Trinh Nguyen Transcript: June 24, 2025
Kevin Johnson, National Press Foundation (00:00:00):
As we’ve become accustomed, the American president has loomed large in our discussions over the past few days and he’s looming evermore here mostly for his extreme unpredictability and uncertainty has long been the enemy of the global economy and international trade. How are countries, especially Asia, adapting who is best positioned to take advantage of this chaotic time? What will global partnerships look like? As tariff policies continue to roll out as reporters, you are always looking for knowledgeable people to provide context in these fraught times. And some of the best reporters I consulted when I was trying to find folks to talk with you during this week referred me to our next speaker, Trinh Nguyen she is a senior economist covering emerging Asia at Naus based in Hong Kong. Trinh joined Naus in October 2015. She previously served at HSBC as an Asia economist from August, 2011 to October, 2015. She was awarded best economist and top ranked for her forecast and expertise on emerging Asia by Asia money. And Trinh is known to produce forward thinking and changing insights. She is unique in her ability to provide sharp analysis. She also has some sharp analysis for us as reporters. So I think you’ll enjoy some of her observations there as well. So please join me in welcoming Trinh.
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There you go.
Trinh Nguyen, Natixis (00:01:59):
OK, thank you. So I have an hour, it’s your session. So the way I kind of tend to do these presentations is it’s for the audience. And so what I prepare a slide, I will go through them, but given that it’s an hour, what we can do is we can be a bit interactive At any point during the presentation, if you feel compelled to say something disagree, want to talk about something further, we can or we cannot. But that’s definitely an open forum. So feel free. I’m very easygoing so you can interject and disagree. So I think the way I will talk about Trumponomics and its impact in the world, particularly Asia, is I’ll start with tariffs, but it’s not the only one. And I think after I go through the slides, I will talk about maybe perhaps the three questions I get all the time because I’ve done these kinds of panels probably like maybe this is probably my 12th talks to all sorts of audience from investors to seminars.
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So first the presentation is followed in the order of tariffs and what that means and what everyone else is doing about it. So when we talk about Trumponomics, I would say that before we get so fixated on tariffs, you have to think about what are his ideological ideas and what’s shaping him. So the one question I got, I was doing something with David Engli, anchor Bloomberg, and the first question and the first question everyone asked about Trumponomics is what does he want right? To analyze Trump, you have to ask what does he want and how is he going to get it? What are the tools he’s going to use to get it right? And the answer most people tend to say is he doesn’t know what he wants. How can that be true if you’re president of the United States? And since he’s been saying it since the 1980s, he has a very strong conviction.
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What he wants, and I’ll start with trade, for us, he believes that an economy has to start with the real economy. How do we differentiate between a real economy and the financial system? So I actually have a sense of who’s here. So let’s say her, she’s a financial journalist for Bloomberg. When people write for a financial newspaper, whether it’s Financial Times or Wall Street Journal or Bloomberg, which I am a consumer of, they are very interested in one sector of the economy. Finance, right? Finance is not the economy finance, the US financial system is much larger than its economy. I’ll give you example. Asset allocation to the US in the MSCI index is more than 60%. The US as a share of the global economy is only 26%. So the financial sector is not the economy. We are biased by what they say. The monk sees the world through his eyes, so on and so forth.
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We’re biased of what we want to see. So what Trump sees is in a total disconnect to people in the finance sector, which we like. That’s huge. We like that’s influential. We like that’s growing, right? In the finance sector, we tend to care about corporates because corporates have earnings, they have stocks, they have debt, the US Treasury. So we’re very focused in a very narrow path. The ordinary person is not interested in a lot of things that we care about. For example, physical goods, not all the physical goods, the companies that own them are listed to the stock exchange for example. So there’s an adage that says the economy is not the stock market. So for Trump, he’s very focused on this and there’s one sector of the economy he’s very focused on, which is the manufacturing sector. And that’s since the 1980s, since you watched that Oprah interview, he talks about a lot.
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At the time he was pissed off about Japan and the trade stuff, plus it has with us and currently it’s about China. And why does he care about, maybe because he’s a real estate guy and he’s very physical in nature. He is a construction guy who knows what is shaping his ideology. But him and Xi Jinping, they’re very similar. They care about the physical economy and particularly the manufacturing sector, particularly within the manufacturing sector, the industrial sectors, the sectors that tied with security, which is steel, which is all these metals that we’re talking about at rare Earth, which is the frontier of technology. What’s happening at Iran is all very related. The ability to go high in the sky to intercept all about high tech security. So in a way he’s a hard power kind of guy. So when we talk about trade, what’s happening, trade war negotiations, it’s all very connected.
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And that what he’s doing is in total disconnect with the way things are running, the way things are running in the United States. It’s a highly financial system, financialized system, the US manufacturing share of the economy has shrunk significantly. Manufacturing share of jobs has shrunk significantly and the US has done pretty well and particularly the financial sector and particularly the services sectors and so on so forth. In particular within service sector, the tech sector, the issue with the tech sector, which I’m from is that as we all know, it’s all about scale. They’re very good at scaling. The problem with scaling is it doesn’t employ enough people. So in every economy we have the workers who are very skilled no matter whether basic can serve the whole global economy. We can think Amazon is an example where you can be based out of Seattle and so forth, you serve, but you can have people that don’t speak any language, computing language, foreign languages and so on and so forth, or credentials recognized internationally.
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They cannot move. So there are losers of global trade, even if the US has been the biggest winner of the mob, particularly US corporates. So this is what it’s about and he is disrupting the fabric of everything we care about. So when we analyze him, we have to start with that framework. That’s what he’s motivated by and how is he going to go about it? He is going to go about, his power comes from all sorts of weird different sections that’s come through history of the us. So he has in Trump 1.0, he used what we call section two thirty two, which is a sectoral section that you use and it comes, you have to go through a lot of analysis by the Department of Commerce. So Lutnick is under the Department of Commerce right now head. And that takes a long time. Then you have to consult with all the people working in the economy within the sector, all the people opposing it.
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So it takes a long time, usually six to 12 months if not longer. A good example is when Trump came into power. The first time he imposed a steel tariff. It didn’t come into effect until 2018. And then when he came in the second time, he didn’t post new tariffs, he just removed exemptions, right? Another one, it’s another power that comes from for Trump is really the country specific, which he imposed severely on China. Section 3 0 1 he imposes on China. And those two tariffs, they stay because they go through a very lengthy process. And frankly speaking in the US there’s a bipartisan support to go after China. So section 3 0 1 and section 2 32 is very deep in foundation, but very narrow in focus, right? Narrow in sector, narrow in country. So here comes Trump to 0.0, which is a totally different guy. Instead of being very focused on sector, being focused on specific countries, he decided that in the first term China was able to kind of diversify and reshuffle and still find goods in the US anyway through other countries.
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And so what he’s going to do is that because international trade is very global in nature, you cannot analyze international trade vis-a-vis just the US relationship with China. You have to analyze international trade, China’s relationship with Asia, Asia’s relationship and so on and so forth. It’s a global system. So then he says, well let’s listen. We’re going to impose tariffs on everyone and where does that comes from? He used IEEP, which is the international emergency power, which is being widely contested right now. The federal court, it started with the New York trade court and then now it goes to the federal. It’s probably going to go to the Supreme Court if it’s rule against. And this one lacks, it’s very thin in foundation because you have to come up with some kind of emergency. China fentanyl is part of that. He says, we have an emergency, we have a fentanyl crisis.
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Let’s impose tariffs in Canada and Mexico, 25% except for us MCA, and let’s impose 20% on China, 10%, another 10% and plus reciprocal tariffs all under this. And all of that could evaporate if the Supreme Court rule against it, against it. The question is whether it would, would it want to go into something that’s economic in nature or political in nature? Would it just leave it to Congress? That’s a big question mark. And I think very tradable question right now in the market, if you have an answer, but irrespective all of these slides are to show that Trump likes tariffs. Tariffs are going up and they’re one of the tools he uses to get what I think he’s motivated, which is the beginning of the presentation. So what does that mean? It means that there’s a lot more going on. There’s sectoral tariffs that’s being happening right now that he’s studying.
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Like I said, it’s very deep. It takes a long time. So he is studying them, so watch out. They’re coming. They’re coming to really change the world and things are very linked. So sometimes you read a story that’s very different like the Lee Cushing story on port. It’s very linked to what Trump is trying to do with shipping, right? Shipping in commercial shipping. China has dominated, it’s about 50%. The rest of it’s South Korea and Japan in commercial shipping. What he’s going to do and under analyze right now, it’s not just about Chinese ship dock in the US, but the percentage ships that you actually owe. And so actually what makes a difference is that whether or not the port is a US dock, US port, and which is why this Panama thing is very interesting because it’s a portfolio port. So if BlackRock, the company that’s under is successfully buying this, suddenly a lot of these ports are now American.
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So any company, not just a Chinese company, any shipping company that docks in any of these docks, and if this shipping thing goes through, it’s going to be absolute may mayhem in global trade. Much more important than anything I’ve talked about. Why? Because the very thing that carries your good, if the cost goes up, it’s like oil. Oil is a very thing that goes into everything. It’s an oil derivative, it’s a derivative we use to make fertilizers the very thing that goes into everything. It can really, really rip the fabric of global trade. And it is a bigger friction in the sand than anything I have ever discussed and which is why I think is going to be very interesting. So one of the things people like to ask the question is what’s going on with this port deal? Which no one else has an answer, but it is very important picture, but there are many other things happening.
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So long story short, the global order as we know, I’m going to skip this. This is a slide for present for investors, and I’m just going to go quickly about this idea and then going into what happens in the impact on Asia. So long story short, tariffs are going up. It’s not just the things I talk about I a sectoral section, but section 2 32, particularly in shipping and so on and so forth, this is going to be very important. So pay attention and what does it all mean? It means that we sit here in Singapore, I sit in Hong Kong and I’m Vietnamese, all these big traders of Asia and Chinese or whoever you are. And if you have tried to escape property or make money or however out of trade, there’s a huge friction to it. And the one thing I want to leave away with you is that trade and tariffs is never just about trade, it’s about investment.
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So when people talk about trade, when people talk about tariffs, they’re talking about investment. Investment is being disrupted. If trade is being disrupted, investment is being disrupted. And we’re going to talk about two kinds of investment that’s being disrupted. But before I get there, I’ll just talk about tariffs a bit. So I have a bunch of these charts because again, people are so confused. Trump’s doing this, he’s doing that and he’s wild, he’s tweeting, he’s too socially. So this is a summary of what has happened so far. So basically this is a value of exports to the us I did as a percentage share of GDP, just to give a sense, but just to give a sense of Vietnam is exports is almost a hundred percent of GDP. So he’s so far, because the fact the US is integrated with Asia and the rest of the world, when he imposes all these things, he has to reverse a lot of ’em, right?
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And a lot of ’em have been exemptions, a lot of’em pushing the deadlines. And the idea is that because American companies and Americans are so integrated with the global supply chain and we start with the first, we so deeply you can only entangle it slowly without severely crushing itself. So we’re all in this together, but it is being slowly entangled. So these, the products are being exempted. So it’s quite a lot. For some countries like India or Malaysia, it’s like 60% from Malaysia that’s being exempted. And on top of that they have 10%. And if reciprocal tariffs goes away, you have higher numbers. But long story short, a lot of people think that it’s going to be negotiated anyway. So I have some estimates of impact on Asia. It’s a very crude estimate. It doesn’t go into an effect of what happens if you actually have the elasticity of demand can change.
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So this is using a very basic elasticity of demand, which is basically how sensitive you are to the change of price. Actually, before I talk about this, I want to talk about tariffs and how they affect, and when you write stories, why there is a disconnect between tariffs and the prices you see in the us. So example is China. China is a good one because China, US tariffs and China is basically roughly about 25%. For some sector it’s like a hundred percent, right? So it’s roughly, let’s say 25% before Trump starts at January 19th, 20th of this year. And then he add another 30%, right? 20% on the emergency. One fed plus 10% reciprocal tariffs pause into August. So let’s look at effective tariffs on China. Roughly 40, 50% effective tariffs, which means you take the ratio and you calculate it based on the value and you get an effective rate.
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So that’s a lot. But when you look at the prices, they haven’t translated. So what happens, let’s say you are a buyer, US importer, you’re a Chinese seller. When you buy, let’s say tariffs from before this year, 2024, the price was a hundred dollars. Now it’s a hundred. According to the tariffs, after you paid the duties, it’s going to be one 30, right? The thing is that you can actually, what happens, you can potentially, we call a pass through of tariffs that you can try to negotiate for the Chinese guy sell you for 90, he may or may not sell you. Of course he’s not going to sell you for 70 or 80 or whatever the exact number exactly. So that your final price would just be a hundred. He won’t do that, but he may. If you are Walmart, because you’re a huge buyer, you can probably negotiate to 90 or 95.
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So some of that’s offset. Then you take Walmart because the margins are thicker, they can take some of that and then maybe they’ll raise prices so that fundamentally their margins remain the same or they can cut some of their margins. So then in the end, when you go to Walmart, prices are not going to be 30% higher because some of it is cut here, some of it’s cut here. And then another aspect is of course is the FX exchange rate and so on and so forth. But we’re just thinking simplistically in terms of what happens when tariffs goes up and who has ability to negotiate or more. And the Chinese can be like, look, if it’s too high, he can say, look, my margins already thin. I only have one or 2%. I’m not going to bother. I’m not going to bother doing this business at all.
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I quit. I shut my factories or I’m not going to bother selling to your market. So a little bit of all of this is happening. 1, 2, 3 is happening. So it is disrupting global trade and eventually when prices rising up, you’re going to go to the Vietnamese guys who actually has lower capacity and cost probably was higher. So maybe before you were ordering from the Chinese guy for a hundred and Vietnam was like 102 or whatever. But eventually when prices go high enough, it may be profitable to go here to import, so on so forth. Or if you think in the future, tariffs will go much higher. And it isn’t just tariffs. What about shipping? What about these other friction in the sand that we’re talking about? What about something I haven’t talked about geopolitics? What if there’s a total ban and so on, so forth.
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What happened to Russia? There’s no trade. So a lot of people say right after Trump, it’s like why isn’t he not imposing anything on Russia and he’s just attacking allies because there’s no trait. There’s basically essential embargo. You can’t impose punishment and there’s no relationship, right? So long story short, tariffs actually, when you look at US CPI, and there’s a number coming out this week, PCE and so on and so forth, it hasn’t risen that much. And I think a lot of it, and there is a disconnect between, again, the financial markets which we read and everything is mayhem, which is true by the way. There is mayhem. If you’re apple and suddenly your prices for China goes up 30%, there is mayhem for you. And Apple is a big enough company and tons of people own that stock. So there’s mayhem for the owners.
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And if you work in the financial sector, that’s a big story. But fundamentally, when you go buy an iPhone, which you only buy once every whatever year, if the prices don’t go up a lot, you’re not going to matter. By the way, it’s a luxury product anyway. The people in the stock market world, people don’t even consider apple and electronics. They consider it’s a luxury product. It’s all about branding. It’s not really a handset. So anyway, long story short is my ears are hurting from this thing. So what are the Asians going to do about it? This is not good. So if you think about Vietnam on reciprocal tariff day, it’s an absolute abomination of a disaster. We got 46% rate. China got 30, China is only 50 if you add 20% fentanyl. But China after negotiating, we’re talking about the 1 45 after they went crazy on Twitter and whatever. But reality is China only got 30, which sounds very low. Now if you think about it, because after all that drama, we’re only negotiating 10% and then total is 30. But China literally got only 30 on reciprocal tariffs day. So for southeast Asia they got the highest numbers, particularly the guys. Cambodia very devastating because Cambodia doesn’t have a lot to offer the world except cheap labor.
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And what it offers is the ability to assemble things for really cheap. But the thing is that Cambodia also have very lax ports where you can train ship. So what Trump, again, we go back to Trump motivation. He wants to have the US importing less. He couldn’t do it with just imposing tariffs on China. He decided, I want to make my problem yours. If I can’t solve it with section 3 0 1, I want to make my import problem yours and you’re going to help me fix it. And then that’s what reciprocal tariffs about. It’s like if you ever read a book on negotiation, they say how to negotiate like a terrorist with a terrorist, not like a terrorist. If they ask you, they tell you it’s actually a good book for management. You should read it. If you want to move up in a company, basically it says terrorist takes your daughter, he wants a million dollar.
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How do you negotiate? Right? The way you do it is you say, how am I going to get a million dollar? So you make your from his, right because he doesn’t know you have a million. How are you going to get it out to give it to him? So that’s what Trump is doing. He’s like a toddler. He makes his problem yours, he makes it, he’s a good negotiator, but how good is it? Is they actually have leverage. What of people decided that they want to give him back his problem? So for example, well maybe we’ll give you back your problem too. You figure it out as well. So this is a problem for a lot of Asians and a lot of ’em actually don’t have as much leverage. China may have more leverage a bigger economy, it may have other sources, but for a lot of countries that are very exposed to the us like Vietnam, it doesn’t have a lot of leverage.
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Can it buy a lot of Boeings, a lot of aircraft and a lot of defense goods? It can, but a lot of these countries, again, there’s a reason they have a huge trade deficit with the us. So I think the trade negotiations are very interesting and I think it has a huge impact in the region. And what does that mean? It means that people are starting to think that the US is fundamentally, if Trump gets what he wants, is not going to be the source of growth over the long period of time if he reduces the imports. But there’s a huge problem with this. If you’ve read any stories about Vietnam is the same story. We need to diversify or China, we need to diversify. But if the US is the largest importer of goods, which is 4.1 trillion, where are we going to sell more?
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But remember, if the US cuts up everybody else and the US becomes poorer, you can say you make a normative argument that this is bad for the US and so forth. Irrespective, let’s say they actually do it. Let’s just imagine that they actually from 4.1 trillion import three or 3.1 trillion. So we have 1 trillion we need to sell somewhere else. Where are we going to sell Europe? Another rich country, but the Chinese also doing that. So everyone is now trying to sell everywhere else with a shrinking pie. And I think that is the story of what happens. There’s friction in the sand in global trade and particularly with a lot of the countries are big traders. China is a big trader. Germany is a big trader. What are you going to do? And the second aspect I haven’t talked about is on the investment side. I’m going to skip a lot of these slides and I’m going to talk about, oh yeah, actually these slides are good.
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So it’s about what are these Asian countries are going to do? So first, again, diversify. It’s very difficult. So whenever you talk to anyone, Alibaba, tamu, you go to Europe, the ads out of control, people stop doing advertising with Google for anything because suddenly there’s no point. They’re just going to ramp up the pressure on other countries and a lot of the products are about advertising. You buy what you see, we’re digital and so on and so forth. So look at the advertising space is also very interesting. So can they buy more American goods that can be very limited? Can they diversify? Of course you can always diversify, but who’s going to buy your stuff and you have more competitions, the margins are being squeezed. So that’s a big problem. India is a good country. To give you an example, India is a great market, huge.
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A lot of people, it’s growing. Let’s go sell more to India. If everyone has the same thesis, suddenly the Indian guys inside India, I don’t like it. So they have a flood of foreign people coming. Their margins have traditionally been good and suddenly you squeeze out. So I think we have in this now we have what we call a race to the bottom. So instead of pie expanding the global trade, we have a shrinking global tray pie. If Trump is actually successful, he doesn’t have to be a hundred percent successful, he just have to be slightly successful. And we’re going to see consolidation, which means there’s deep. So the impact on this is maybe the US will industrialize, but the rest of the world, if you’re not strong and you don’t have a government that is essentially planned communist government that controls the banking system like China, you’re done for. Because if you’re a little guy, you cannot compete with guys that take so thin margins and sometimes at loss because they get subsidies. So that’s what’s happening. So what can the Asians do first? We already saw that we cut interest rates on a monetary side, fiscal policy gets a little bit bigger, but these are all just kind of quick fixes. They’re what we call cyclical support, and there’s limited in what we can do.
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Again, I already talked about this. The fact that you’re going to get more competition for shrinking pie, and you already start to see that with us data, is that there’s a fed paper, a Minneapolis paper that basically asked about her questions, what happens to these tars? What should the Fed do? And I think in this paper I think it’s very interesting because something people don’t discuss about is really what is the value of this import to the us, which is huge for other countries like Vietnam, which is almost like a third of its GDP in export to the US is what is that as a share of us? GDP, right? So it imports 4.1 trillion, roughly about 500 billion is from China. So that’s just going to us is roughly 30 trillion economy in terms of actually CPI basket in the us, most people have non tradables as their most cost, right?
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Housing, healthcare and so on. So in fact, it’s only 10% of the consumption is really tradable. So for the US and for a lot of these countries, actually it’s negative. So when you read the news, a lot of people reading the news and the reus could be Wall Street Journal, financial Times a Bloomberg, and the news is fixated on the corporates impact more than the households and they feel very negative. And because immediately the financial system reacts, when you hear the tariff news on reciprocal tariffs say stocks can fall very fast, your prices at Walmart haven’t fallen, they haven’t laid you off, but things react very strong. So you could go and instead of buying lots of stuff with the same amount of money that you would’ve done last month, stop buying less because you think, well, there’s two things I can do. I can hoard the stuff that’s very, you think cheap now and more expensive than you.
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Let’s buy as much as you can. That’s what a lot of people did with the cost. If you think it’s 25% higher before, but a lot of people also start buying less and that’s what’s happening with US data, retail sales and so on and so forth. And eventually the front loading impact is only so much and eventually what happens is that the stores have already hoarded all this stuff and they can’t sell, so they import less. So the import numbers are already starting to show, and that’s why I think in the third and the fourth quarter, the Christmas season is going to be very interesting whether or not people are going to actually buy the trinkets they always buy because Americans are pretty wasteful. I don’t mean to be saying this, but it’s true. Every year you go and you’re like, why are you selling so many ornaments?
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You buy them once and every year maybe you add one ornaments, but you always see the bubbles. They’re always on sale. So which means that you don’t need these. Maybe you take out something from your garage and put it up. So that has an impact on us. So the trade volumes are probably going to be pretty decent at the second quarter, but the third quarter and the fourth quarter as the US import less and then you’re going to see the earnings and so on and so forth. The third thing is, I guess the last impact is what Trump is asking. He’s making his problem the Asian’s problem, which is we want to move up our manufacturing capability, but we’re not going to do that if we buy it for less. It is like rare earth. The US imports about a hundred something million rare earth a year, which is if you think about the US economy, that’s a rounding era basically.
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So why would we go through all this trouble figuring out how to do something that has very low economic value, but high strategic importance? It’s kind of like water, right? Low economic value, high strategic water if you don’t have your debt, but frankly speaking, water is pretty cheap relative to diamond, which is not useful. So long story short here is that he’s saying, well look, we need to stop importing. How are we going to stop importing? The only way to do this, make it more expensive, but we can’t make it too expensive that we go out of business as a country. We have to somehow jumpstart everything. Now we’re going to get the Asians to do it for us. That’s what’s happening with Japan and all these countries. And it’s very difficult because in Asia we have deep regional supply chains. The second thing is not even about trade.
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Even if the US is the number one customer, say for the like of Vietnam and Vietnam imports intermediates from China, Vietnam has a bigger consideration with China, which is that China sits on top of it. So it’s like your neighbor, you don’t want to piss him off. You see him every day, he can do something to you or it’s like a bad relation. So long story short, Asia has a very tough problem if this is the way you get out of these reciprocal turfs and trades. So what I think the two impact of what’s happening, what Trump is doing is that if the tariffs were to stay, instead of which is globalization, which makes it a lot of sense to kind of move things around because moving things around is very cheap. There’s no friction to trade. You’re going to have more consolidation, what I said earlier in terms of corporate, but also in supply chains becoming more regionalized.
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So instead of imagine a car manufacturer which has a lot of parts, you import some parts, you ping, ping, ping, ping, ping, it goes over USMA and so forth. If you face 25% tariffs, maybe you just finish, take the whole thing. If you’re going to pay tariff, you pay for the final product. So then you have a shrinking of trade in a different way. So you can have an expansion of trade in a free trade area, whether it’s deeper integration, but fundamentally when you sell, you’re going to try to reduce the friction so the supply chains are shortening and that you’ll see, and I think, I don’t know what the Harvard, whatever thing is doing, but if you look at in the longer time horizon, you’re going to see that things will start shrinking and there will be more deepening of regional, and that was happen in Europe as well.
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Europe is something, it’s simmering relationships with Asia in terms of particularly China is something is simmering, which also will create this deepening of regional supply chains, but also in a way shrinking global supply chain. So some people coin terms like nearshoring, onshoring, whatever the case is, but that’s the way I would think. That’s why I kind of make this chart just to kind of show you that this is not going to be disrupted, but it’s going to be rejig and the arrows will flow a bit differently. Actually no, I said this is disrupted. It is going to be rejigged, regional supply chains will remain. It’s going to be rejigged. There will be a bit more in India to sell to the US market and so on and so forth. So you have a deeper regional supply chain rejigging with the center being China less but more centers.
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So we already discussed about investment flows. I think the FDI story is pretty well told, but I want to talk about diversification. So one area of trade, of course supply chains is supply chains. When we talk about supply chains is investment. To make something you need to build a factory to build a factory, hire the workers. A good example is despite of China’s rise in export, about 30% of China’s export is still foreign. Oh, so there’s a lot of outward FDR, but the stock remainder, just the share of Chinese is rising. So that share is shrinking. So I do think that there is going to be a lot of disruption in these factories. We move and I think going to be a lot of regionalization also in the us deepening us with Canada and something I haven’t talked about yet. But I think there is something that’s happening as well, which is on the portfolio side, which is the capital that’s moving around and how we’re going to recycle this surplus in Asia, as I mentioned, there are two themes that diversification and investment is happening, which is, sorry, just don’t look at this.
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Just like let me just build a narrative and we’re talking about the slides, is the idea that it’s a very China centric supply chain and a US-centric financial systems and these things are being shifted because of the sands and the investments and the relationship from tariffs, but also something else geopolitics. And there’s also the US side, there’s a center of gravity. There’s a reason why things are happening in China, and there’s a reason why everyone’s investing in the us but everyone has come to the consensus that there’s too much of a good thing. It’s too much of a good thing to buy everything from China, to have every China produce something. It’s too much of a good thing if everybody buys SPX and US treasury, right? There’s a consensus, but the question is how do we get there and what costs, right? If we diversify out of China, that means there’s a cost. You have to set up new factories, you have to reshuffle. If you diversify out of US assets, there’s a cost. US treasury is high yielding, it’s pretty safe. Even if it lost its aaa. So aa, remember France is only single A. If you buy Indonesia, it’s a barely investment grade. It just got past it. So when you diversify out of US assets, you also need to buy something else. You can buy something safer like German Bunin, but it yields less.
(00:37:29):
You can buy Japanese yen, but you use less and so on so forth. So there’s a big, big, big reshuffling and I think the rest of Asia is going to benefit the rest of those that have a harder time. Having an investment thesis will have people look at you better. Even China as an investment thesis, if you go and try to pitch China before Trump trade war was very difficult to do after. It’s much easier because China is an investment thesis in terms of diversification of supply chains, but it can be a diversification in financial asset. It’s like a total of two different thing except if you’re a US investor, European for example, it could be an interesting and so on and so forth. So I think those are also two key themes that’s playing out. It’s a difficult theme because it has costs and the costs.
(00:38:23):
Calculus will tell you that it’ll happen pretty slowly. The second thing is that if you buy too much of something, you appreciate the asset very rapidly. And when you appreciate the asset very rapidly, then I’ll give examples, bonds, if everybody’s buying Indonesian bonds, the debt of the capital market is very limited. Just give you ballpark. Indonesia is a one something trillion dollar economy. 1.4 debt of the government debt is roughly 30, 40%. So we’re looking at a roughly 500 billion max market and US treasury market is in the 30 trillion because if the US economy is 30 trillion and debt is almost a hundred percent should roughly a hundred. So if you move, you start moving and you move, suddenly you have everyone trying to buy stuff and it becomes more expensive. So then what happens next? Then you have risk building. So you’re buying something where the more you buy the prices go higher, so on and so forth.
(00:39:33):
So investors have this issue in diversification out of the US and that’s a real consideration and that’s why I think the trend is happening. It’s going to happen much slower and that means that the sell off of the bond market, US small market for example, we’ll find buyers just like the sell off of the Indonesian market, we’ll find buyers and the financial crisis is actually not as near as you think. So even if we have trade war, which is fracturing the world and disrupting things, and Trump is wildly erratic on the financial asset side, the storm is not brewing as much as you think it can cause volatility, there’s a difference. You can rise in a storm. If you go sailing, you can have severe wind. But what matters is in that volatility, it can be very, very exciting. You don’t want to be sailing with no wind, you’re going out of nowhere.
(00:40:33):
You’re just kind of stagnant just hanging out in the water. So you do want to have some wind, but too much wind, too much volatility can create a lot of problems. You can actually crash. So my thesis here on the financial asset side is actually when you read the news, and I give you an example of country I cover, which is Indonesia. There were in February, March, huge articles on IDR Indonesia Rya collapsing to Asian financial crisis. And I said, it’s fine. That was 1997. That country has been slowly depreciating only took a little bit like 50 basis points to get the Asian financial. Rupe is another example because Indian people are super negative India. So the droopy is also always depreciating to all time high because it’s depreciating every year by 2%. That’s what the central bank does. It doesn’t like a strong currency.
(00:41:20):
So of course it’s always depreciating to all time high. But if you look at the currency is only depreciating by 1.5% per year, which for an EM is probably not catastrophic. So basically it’s what I’m trying to say is that because it’s harder in the financial market side to completely abandon a market, you can sometimes it’s no longer a viable investment thesis like Venezuela, but somewhere like Indonesia sitting in Asia with its flush cash, when Chinese government bond yields a sub 2% in the shorter end duration the entire and there’s not enough juice there and your profit margins are thin, you’ll get bitters. There will always a Chinese bank that will buy or private bank that will buy some of this debt just like you’ll find buyers of American debt at a certain level. So in financial assets, there’s great trends going, but it’s not going to be going rapidly.
(00:42:24):
We can’t from overnight diversify the entire financial system or global trade is that I think he wants to cut me off. My time is out. OK, you know what, we can actually take q and a because I’m tired of talking, I’m just using an excuse. So I’m just showing some charts actually of allocations for an allocation. So if you look at this, the allocation of US equity is something that’s very interesting, right? In 2018 when Trump was president, people started buying lots of it and by now they have lots of it. So there’s too much allocation. So now if you’re going to sell out this much money, you have to find something to buy and you have to say who is a willing seller of these assets? A good example, I saw you Euro. The Euro is now 1.16 with the news this morning. The euro is the perfect asset to buy at the moment.
(00:43:31):
Why? It’s not the us, it’s not China. It’s developed enough, right? It’s safe enough, it has liquid. It’s kind of like a neutral guys. It’s always playing itself as the good guys. It’s always a victim of something. There’s always China beating on its trade or the us there’s someone and there’s the Middle East. So the euro is a perfect little asset and the problem is you can have too good of a good thing. Just think about Euro stock as banks, so that’s fine. But let’s imagine banks kind of like volatility. So probably going to do well in this environment. Let’s imagine if you actually sell real stuff a shirt like Zara before a hundred euro was a hundred euro versus whatever, but now a hundred euro is 16% more expensive. It’s now cheaper for you to buy European goods than Hong Kong because Hong Kong is the dollar then to go to duty fee per, because it’s 16%, right?
(00:44:28):
VAT is only 10% or something. Depends on the goods I think in jewelry, whatever. So long story short here is as you are getting in a way a tariff as a European exporter, but it’s not a real tariff, it’s just an FX fluctuation that’s hurting your bottom line and because your earnings are euros. So I do think that there’s a reason why, and I think a lot of countries are going to find out that this privilege, this thing, this rant, this Moran rant, this Trump rant, which is we have lots of people investing us appreciating the dollar to the point. At one point the euros in parity with the dollar, the yen was one 60, the dollar was so strong. I mean it makes no sense for Americans to do anything but buy stuff, go to Europe. Well there’s no point. There’s no point doing anything. It’s so cheap. So then what happens to your export? It goes down except for some sector. So people aren’t going to start to figure out as well that too much of a good thing. There’s a burden. And I think that’s another big question beyond this, what is China going to do? Is it going to want this?
(00:45:44):
Does it want to have the responsibility of the US to secure the sea? Does it want the responsibility of the dollar? And I think many people are going to come to the conclusion that probably not. So the change we’re seeing is probably going to be much more gradual than people think, in my opinion. Thank
Amy Chang Chien | The New York Times (00:46:06):
You. Thank you so much for your amazing presentation. I’m Amy for the New York Times in Taiwan. I have a question about the recent appreciations of currencies in Asia. How do you think this will affect the things you talk about? Can you give some assessment?
Trinh Nguyen, Natixis (00:46:24):
OK, so the appreciation is like some people say of course for Taiwan and a lot of the Asians currencies, currencies can only appreciate if the central bank allow it to, right? Central bank has always intervene. They can intervene by building up reserves and sterilize the currencies and so on and so forth. So when they let it appreciate the question is how much more or right? And I think the second one of course is the N entity D is appreciated very rapidly, very fast, but kind of stay at that level, which again goes to show unless the yuan, and I think this is where I think it’s a big story. Can the entity entity rise against the yuan too significantly? And the entity entity, of course Taiwan has a lot of sectors that have at the technological frontier, TSMC and so far, but even that it’s going to cut into the margins.
(00:47:17):
They’re going to have to get the suppliers to squeeze the margins and the supplies and so forth. And it gets to a certain level, it’s going to start impacting earnings in NTD, right? Because TSMC sells to the US. TSMC sell to others. If others appreciate as much as them, then it’s neutralized. But the reality is has not, there’s only three currents. A lot of the North Asians have done a lot of appreciation. The JPY, which actually depreciated and then appreciated again to 1 45. So it’s actually moved very flat. And what the BOJ is doing is very interesting. They haven’t hiked anything because they realized that again, too much of a good thing. We can’t do too much. We can’t really do QT on the longer end. Even the tapering, we’re continuing 2026. So long story short, I don’t think there’s much more appreciation of the Asian effects of the yuan doesn’t move because if everybody moves versus dollar, because the dollar is a reserve, currency is kind of an anchor.
(00:48:16):
It kind of gets neutralized if everyone does. But if all the competitors, the North Asians move and the Yuan barely moves, if you look the Yuan versus dollar, it barely moves, then your relative game is lower. And I think from that point of view, the Asian effects, the Bank of Korea already mentioned that it’s going to watch the one I just published a note like last week on this particular issue, can the Korean won rise against the Yuan that significantly it’s risen about 6% higher, it’s much higher in dollar. The answer is no for all the things I’ve mentioned, right? And Korea is a little bit Taiwan’s, a little bit less because you have something that everyone kind of really needs. But Korea has memory chips where it’s got people kind of encroaching on it. It’s got ships being eroded by the Chinese, it’s got a bunch of industrials being eroded like the chemicals and whatever.
(00:49:13):
If you look at Korea relationship with China, it’s gotten really bad. It’s trade balance since 2023 went negative, it’s one of the few countries that had a trace surplus. It went negative in 2023 and it continued to go negative. And the reason it goes negative is bad as well is that imports of rising and exports are declining. So which means that your industrial sectors are slowly being in Deindustrialized and the one place where Korea has done pretty well is exporting to the us. So on an net, if you look at Korea’s numbers, it look pretty good. And this is where Korea has a problem. But Trump is like, no way Jose, we have 25% auto tariffs on Korean goods even though we have an FTA, right? So that’s bad. So for Korea, there’s a big problem. The currency appreciation adds the problem. China PPIs minus 3.5% deflated. That means that compounding all the deflation China has had, plus the appreciation means you’re uncompetitive. Pricing wise, we’re not talking about the quality of the product at all. We’re just talking about pricing here. So I do think that for the Asians, they watch the yuan like a hawk.
(00:50:27):
The PPOC is watching though. You want a hawk as well, right? And it’s not going to get let that go. I don’t think it’s probably one of my bigger calls is I don’t think the yuan is going to be depreciated against the dollar massively. So that’s why the euro is an exceptional story. It also stands out like a sore thumb because what that means is it’s very attractive if you compete versus a Euro product because they’re much more expensive and your goods are now cheaper so you can sell into Europe. So they’re losing in their market and in third market. So I do think we have basically a global currency world. So people think the big picture is the dollar going down, but it’s not. The dollar is just an anchor, right? It goes up when you know what I mean. If everyone depreciate against the dollar the same way or everyone appreciate the same way, it’s not a big story because it’s just a cross. But actually what’s interesting is the cross between the Yuan and these big traders. So I do think that it’s a big problem for Taiwan. If it appreciates further, they would have to intervene at some point the Euro, they’ll have to intervene. And I think one 20 is a cap. Some people call for one 40. I think if the yo doesn’t move, going to 1 1 40 is industrial suicide.
(00:51:56):
German cars are already uncompetitive.
Soo-Hyang Choi | Bloomberg (00:52:03):
Thanks Soo-Hyang from Bloomberg News, I cover Korean economy at government. So I remember one of your slides say Asian countries need to do as many trade deals as possible, but you also said they really don’t have any leverage. That’s what I’m hearing when I meet with Korean government officials. So what do you think these Asian countries, smaller economies, how can they approach these negotiations and what would you say a good deal for Asian countries would look like when they’re
Trinh Nguyen, Natixis (00:52:30):
Sectoral? Look, countries are very different. It’s like all trade not equal for Korea. Auto is important. Auto export to the US chips and so on and so forth. You’ll look at the UK deal, it’s sectoral, right? The UK took 10% hit, but they got the sectoral coda, which is basically the same level they traded with the us. So I would try to get sectoral. I think that’s what if you look, you read the Japanese, that’s what they’re doing. They’re trying to get, they’re going to probably, you go for what? You must have to survive first and then you give up the little guys in my opinion, and then you buy time. So I do think that for Korea, sectoral is important. They already have. Korea faces a big, big problem already, which is the way Korean companies, and this goes back to the Trump. So Korea is turning into America in a way, is that the big companies like Samsung Hyundai and even the solar companies have done basically FDI to the us.
(00:53:42):
If you look at, we have a lot of these charts, their deployment to the US is massive and their Korean companies are behind the imposition of solo on Vietnam recently because they have deployed so much capital into the us. And what a lot of the American companies did was that when Trump imposed tariffs on China, they started importing from Southeast Asia, right? And the Korean companies were the first to then file this lawsuit with the Department of Commerce that successfully imposed thousands of tariffs on these Southeast Asian companies because they want to make sure their investment in the US bear fruit. So even if the Korean companies do well in terms of arbitraging with FDI to the us, I think Korea has a problem in that if everything is going to be produced in the US via outward FDI, Korea is going to lose jobs in autos, is going to lose jobs in solar plants and so on and so forth.
(00:54:36):
Fundamentally, they need to find out a way somehow have jobs in Korea. Selling to Koreans doesn’t work because fertility that’s very low. So you have to sell outward. Where Korea is big in one of the big IPOs I think last year was in auto, Korean auto company in India. So I think for Korea, they need to find a market that’s the opposite of their market. They need to try to preserve some of the sectors inside Korea because you need an anchor for your industrial sector. I think some sectors they can be big winners like shipping is if the US is going hard on China, they need Korea for naval ships for commercial, they can use leverage on that. But fundamentally, I think the Korean growth model, even before Trump was cracking and I think after Trump is very challenging. And so the president, the new president and president Lee is going to have a lot of work cut out for him.
(00:55:40):
But I think the answer is probably even more subsidies to compete and also watching that Korean won like a hawk. But in terms of negotiations, it needs to go for sectors, go for easy wins of sectors, probably settle for 10% tariffs, but make sure that you get a preferential sectoral that you care about access to the US because if you look at, and I wrote this in my trade, this is an area where Korea is doing well because it’s able to solve to the US without China competition. So it needs to maintain the US market in my opinion. But how it does so needs to probably sweeten trumps the ears a bit and get some of the sectors they need.
Kevin Johnson, National Press Foundation (00:56:24):
We have a question. Ravi, go ahead.
Ravi Dutta Mishra | The Indian Express (00:56:26):
Hi, this is Ravi from the Indian Express. So I wanted to understand your views on India as an investment destination. You are talking about trade deals, India has skipped joining the RE, the China LED RE, and we are trying to sign deal with the European Union, the us
Trinh Nguyen, Natixis (00:56:46):
I have that slide here somewhere,
Ravi Dutta Mishra | The Indian Express (00:56:48):
All these western countries. So how do you think it is going to pan out? And also we are opening up perhaps for the first time our automobile industry, like you mentioned, it’s anchor for the industrial base. So are these deals right? Decision for India, because we already have a lot of deficit with China, we are already importing a lot more than we are exporting. So what is your,
Trinh Nguyen, Natixis (00:57:14):
OK, so I think India is very interesting. It’s interesting, OK, we start with its relationship with China I think is interesting because of course, as you know, India and China had a border dispute. They never call it war, and they avoided using any weapons to avoid calling wars. So they even used knives to fight at the border, but that got really calm recently. But as a result of this border dispute, TikTok got banned, companies got banned and investment in people that was like, it’s impossible to get a visa as a mainland Chinese going to India just like being a Pakistani basically. But worse if you’re Pakistani, probably because you have to declare your ancestors. But long story short, there’s no relationship in terms of people mobility and investment, but it has this widest trade deficit with China and that relationship is even rising. And rising.
(00:58:09):
Rising. And this is something I ask every time I meet Indian government official, is that, how do you think about that? Because in a way it doesn’t get any of benefits of investment, but it gets a bunch of trade. And as it try to in this aggressive Trump 2.0, and I think India can be a big winner relative because if you look at that chart where I map out the linkages, India is kind of far, but it still needs to import the components and many of these things are Chinese. So then there’s a question, this question, and I think India has a philosophical question beyond all of these things is how it sees about the outside world. Because India obviously has Pakistan, which is a big security issue, which is obviously many people before our Punjab and basically just Indian. So got split. And it sees the world in a very suspicious lens because it sees security problems.
(00:59:12):
If you ever try to enter India, you’ll know they ask all kinds of questions. I’ve never entered a country where it’s very so severe in of security and when you go to the airport, so there’s this fear, the fear of the outside, the fear of the inside, and that fear is in trade. I talk to officials and they say, well, and I said, how come you don’t do this and this and this and this and this? And they say, well, if we let it in, then we can let the bad. There’s a fear. There’s a fear of the outside. There’s a fear of trade. But I think that fear has declined. And there’s another fear, which is a fear of missing out. The FOMO is that we miss out. So I think there’s that philosophical debate, the fear of the outside and things are going, but things are going better but not great.
(01:00:05):
But as China, and I think that conflict with China, which I go back to is why is an important one for India and why I think it’s changing is that China’s rise isn’t about China positioning as an investor destination and so on, but it’s a security threat. If you look at what Israel and Iran and what happened in a hard power world, if China decides to actually invade, if you are not a strong industrial power, right? Look what happened to Iran. Look at a lot of these countries. The lesson here is that you must industrialize.
(01:00:44):
It is not about even choosing sectors to grow, but it’s about survival. And I think China’s rise in a way. I think it’s helpful even if in choose a low of fear. And China’s industrial and military ambition in a way is also helpful is that India also has to be. So what that means is that they need to find a way to exit this fear of the outside. And I think in a way Trump is accelerating the opening up of India, maybe vis-a-vis the US and very slowly probably with the eu, so they’re entering this late. But I think things are very much changing in India the way people think because the reality of the world we live today is that you can’t be functioning the same way when your neighbor is already industrialized at great speed militarily. And then the fighting between Raphael’s, the French Raphaels versus the Chinese aircraft show you that and they can build a lot of these things. So I do think that for India, they’re going to open up very slowly but very rapidly over time and they’re going to probably start with the bigger countries in the us.
Nilantha Ilangamuwa | Sri Lanka Guardian (01:02:06):
Thank you so much for your presentation. And before we move to other countries from Sri Lanka and represent S Guardian, I just want to get your advice about the case in Sri Lanka. Probably that we went bankrupt a couple of years back and then we now slowly, surely coming up, but our economy is still on the knife edge. So with the help of the IMF and other the creditors and all, we got the grace period until 2028. Right after 28 we had to pay back. And how a small country like Sri Lanka can’t prevent going back to the bankruptcy. And what is the role in this situation? You probably know that we got the 44% tariff from Trump’s as well. Yes.
Trinh Nguyen, Natixis (01:02:56):
Sorry, my eyes are bad. So Lanta. OK, sorry. Yeah,
Nilantha Ilangamuwa | Sri Lanka Guardian (01:03:01):
So I just would know what your advice is.
Trinh Nguyen, Natixis (01:03:03):
OK, thank you Lanta. God, you’re trying me to get me to solve your country’s problems. Make your problem my problem. I’m just kidding. No, that’s a joke. Yeah, I know. That’s a big one. Let me just give you a simple cop out diversification. So I think one of the things is that Srilanka has got tourism, it’s got two problems ongoing to crisis, very similar to Pakistan is that we got before COVID was on its knees, COVID, completely annihilated tourism. I’m not a srilanka expert, I’m just kind of shooting what I know and just macro hats. And then you got the energy crisis and it’s a classic balance of payment problem tourism is how it earns foreign earnings. You got to have more than that, right? So if you ask me, if I were to be your leader’s advisor, I would say diversify your basket, your earnings and tourism, anything, just countries that diversify when all these crisis have done better.
(01:04:11):
Vietnam’s example where they had tourism, it got annihilated, they still got manufacturing, so on and so forth. You have some savings for buffers. Energy is a bloodline of your economy. You need to figure out how to diversify your energy supply to meet the demand. If your energy source is LNG, you’re in trouble. If the Europeans are buying it, pushing it up higher only LNG. If your energy supply is only renewable, you are in trouble. If suddenly, if you don’t have the grid to distribute it, you have too much of solar, you have too much of wind, you can have very little like Vietnam hydro was great, suddenly it dried up. And also it hasn’t invested in the grid to distribute all of this. So I would say the simple answer is diversification. Diversification of sources of income and so on and so forth. But frankly speaking, you can’t do any of this if you don’t have the right politics.
(01:05:05):
So the right people, I mean I can’t solve this, not just the leader, but the bureaucrats, the technocrats build some institutions to kind of a good example. I would say Thailand is a country been on its knees for the people leading, but the technocrats have been decent enough that it’s not like devolving, it’s just a burning crisis. It burns slowly over time because they still have decent people at the MOF, the BOT, the airports still works and so on, so forth. So some people think Thailand is a basket case, but I would say for an EM country, it’s not done too badly that it’s been an ongoing political science crisis since the two thousands, right? When toxin got removed. So in that way, I would say build some institutions to solve the problems. I said that will endure. So I think, not to sound like someone who’s brainwashed by DC or US institutions, but I’m a big, I think if you’re lucky, you get a great leader like the type or whatever, but a small place like this is different.
(01:06:17):
But even a big, big place, you need the institutions to hold to solve some of these problems. And we can only solve problems that we know that we don’t know. We haven’t thought about the problems that we don’t know. So in this crazy world, you’re going to find yourself where instead of using soft power, you have hard power. So I dunno if that helps push your government to do more to attract FDI push your government to do more to get other than tourism. Tourism is an easy winner, is beautiful. It’s got teas, got good foods, it’s got sapphires got. I know I keep talking about jewelry I’m obsessed about, but I’ve never been to Sri Lanka. But I think that’s an easy sell, right? But you need to have more than that and people could choose to go look at it and not spend any money.
(01:07:11):
Just exactly what’s happening in Hong Kong. You can have a beautiful place and a beautiful whatever, and the mainland come and they now just take pictures. Literally they go in front of this fringe club and they take pictures in front of, and I’m just like, seriously, you need to buy something. They should be a tourism tax because eventually it’s tiring for the local shops because they’re so expensive. It’s been dollarized, right? So there’s no reason people buy anything. They go across sangen cheaper. So they just take the pictures and they go back across and they buy all the goods there. So tourism in my opinion, I’m not a big fan as a growth model at all because it’s so volatile.
Kevin Johnson, National Press Foundation (01:07:51):
So I think we’re going to make this the last. So I promised trend this would be an hour, but she’s been generous.
Trinh Nguyen, Natixis (01:07:58):
Oh, it’s more than an hour.
Kevin Johnson, National Press Foundation (01:07:59):
Yeah.
Trinh Nguyen, Natixis (01:08:00):
Oh, goodness me.
Franc Han Shih | Thai Public Broadcasting Service (01:08:01):
Thank
Kevin Johnson, National Press Foundation (01:08:01):
You.
Franc Han Shih | Thai Public Broadcasting Service (01:08:02):
Given that you talk about Thailand, so Frank from Thai PBS, I just want to understand how does the acceleration of regionalization help image the global trade disruption? As in of course in Ian, we always talk about intro trade promo for that. And right now Malaysia is promoting Ian, GCC, China to other relations. How does that really help? And Thailand actually is trying to forge that collaboration Ft A with EU two right now. I think today is the starting point for the six negotiation process stage. So how does that regionalization block to block to help at this moment?
Trinh Nguyen, Natixis (01:08:45):
It doesn’t hurt, right? I would say, like I mentioned, there’s friction to trade to the US fundamentally. Eventually you’re going to export the final product instead of the intermediate. This one, that’s the one impact regionalization helps because you reduce frictions, you become more competitive. But I think it’s actually been pretty well, we have already been regionally Ian as the center of a lot of food trade agreements. The issue with the region is non tariff barriers. They have this Ian meeting where they’re like, we’re going to reduce the last 1% that we have friction on. But the problem with us is not tariff barrier, it’s the non tariff barrier in terms of people mobility and so on and so forth. So I do think that, and then fundamentally for ION and then also China, many of these countries, it’s very different than the EU is that it’s created to protect the sovereignty. It’s not created to deeply integrate, to subordinate ourselves to the greater dream. There’s no Ian dream. If you talk to a European, they have a European dream. No, I’m serious. My boss is from that generation. She’s got that dream. It is from the sixties. They make movies about it. They try to create this identity. There’s no Ian identity. It’s a made up acronym. So I think it’s deeper. It’s different.
(01:10:16):
Thailand, Burma. Does Thailand feel any responsibility towards Burma? No. Just sees it as a tourism liability of causing the Chinese tourists to stay away because of the kidnapping. You know what I mean?
So I do think that we don’t have that deeper vision of integration. Maybe it’s a good thing, maybe it’s a bad thing. Irrespective we’re going to integrate the easiest way possible. I do think that within Sian relationship with China is deepening a lot, partly because of China’s focus. Traditionally the way China did our FDI was to get what it didn’t have, which is a country that doesn’t have resources in Latin America, Africa, Australia. And then it realized that, OK, now that I got this stuff, I don’t have influence in my backyard, so to speak. People hate it when I use that word, but I think it’s an easier way to envision it the way, think about it.
(01:11:15):
And then they start going into Southeast Asia where the Japanese have traditionally. And so I do think that because the will is there and it sees that it’s the easiest non friction expansion of relationship. There’s friction with Korea, there’s friction with Japan because they’re allies not just in ally countries, but actually militarily and also they compete. Whereas in the Sian countries, it’s easier to kind of enter in a divine conquer kind of way. Whereas Malaysia argues for deeper relationship with China in a self-interested way. There isn’t a cohesive message regarding anything. No one’s looking out for the Philippines little ship ramming with China. They have zero interest. Thailand is interested in protecting its tourism, right? So on so forth. There’s no bigger ideological vision. So I think there’s a limit, if that makes sense. And I don’t mean to be pessimistic, just realistic. Yeah, and I mean there’s a Cambodia Thailand dispute ongoing that’s brewing potentially a coup, right? So yeah, I’m highly skeptical because I know how they think. They don’t think the purpose of Ian is to subordinate these countries for a greater good. The purpose of Ian is to fight communism, which no longer is a fight, and to somewhat promote us, but also protect sovereignty.
Kevin Johnson, National Press Foundation (01:12:49):
I think we’ll have to end it there, unfortunately. But I want to thank Trinh for her time and sharing her knowledge with you. I think we could have gone for a couple more hours with your energy and the questions of the room. I think we could go longer. But thank you so much for doing this. We really appreciate it.
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