This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. When the world is going haywire, especially when it comes to trade, and especially when it comes to the United States and China, what do we need, Paul Sweeney? We need a double shot of Stephan Sea Like, that's what we need. Partner for Bridge Park Advisors and of course former Under Secretary of Commerce for International Trade at the Department of Commerce during the Obama administration, joining
us on the phone from Long Island. Stephen, how the heck are you? It's been a while? Get as I am fine, Jason. Good to hear your voice. Um, and please pass on my regards to Carol, and good to talk to you Paul as well. I will I will certainly do that. Thanks for joining us. So, UM, I gotta ask you. I mean, since we last talked, which was probably a month six weeks ago, you know, U s China relations I feel like have taken a turn and a turn and a turn all down word in
many ways. Where are we right now? Well? I think you're quite right. I think the relationship with China needs to be described as one under increasing dress with the dynamic of the relationship only getting more challenging. And you know, in our conversations in the past, we were largely focused on, you know, the trade spac that we had with China, which the current administration largely viewed in the context of
our bilateral trade deficit, primarily and manufactured goods. But in the recent weeks we've seen that really become or that conflict become expanded and take on a number of different fronts, and the technology war has come really into focus, from more than fiber theft and intellectual property issues to just last week, as you know, the FCC labeled z t
E and Huaweiha security threats. And now we're also faced with a number of ideological UM issues coming out of China and those are being manifest in the recently imposed Hong Kong's security laws, and of course UM the issue with the weaker's UH in China and our recently just passed weaker Weaker Human Rights Policy Act which was signed
into UH signed into law. So UM, not only is it deteriorating, Jason, I think it is becoming more complex and the tensions are taking on a number of different fronts. So Stephan I was talking about this very topic earlier this morning, and the guests we had on challenge the premise I had, which was President Trump was primarily responsible for this increasing tension between the two countries with trade
war and tariffs and rhetoric. And this guest pushed back and said, no, is actually President She in his opinion, that was kind of instigating, uh, the challenging tensions between the US and China by China asserting more aggressively. It's pre is economically, militarily, and not not just in the region but globally. How do you view that how we got here? Is Is there any blame to be put
around here? Is it equally shared? Paul, I think it's a mistake to ascribe blame to any individual or any leader. And I think this really is a function of certain structural issues that are much more important than any one individual.
And so if you look at the trade if you look at the trade issue, it is primarily a function of the fact that China, after after being accepted into the World Trade Organization, still remains a state, a largely state controlled economy UM and has limited market access for foreign companies and supports their large portion of their economy UM from the state one Two is if you look at the technology issues, China in fact has very little um fla xability here as they are going to have
cannot rely on the US and the West for technology if they're going to move up the value chain and avoid this so called middle income trap, if they want to continue to grow wealth and prosperity in their country. And and as it relates to the human rights issues, boy, you know, the Communist Party, the Chinese Communist Party has never expressed a real interest in human rights. And we've seen that, you know, for generations and as recently as Tianamen Square. And so none of that should come as
a surprise to us. So I think all of this predates g predates Trump, and is fundamentally a reflection of two different systems that are largely incompatible. So, Stephen Hong Kong, how big of a deal is that? Both in economic terms and financial terms, especially when it comes to our core audience, as you know, being being Wall Street, but also as a marker in the evolution in of China
US relations. You know, I think China would not be behaving Lee would not be behaving as aggressively with Hong Kong as they have been if they didn't believe, certainly from a Chinese perspective, that the economic fallout would be limited because they do look at the management of their economy as a core competency of the Chinese Communist Party, and obviously they're facing similar sort of pressures coming out
of COVID. So UM, I don't think they view these Hong Kong issues through an economic lens as being um highly problematic. I think from our audio or your audience is um perspective. You know, boy, you know this was inevitable. Um. We knew what was going to happen, We just didn't
know it was going to necessarily happen this quickly. But I think more than anything, it points out that the Chinese view about the rule of law, because don't forget they had an agreement um that they enterde um uh that this exactly, this sort of thing exactly wouldn't happen. But their their view of about these sorts of agreements, I think is not going to be particularly vertical, and they are going to continue to behave in a way
that is in their narrow best interests. So Stephan, in the last block, we're chatting about China as it relates to rising tensions with the US trade tariffs. Hong Kong. I'm gonna talk about the economics of China right now. Obviously the days of double digit growth are gone. I think the printed number that they want you to buy into is a six kind of GDP growth. Really give us a sense of where you think China is over the next couple of years in terms of its ability
to grow its economy. Well, look, China is clearly slowing, but they were slowing from you know, a very rapid uh growth and they will continue to be uh, you know, the engine of Asia, and so you know, I do think the most interesting question for China is going to be their ability to move from a manufacturing, infrastructure based economy to a more consumer based economy, which is um you know, and has been challenging for a number of
developing economies. But that will be the key and clearly what the Chinese Communist Party is focusing on to get to the next leg of growth. So Stephan, I gotta talk deal making because we had uber Um do a deal. We had, you know, Mr Buffett pulls something off. We've had some activity. When it comes to M and A, you are ultimately a deal maker. How does it feel out there right now? You know, Jason, it's it's it's
muted for sure. I think deal activity is likely to be concentrated in certain sectors, and those sectors are largely going to um align with those sectors that are doing well. You know, right before you had me back, one of your commentators is talking about record hizes in techno oology shares and in the nasdack. So you could imagine, whether it's Uber and Postmates or other similar companies, that there
will be enthusiasm for deals in those sectors. But I don't think you're going to see, you know, broad baking, broad based deal making activity across the more cyclical part of parts of our economy. Stuff. And I know you've spent some time in your career on the TMT space technology and media telecommunications. Boy, we're seeing an industry that's just been disrupted the traditional media business like you've never seen, you know, I guess, culminating in the Walt Disney company
buying out most of Rupert Murdoch's news corps. Do you ever expect the big technology companies Apple, Google, Facebook to ever jump into the deep end of the pool and get into the content side of the business. Um. You know, boy who knows you know, those particular buyers have unlimited capital u uh um. You know, those sixpanies that you're referencing make up something like the overall overall market cap
of our entire equity markets. And a lot of those traditional media companies in certain sectors are obviously facing very challenging UM times, and so you could imagine um, you know, real deal making activity in that in in in some of those areas, as as those companies look to take advantage of depressed valuations across the sector. And how's Wall Street feeling right now? Stephen? Just before we let you go, I mean beyond just deal making, you talked to a
lot of very senior people on Wall Street. We're talking about kind of going back to work ish. Um, what's sort of the mood around the Wall Street community? You know, I think it's it's pretty much mirrors what's happening in the overall economy, which is a mood of uncertainty and some instability. UM. I think people really don't know what the new normal is going to be. I think to some degree, because the markets have outperformed the real economy,
there's um some if not enthusiasm on Wall Street. There's there's there's certainly not UM panic. Uh. You know, the fixed income markets have been highly receptive to capital raising throughout this coronavirus pandemic, even in those industries that are facing some significant challenges. And so I think in terms of Wall Street UM people are expecting less m and a dealmaking activity, but a pretty robust financing calendar, both on the equity and on the fixed income side to
keep folks busy. Yeah, yeah, makes sense. All right. Seven. Great to catch up with you. Always a treat. Stephan Celia's managing partner for Bridge Park Advisors, former Under Secretary of Commerce for International Trade at the Department of Commerce during the Obama administration. He joined us on the phone from Long Island,