the ambassador well knows, are pausing or cutting their investments, but not this company , you are expanding well, because we are here for the long term and We believe in the consumer power of the growing middle class, there are 1.4 billion people here and imagine, for example, healthcare and the same with cosmetics and beauty and beverages, all those sectors.
Packaged foods are really the biggest market, etc. We are very confident in the long term, what does that say about real trust in the US-China

relationship

? It seems to say that you believe things will get better, which I'm asking, it's a great question for the Ambassador, I think. I hope you know we'll actually see Burn says he's wary of the future, as the fundamental rivalry and mistrust between the United States and China is shaking the confidence of the business world and has brought our relationship to its lowest point in half a century. It's our most competitive relationship in the world right now.
This is the most important, most competitive, and most dangerous relationship the United States has in the world right now. And I think over the next decade, I want to quote you again and Tell us what you meant, you said divorce is not an option, our two

countries

have to live together and I think this is the biggest tension in the relationship between the United States and China. China is our biggest competitor and at the same time, China is our third largest trade. partner 750,000 American jobs at stake agriculture China is the largest market for us agriculture a portion of all our agricultural exports are sent to China, which amounted to $4.9 billion last year, so we cannot afford the luxury of having a real break here, well, it's complicated. jobs, it would be complicated some people say that we are so competitive with China that we should end the economic relationship;
The consequence of that would be that 750,000 American families would not be able to put dinner on the table, so this is an extraordinarily difficult situation balancing act in my job you are a brother Linda. I've never thought of myself that way, but you're on a tightrope, well, we have competing interests here and balancing those interests is the reality of the US-China relationship. To

compete

, we have to

compete

responsibly and maintain peace between our

countries

, but we also have to get more involved in the Law of Balance and in China's biggest economic problem today, when we come back, one in five people in the world is China.
It is four times the size of the United States and the country has a vast area of ​​3.7 million square miles, dominates the Taiwan Strait through which half of the world's trade flows each day, and is located about 100,100 miles from Taiwan. . President XI likes to say that the East is rising and the West is declining, but

economically

the United States is prospering compared to China in December. Moody's, the credit rating agency, lowered its outlook for China to negative and faces a long-term demographic problem: a decline in the birth rate that experts say is irreversible, meaning the country is The Ambassador Nicholas Burns, both aging and shrinking, took us on a tour that began in Beijing.
The story will continue in a moment. The Ambassador and his wife Libby like to take early morning walks in a park near his residence. This is a 600-year-old Ming Dynasty. The park is called Ron Park, it is a place for many retirees and many young people and is tremendously active, it is where the locals come for their morning routines such as Tai Chi yo-yoing and pingpong. Oh, it wasn't noticeable in these scenes. Wow, that China, where the Covid pandemic began, is still emerging from the trauma of President XI Jinping's oppressive zeroo policy. Burns 68, a career diplomat who has served in Republican and Democratic administrations, arrived in China at the height of the zero covid lockdowns and quarantines when my wife Libby and I arrived here in early March 2022.
We were quarantined in this house for 21 days for 3 weeks. Shanghai, a city of 26 million people, was completely closed for 63 days. What was that like in the city? We had women who needed to give birth and we had to find a way to get them to the hospital. We had Americans who wanted to go out but they had to find a way to get out of their closed compounds to the airport, so Zero Co worked for a while in 20 and 21. Very low or relatively lower infection rates, but by 2022 there really were divided this society, sparked rare widespread protests and then, in December 2022, President XI abruptly ended the policy.
The last thing this government is going to accept here is volatility. Volatility is something yorg. Woodka, a German businessman who has lived and worked in China for more than 30 years, had not seen him since the Tianan Square uprising in 1989. He represents BASF, the world's largest chemical producer. You have said that this is a country with PTSD, a country with PTSD. Do you have good intentions? Everyone has been traumatized by the lockdowns that took place in many cities in China and the kind of message that came out from the leaders is becausetheir own safety and then the lockdown was lifted, it was actually more of a government capitulation. the lockdown basically went away and like, aam, we were wrong, we're going to lift it, they never said they were wrong, that's not the system, this one admits they did something wrong and then it was basically like a tsunami Co was rolling all over the country after they lifted it.
In December, January, I would say a billion people were infected and certainly many people died. Independent analysts say approximately 1.4 million people died. This type of environment really changes your attitude towards life and the business that we thought we were going to have. a comeback story and we had a good couple of weeks and then the economy basically fled, you know, after covid in the west, in the United States, in particular, we had a huge and rapid rebound. Why didn't it happen here? I think Co has also covered up a couple of long-term problems that China has been accumulating, for example in real e

state

.
We reported on real estate 10 years ago with amazing sites like this one of empty buildings in city after city across the country. This is today a similar hollowed wasteland of unoccupied and unfinished apartments known as ghost towns when I was here 10 years ago. I never expected to see these buildings still here, but back then a real estate bubble grew and eventually burst. This real estate crisis is in the heart of China's economic decline. Has anyone counted the number of empty units, that is, throughout the country? Well, in all of Germany, we have 82 million people who could move here immediately. 80, 80 to 90 million apartments are empty, 80 to 90 million apartments are empty, unfinished.
Over the years, Chinese banks have readily lent money to developers as the construction boom created millions of jobs and fueled China's growth, but in 2020, President XI's government clamped down on rampant borrowing, causing major developers to default on their loans and run out of money. money, look the façade is not even finished, he says they couldn't even afford to dismantle the cranes in January. Grand, once China's largest developer was ordered to liquidate its remaining assets, left in the lurch millions of Chinese citizens who bought These apartments before they were built, the developers owe their customers who paid the magnitude of 1 billion dollars, so if I put a down payment on one of these apartments, will I ever see that money?
No, you won't see the money that's gone. It's over, it's over, so I mean it's really dramatic. We were told 10 years ago that this was the way people put money into their nest eggs, for example, into their retirement fund. That is still the case, 66% 23 of the average wealth of a family household. It is in apartments that the loss of wealth has depressed consumer spending and dragged down the economy. We wonder if people blame President XI for that or for the Covid deaths, but we were unable to gauge public opinion or whether it even matters as long as no one. from the government would give us an interview that we were able to find out, since yorg woodka, who has lived here for 30 years, told us that it is not a good idea to bet against the Chinese people, what are some of the positive aspects of the economy here China is not really good at basic research, but they are fantastic at development, They are world champions in actually making products better, faster and cheaper, they are better, yes they are in some areas, our Chinese competitors are breathing down our necks and basically driving some of us out of the market e.g.
China now manufactures more than 80% of all solar panels in the world. The winter turbine market is about to surpass Japan as the largest automobile exporter in the world and, in addition, it is the main trading partner of twice as many countries in the world as the United States, so it has a leading trading partner with more from 60 countries around the world. and now with heavy government subsidies it is quickly becoming the leader in electric vehicles last quarter automaker byd overtook Tesla as the world's best-selling electric vehicle maker Shanghai-based Neo is trying to break through With high-tech innovations in December, the company introduced a new battery with a driving range of 620 miles, more than 200M longer than Tesla's top model.
This is our flagship. William Lee, the CEO and founder of Neo, says its battery swapping technology allows owners to swap their dead battery for a fully charged one. in less than 3

minutes

exactly it's uh two and a half

minutes

two and a half and a half minutes yes, we already installed 2200 exchange stations in China China is also developing a humanoid robot industry look at that after many years, it's true Alex goo is the founder and CEO of forier Intelligence hello, last year you launched the gr1, your first generation humanoid, we can make an arm, you can move the arm, yes you see, oh look at the fingers, oh my god can you play the piano?, yes, the future, definitely, in the future.
He also says that in the future robots could provide medical care to China's rapidly aging population. Maybe we can, for example, remotely control those types of robots to help my grandfather, for example. Yes, I believe that President XI, who visited this company last year, called for mass production of humanoids by 2025 in his annual New Year's speech talked about the country's economic problems and for the first time recognized the high unemployment rate, but it has still set a long-term goal of doubling China's economy by 2035 and overtaking the West. In technology, our companies and technology experts compete in artificial intelligence, biotechnology and quantum mathematics.
All these technological advances will lead to a new generation of military technology. Our two armies are competing for military supremacy, who will be the most powerful in the most important strategic part. of the world, which is the Indo Pacific, she and Presidents Biden met in San Francisco in November in hopes of restoring military communications between our two countries that China had cut off. I believe we have returned to a more established and stable relationship between the two countries. but it has been a rollercoaster, the low point, he says, was the spy balloon incident last year, but there has also been the build-up of military bases in the South China Sea, the increase in air raids near Taiwan and the hum of American military planes. drop in temperature in the South China Sea, no, and that is a problem that should not be faced, and then in Taiwan, after Speaker Pelosi's visit, we have seen for 16 months a much higher rate of activity Chinese air and naval, which is very intimidating. to bully, that's not it, they haven't backed down from that and I think ultimately they want to become and overtake the United States as the dominant country globally and we don't want that to happen, we don't want to live. in a world where the Chinese are the dominant country when the Cold War ended we all thought our system had won yes, you know, their system failed, our system stood up now he came back and said no, no, the communist system is the right path, I guess I didn't bury it, after all, you know, it's interesting to compare the old Cold War with this era, what distinguishes this era from the old Cold War.
The Soviet Union had strong military and nuclear weapons, it had a very weak economy that in no way competed. with ours, China's economy is very strong, we are dealing with an adversary, a competitor in China stronger than the Soviet Union was in the 1940s, 50s, 60s, 7s and 80s, so if that was a Cold War, what is this called? It is a competition of ideas. a battle of ideas our idea America's great idea of ​​a democratic society and human freedom versus China's idea that a communist state is stronger than a democracy we don't believe it so here is a battle over which ideas should lead the world and we believe Those are American ideas.
Get up and get married. Leslie Stall witnessing China's turnaround while he reported for 60 Minutes. This was different from the other times I was there reporting for 60 minutes in overtime.

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