1 00:00:00,767 --> 00:00:01,501 >> Sreenivasan: NEWSHOUR'S 2 00:00:01,501 --> 00:00:03,136 SERIES, "CHINA: POWER AND 3 00:00:03,136 --> 00:00:04,537 PROSPERITY," CONTINUES TONIGHT 4 00:00:04,537 --> 00:00:05,672 WITH ONE OF THE MOST CRITICAL 5 00:00:05,672 --> 00:00:07,073 ISSUES RANKLING U.S./CHINA 6 00:00:07,073 --> 00:00:08,675 RELATIONS: TRADE. 7 00:00:08,675 --> 00:00:09,843 THE TWO NATIONS' DISPUTE HAS 8 00:00:09,843 --> 00:00:11,411 LARGELY PLAYED OUT AS A TARIFF 9 00:00:11,411 --> 00:00:12,912 WAR, BUT THERE ARE UNDERLYING 10 00:00:12,912 --> 00:00:14,748 ISSUES AND ARGUMENTS ON BOTH 11 00:00:14,748 --> 00:00:15,548 SIDES. 12 00:00:15,548 --> 00:00:16,649 SO, IN PARTNERSHIP WITH THE 13 00:00:16,649 --> 00:00:17,817 PULITZER CENTER, WE TELL THIS 14 00:00:17,817 --> 00:00:19,486 STORY WITH TWO CORRESPONDENTS, 15 00:00:19,486 --> 00:00:21,588 NICK SCHIFRIN AND KATRINA YU. 16 00:00:21,588 --> 00:00:23,223 THEY BEGIN IN CHINA'S SILICON 17 00:00:23,223 --> 00:00:25,558 VALLEY, SHENZHEN. 18 00:00:25,558 --> 00:00:26,226 >> Yu: IN SHENZHEN'S 19 00:00:26,226 --> 00:00:29,295 SEG-E-MARKET, YOU CAN BUY 20 00:00:29,295 --> 00:00:31,698 ANYTHING ELECTRONIC. 21 00:00:31,698 --> 00:00:32,999 THERE ARE TEN FLOORS OF CIRCUIT 22 00:00:32,999 --> 00:00:34,634 BOARDS, BATTERY-POWERED 23 00:00:34,634 --> 00:00:37,737 CHILDREN'S TOYS, DIGITAL 24 00:00:37,737 --> 00:00:40,306 WATCHES, WIRELESS HEADPHONES, 25 00:00:40,306 --> 00:00:43,710 EVEN BITCOIN-MINING COMPUTERS. 26 00:00:43,710 --> 00:00:44,511 >> Schifrin: AND ALL OF THIS IS 27 00:00:44,511 --> 00:00:46,379 SOLD ALL OVER THE WORLD BECAUSE 28 00:00:46,379 --> 00:00:47,680 INTERNATIONAL COMPANIES HAVE 29 00:00:47,680 --> 00:00:49,516 LONG TAPPED INTO CHINA'S MASSIVE 30 00:00:49,516 --> 00:00:51,284 MARKET AND HUGE SUPPLY OF 31 00:00:51,284 --> 00:00:53,019 RELIABLE LABOR. 32 00:00:53,019 --> 00:00:54,487 >> Yu: IF YOU HAVE AN ELECTRONIC 33 00:00:54,487 --> 00:00:55,955 PRODUCT THAT'S LABELED "MADE IN 34 00:00:55,955 --> 00:00:57,557 CHINA," THE CHANCES ARE ITS 35 00:00:57,557 --> 00:00:59,759 PARTS COME FROM HERE AND END UP 36 00:00:59,759 --> 00:01:01,561 ALL OVER THE WORLD, INCLUDING 37 00:01:01,561 --> 00:01:02,796 THE U.S. 38 00:01:02,796 --> 00:01:03,496 >> Schifrin: FOR DECADES, THE 39 00:01:03,496 --> 00:01:04,898 WORLD'S TWO LARGEST ECONOMIES, 40 00:01:04,898 --> 00:01:06,232 THE U.S. AND CHINA, HAVE BEEN 41 00:01:06,232 --> 00:01:07,167 INTEGRATED. 42 00:01:07,167 --> 00:01:07,667 BUT NOW, THE TRUMP 43 00:01:07,667 --> 00:01:08,768 ADMINISTRATION IS TRYING TO 44 00:01:08,768 --> 00:01:10,236 CHANGE THAT, AND THE TRADE WAR 45 00:01:10,236 --> 00:01:11,404 IS NOT ONLY GOING TO AFFECT 46 00:01:11,404 --> 00:01:12,772 AMERICAN BUSINESSES AND 47 00:01:12,772 --> 00:01:13,573 CONSUMERS. 48 00:01:13,573 --> 00:01:14,707 >> Yu: BUT ALSO BUSINESSES AND 49 00:01:14,707 --> 00:01:17,110 CONSUMERS HERE IN CHINA. 50 00:01:17,110 --> 00:01:18,411 SEG-E-MARKET HAS BEEN CALLED THE 51 00:01:18,411 --> 00:01:20,146 BAROMETER OF CHINA'S ELECTRONICS 52 00:01:20,146 --> 00:01:21,181 INDUSTRY. 53 00:01:21,181 --> 00:01:22,782 COMPONENTS AND FINISHED PRODUCTS 54 00:01:22,782 --> 00:01:24,284 ARE SOURCED FROM SUPER-FACTORIES 55 00:01:24,284 --> 00:01:25,819 ALL OVER SHENZHEN. 56 00:01:25,819 --> 00:01:27,554 MORE THAN 60,000 BUSINESSES HAVE 57 00:01:27,554 --> 00:01:29,055 SET UP SHOP HERE. 58 00:01:29,055 --> 00:01:30,957 WHILE THEY MAY SELL EVERYWHERE, 59 00:01:30,957 --> 00:01:32,926 THIS YEAR, ALL EYES ARE ON THE 60 00:01:32,926 --> 00:01:35,028 U.S. 61 00:01:35,028 --> 00:01:35,829 >> ( translated ): I HOPE THE 62 00:01:35,829 --> 00:01:37,130 TRADE WAR DOESN'T CONTINUE TO 63 00:01:37,130 --> 00:01:38,131 GET WORSE. 64 00:01:38,131 --> 00:01:38,932 LET'S KEEP A PEACEFUL 65 00:01:38,932 --> 00:01:39,999 RELATIONSHIP. 66 00:01:39,999 --> 00:01:41,301 DON'T RAISE TARIFFS BECAUSE NO 67 00:01:41,301 --> 00:01:42,869 ONE WINS. 68 00:01:42,869 --> 00:01:43,736 >> Yu: ALL THE VENDORS THAT WE 69 00:01:43,736 --> 00:01:45,438 SPOKE TO BLAME PRESIDENT TRUMP 70 00:01:45,438 --> 00:01:48,741 FOR THE TRADE WAR, AND SOME SAY 71 00:01:48,741 --> 00:01:50,210 TRUMP FEELS THREATENED BY 72 00:01:50,210 --> 00:01:52,645 CHINA'’’S SUCCESS... 73 00:01:52,645 --> 00:01:53,480 >> ( translated ): CHINA'S 74 00:01:53,480 --> 00:01:54,781 ELECTRONICS INDUSTRY IS PRETTY 75 00:01:54,781 --> 00:01:55,348 GOOD. 76 00:01:55,348 --> 00:01:56,716 NOW, TRUMP IS JUST TRYING TO 77 00:01:56,716 --> 00:01:59,152 SUPPRESS CHINA'’’S DEVELOPMENT. 78 00:01:59,152 --> 00:02:00,520 >> Yu: ...THOUGH SOME FREELY 79 00:02:00,520 --> 00:02:02,455 ADMIT TO SELLING COPIES OF U.S. 80 00:02:02,455 --> 00:02:03,523 PRODUCTS. 81 00:02:03,523 --> 00:02:07,393 I ASK HER IF THIS IS A GO-PRO. 82 00:02:07,393 --> 00:02:08,228 >> ( translated ): NO, IT'S 83 00:02:08,228 --> 00:02:09,596 NOT A GO-PRO. 84 00:02:09,596 --> 00:02:11,297 GO-PRO IS MADE ABROAD, AND IT'S 85 00:02:11,297 --> 00:02:12,665 VERY EXPENSIVE. 86 00:02:12,665 --> 00:02:14,200 BUT THIS ONE IS CHEAP, AND IT'S 87 00:02:14,200 --> 00:02:15,368 SIMILAR. 88 00:02:15,368 --> 00:02:16,936 >> Yu: HOW SIMILAR, NICK? 89 00:02:16,936 --> 00:02:18,371 >> Schifrin: WELL, VERY SIMILAR. 90 00:02:18,371 --> 00:02:20,006 THE CHINESE SPORTSCAM LOOKS 91 00:02:20,006 --> 00:02:21,508 EXACTLY LIKE THE AMERICAN 92 00:02:21,508 --> 00:02:22,542 GO-PRO. 93 00:02:22,542 --> 00:02:23,843 AT THIS CHINESE NEW BARLUN 94 00:02:23,843 --> 00:02:25,778 STORE, TAKE A LOOK AT THE WORDS. 95 00:02:25,778 --> 00:02:27,547 THE SNEAKERS AND THE WRITING 96 00:02:27,547 --> 00:02:29,716 LOOK AN AWFUL LOT LIKE AMERICAN 97 00:02:29,716 --> 00:02:30,917 NEW BALANCE. 98 00:02:30,917 --> 00:02:32,318 THAT'S JUST TWO EXAMPLES OF 99 00:02:32,318 --> 00:02:34,120 CHINESE COPYCATTING THAT THE 100 00:02:34,120 --> 00:02:36,222 U.S. SAYS TURNED INTO THEFT ON 101 00:02:36,222 --> 00:02:38,258 AN INDUSTRIALIZED SCALE. 102 00:02:38,258 --> 00:02:39,626 THE U.S. HAS INDICTED HACKERS 103 00:02:39,626 --> 00:02:40,660 CONNECTED TO THE CHINESE 104 00:02:40,660 --> 00:02:42,662 MILITARY FOR STEALING SPECS OF 105 00:02:42,662 --> 00:02:44,364 AN AMERICAN POWER PLANT SIMILAR 106 00:02:44,364 --> 00:02:46,266 TO THIS MODEL, AND NAVIGATION 107 00:02:46,266 --> 00:02:48,034 SATELLITE TECHNOLOGY. 108 00:02:48,034 --> 00:02:49,235 AND THE U.S. SAYS THE MOST 109 00:02:49,235 --> 00:02:51,337 EXPENSIVE WEAPONS SYSTEM EVER, 110 00:02:51,337 --> 00:02:53,606 THE AMERICAN F-35, LOOKS JUST 111 00:02:53,606 --> 00:02:56,042 LIKE THE CHINESE J-31 BECAUSE 112 00:02:56,042 --> 00:02:57,310 CHINESE HACKERS STOLE THE 113 00:02:57,310 --> 00:02:59,712 DESIGNS. 114 00:02:59,712 --> 00:03:00,847 THE U.S. SAYS, IN JUST A FEW 115 00:03:00,847 --> 00:03:03,616 DECADES, THEFT HELPED CHINA MAKE 116 00:03:03,616 --> 00:03:05,485 ITS MILITARY WORLD-CLASS; AND 117 00:03:05,485 --> 00:03:07,253 ITS COMPANIES, TECHNOLOGY 118 00:03:07,253 --> 00:03:08,188 LEADERS. 119 00:03:08,188 --> 00:03:09,722 >> THAT KIND OF TECHNOLOGICAL 120 00:03:09,722 --> 00:03:11,291 ADVANCEMENT DOESN'T HAPPEN 121 00:03:11,291 --> 00:03:12,592 ORGANICALLY. 122 00:03:12,592 --> 00:03:13,359 >> Schifrin: JAKE PARKER HAS 123 00:03:13,359 --> 00:03:14,928 LIVED IN BEIJING FOR A DECADE. 124 00:03:14,928 --> 00:03:15,962 HE'S THE VICE PRESIDENT OF THE 125 00:03:15,962 --> 00:03:17,664 U.S./CHINA BUSINESS COUNCIL, 126 00:03:17,664 --> 00:03:18,932 WHICH ADVOCATES FOR AMERICAN 127 00:03:18,932 --> 00:03:20,533 BUSINESSES IN CHINA. 128 00:03:20,533 --> 00:03:23,069 >> CHINA'S SYSTEM IS SET UP IN 129 00:03:23,069 --> 00:03:25,805 SUCH A WAY THAT THE STATE HAS 130 00:03:25,805 --> 00:03:27,507 ACCESS TO INFORMATION THAT 131 00:03:27,507 --> 00:03:28,675 COMPANIES WOULD CONSIDER TO BE 132 00:03:28,675 --> 00:03:29,876 TRADE SECRETS. 133 00:03:29,876 --> 00:03:31,244 THE AMOUNT OF INFORMATION THAT'S 134 00:03:31,244 --> 00:03:32,412 TRANSFERRED TO THE CHINESE 135 00:03:32,412 --> 00:03:34,347 GOVERNMENT GOES FAR BEYOND WHAT 136 00:03:34,347 --> 00:03:35,381 WOULD BE EXPECTED IN ANOTHER 137 00:03:35,381 --> 00:03:36,316 MARKET. 138 00:03:36,316 --> 00:03:37,417 >> Schifrin: AS BUSINESSMAN... 139 00:03:37,417 --> 00:03:38,484 >> YOU HANDLE IT, THEN. 140 00:03:38,484 --> 00:03:39,052 >> Schifrin: ...AND 141 00:03:39,052 --> 00:03:40,386 PRESIDENTIAL CANDIDATE, DONALD 142 00:03:40,386 --> 00:03:41,754 TRUMP HAS ACCUSED CHINA OF 143 00:03:41,754 --> 00:03:43,656 PURSUING DECADES OF PREDATORY 144 00:03:43,656 --> 00:03:45,091 TRADE PRACTICES. 145 00:03:45,091 --> 00:03:47,493 >> WE CAN'T CONTINUE TO ALLOW 146 00:03:47,493 --> 00:03:49,896 CHINA TO RAPE OUR COUNTRY, AND 147 00:03:49,896 --> 00:03:51,197 THAT'’’S WHAT THEY'’’RE DOING. 148 00:03:51,197 --> 00:03:53,299 IT'S THE GREATEST THEFT IN THE 149 00:03:53,299 --> 00:03:54,467 HISTORY OF THE WORLD. 150 00:03:54,467 --> 00:03:55,902 WHEN YOU SEE CHINA, THESE ARE 151 00:03:55,902 --> 00:03:57,470 FIERCE PEOPLE IN TERMS OF 152 00:03:57,470 --> 00:03:58,271 NEGOTIATION. 153 00:03:58,271 --> 00:03:59,205 THEY WANT TO TAKE YOUR THROAT 154 00:03:59,205 --> 00:03:59,572 OUT. 155 00:03:59,572 --> 00:04:00,707 THEY WANT TO CUT YOU APART. 156 00:04:00,707 --> 00:04:01,274 >> Schifrin: THE TRUMP 157 00:04:01,274 --> 00:04:02,742 ADMINISTRATION HAS INCREASED 158 00:04:02,742 --> 00:04:04,143 U.S. DEMANDS THAT CHINA STOP 159 00:04:04,143 --> 00:04:05,845 INTELLECTUAL PROPERTY THEFT AND 160 00:04:05,845 --> 00:04:07,647 WHAT THE U.S. CALLS OTHER UNFAIR 161 00:04:07,647 --> 00:04:09,249 TRADE PRACTICES. 162 00:04:09,249 --> 00:04:10,316 THE ADMINISTRATION HAS RELEASED 163 00:04:10,316 --> 00:04:11,851 TWO MAJOR INVESTIGATIONS INTO 164 00:04:11,851 --> 00:04:13,586 CHINESE CORPORATE THEFT AND 165 00:04:13,586 --> 00:04:14,921 LABELED CHINESE COMPUTER, 166 00:04:14,921 --> 00:04:16,322 TELECOM, AND TECHNOLOGY 167 00:04:16,322 --> 00:04:17,957 COMPANIES RISKS TO AMERICAN 168 00:04:17,957 --> 00:04:19,492 NATIONAL SECURITY. 169 00:04:19,492 --> 00:04:20,426 >> PRESIDENT TRUMP HAS RAISED 170 00:04:20,426 --> 00:04:21,828 ISSUES THAT HAVE BEEN AN 171 00:04:21,828 --> 00:04:23,062 IRRITANT IN THE RELATIONSHIP FOR 172 00:04:23,062 --> 00:04:24,364 A VERY, VERY LONG TIME... 173 00:04:24,364 --> 00:04:25,098 >> YOU KNOW, WE'RE THE PIGGY 174 00:04:25,098 --> 00:04:26,966 BANK THAT EVERYBODY STEALS FROM, 175 00:04:26,966 --> 00:04:27,934 INCLUDING CHINA. 176 00:04:27,934 --> 00:04:28,568 >> ...THAT HAVE NOT BEEN 177 00:04:28,568 --> 00:04:29,736 ADEQUATELY ADDRESSED BY THE 178 00:04:29,736 --> 00:04:30,903 CHINESE SIDE. 179 00:04:30,903 --> 00:04:32,939 AND FRANKLY, THOSE ISSUES GO TO 180 00:04:32,939 --> 00:04:34,274 THE CORE OF HOW CHINA'S ECONOMIC 181 00:04:34,274 --> 00:04:35,642 SYSTEM OPERATES, ITS STATE-OWNED 182 00:04:35,642 --> 00:04:36,843 ENTERPRISE REFORM, ITS 183 00:04:36,843 --> 00:04:38,111 INDUSTRIAL POLICY, ITS 184 00:04:38,111 --> 00:04:40,913 SUBSIDIES, ITS OVERCAPACITY. 185 00:04:40,913 --> 00:04:42,548 THESE ARE NOT GOING TO BE EASY 186 00:04:42,548 --> 00:04:43,716 SOLUTIONS THAT CHINA'S GOING TO 187 00:04:43,716 --> 00:04:44,651 BE ABLE TO IMPLEMENT 188 00:04:44,651 --> 00:04:46,486 IMMEDIATELY. 189 00:04:46,486 --> 00:04:47,220 >> Yu: THAT'S BECAUSE THOSE 190 00:04:47,220 --> 00:04:48,488 PROTECTIONIST MEASURES AND 191 00:04:48,488 --> 00:04:49,889 STATE-SPONSORED BUSINESS 192 00:04:49,889 --> 00:04:51,658 DEVELOPMENT HAVE FUELED CHINA'S 193 00:04:51,658 --> 00:04:53,593 RAPID ECONOMIC RISE. 194 00:04:53,593 --> 00:04:55,428 NOWHERE IS THAT MORE OBVIOUS 195 00:04:55,428 --> 00:04:56,396 THAN CHINA'S ARTIFICIAL 196 00:04:56,396 --> 00:05:00,700 INTELLIGENCE, OR A.I., INDUSTRY. 197 00:05:00,700 --> 00:05:02,268 IN CHINA'S NORTHEASTERN LIAONING 198 00:05:02,268 --> 00:05:04,704 PROVINCE, EX-ROBOT IS WORKING ON 199 00:05:04,704 --> 00:05:07,006 HUMAN-LIKE A.I. ROBOTS. 200 00:05:07,006 --> 00:05:08,074 CHINA WANTS TO BE THE GLOBAL 201 00:05:08,074 --> 00:05:10,576 CENTER FOR A.I. BY 2030, AND 202 00:05:10,576 --> 00:05:11,878 SOME IN THE TRUMP ADMINISTRATION 203 00:05:11,878 --> 00:05:13,780 BELIEVE CHINA IS FAST CLOSING 204 00:05:13,780 --> 00:05:15,415 THE GAP ON THE U.S.' DOMINANCE 205 00:05:15,415 --> 00:05:18,384 OF A.I. 206 00:05:18,384 --> 00:05:19,285 THEY CAN MIMIC FACIAL 207 00:05:19,285 --> 00:05:21,220 EXPRESSIONS, RESPOND TO 208 00:05:21,220 --> 00:05:22,121 QUESTIONS... 209 00:05:22,121 --> 00:05:23,956 >> ( SPEAKING IN CHINESE ) 210 00:05:23,956 --> 00:05:26,192 >> ( SPEAKING IN CHINESE ) 211 00:05:26,192 --> 00:05:27,527 >> ( SPEAKING IN CHINESE ) 212 00:05:27,527 --> 00:05:29,128 >> Yu: ...AND EVEN HOST A TV 213 00:05:29,128 --> 00:05:29,796 SHOW. 214 00:05:29,796 --> 00:05:31,597 >> ( SPEAKING IN CHINESE ) 215 00:05:31,597 --> 00:05:32,999 >> Yu: EX-ROBOT PRESIDENT YANG 216 00:05:32,999 --> 00:05:34,867 DONGYUE SAYS HIS COMPANY WILL BE 217 00:05:34,867 --> 00:05:36,302 ONE OF THE FIRST IN THE WORLD 218 00:05:36,302 --> 00:05:38,338 WHOSE ROBOTS CAN REPLACE SERVICE 219 00:05:38,338 --> 00:05:40,440 EMPLOYEES. 220 00:05:40,440 --> 00:05:41,240 >> ( translated ): THEIR MAIN 221 00:05:41,240 --> 00:05:42,508 FUNCTION IS TO COMMUNICATE WITH 222 00:05:42,508 --> 00:05:44,510 PEOPLE, SO A GOOD APPEARANCE IS 223 00:05:44,510 --> 00:05:45,678 A MUST. 224 00:05:45,678 --> 00:05:46,879 IF THE ROBOT IS VERY GOOD- 225 00:05:46,879 --> 00:05:48,581 LOOKING, LIKE A PRETTY LADY OR A 226 00:05:48,581 --> 00:05:50,216 HANDSOME MAN, PEOPLE WILL FEEL 227 00:05:50,216 --> 00:05:51,384 MORE PLEASANT WHEN TALKING WITH 228 00:05:51,384 --> 00:05:52,585 THEM. 229 00:05:52,585 --> 00:05:53,686 >> Yu: BEIJING HAS BEEN SO 230 00:05:53,686 --> 00:05:54,854 DETERMINED TO CATCH UP AND 231 00:05:54,854 --> 00:05:56,522 SURPASS THE U.S. IN A.I. 232 00:05:56,522 --> 00:05:58,124 TECHNOLOGY, IT'S COMMITTED 233 00:05:58,124 --> 00:06:03,062 $150 BILLION TO ITS DEVELOPMENT. 234 00:06:03,062 --> 00:06:04,397 EX-ROBOT ACKNOWLEDGES THAT IT 235 00:06:04,397 --> 00:06:06,232 RECEIVES GOVERNMENT SUBSIDIES 236 00:06:06,232 --> 00:06:07,867 BUT REFUSES TO DISCLOSE HOW 237 00:06:07,867 --> 00:06:09,635 MUCH. 238 00:06:09,635 --> 00:06:10,903 MEANWHILE, CHINA ACCUSES THE 239 00:06:10,903 --> 00:06:12,872 U.S. OF INVESTING BILLIONS ON 240 00:06:12,872 --> 00:06:14,907 ITS OWN A.I. TECHNOLOGY, LIKE 241 00:06:14,907 --> 00:06:16,476 THIS ROBOTIC PACK MULE THAT'S 242 00:06:16,476 --> 00:06:18,044 BEING FUNDED BY PENTAGON 243 00:06:18,044 --> 00:06:19,445 RESEARCH. 244 00:06:19,445 --> 00:06:20,146 >> Schifrin: BUT KATRINA, THE 245 00:06:20,146 --> 00:06:21,581 U.S. DENIES THAT PENTAGON 246 00:06:21,581 --> 00:06:23,316 SPENDING IS A SUBSIDY AND 247 00:06:23,316 --> 00:06:24,951 COMPLAINS CHINA'S SUBSIDIES ARE 248 00:06:24,951 --> 00:06:26,719 INTO PRIVATE COMPANIES AND 249 00:06:26,719 --> 00:06:29,155 CONCEALED IN EVERY INDUSTRY, 250 00:06:29,155 --> 00:06:30,656 TILTING THE GLOBAL PLAYING FIELD 251 00:06:30,656 --> 00:06:32,525 IN CHINA'S FAVOR AND VIOLATING 252 00:06:32,525 --> 00:06:34,727 INTERNATIONAL TRADE RULES. 253 00:06:34,727 --> 00:06:35,995 >> THE CHINESE COMMUNIST PARTY 254 00:06:35,995 --> 00:06:38,297 HAS USED AN ARSENAL OF POLICIES 255 00:06:38,297 --> 00:06:39,866 INCONSISTENT WITH FREE AND FAIR 256 00:06:39,866 --> 00:06:40,933 TRADE. 257 00:06:40,933 --> 00:06:42,201 THESE POLICIES HAVE BUILT 258 00:06:42,201 --> 00:06:44,437 BEIJING'S MANUFACTURING BASE AT 259 00:06:44,437 --> 00:06:46,739 THE EXPENSE OF ITS COMPETITORS, 260 00:06:46,739 --> 00:06:49,509 ESPECIALLY THE UNITED STATES OF 261 00:06:49,509 --> 00:06:51,778 AMERICA. 262 00:06:51,778 --> 00:06:53,012 >> Yu: CHINA HAS BUILT ITS OWN 263 00:06:53,012 --> 00:06:54,680 MANUFACTURING BASE THAT PROVIDES 264 00:06:54,680 --> 00:06:56,883 CHEAP AND EFFICIENT LABOR, AND 265 00:06:56,883 --> 00:06:58,818 MANY U.S. BUSINESSES USE IT TO 266 00:06:58,818 --> 00:07:02,121 MAXIMIZE PROFITS. 267 00:07:02,121 --> 00:07:03,389 SHANGHAI GENERAL SPORTS IS ONE 268 00:07:03,389 --> 00:07:04,323 OF THE BIGGEST BICYCLE 269 00:07:04,323 --> 00:07:06,092 MANUFACTURERS IN CHINA. 270 00:07:06,092 --> 00:07:07,293 THE COMPANY PRODUCES MORE THAN 271 00:07:07,293 --> 00:07:11,697 THREE MILLION BIKES EVERY YEAR. 272 00:07:11,697 --> 00:07:13,499 C.E.O. LEI GE ATTRIBUTES THE 273 00:07:13,499 --> 00:07:14,734 COMPANY'S SUCCESS TO BUILDING 274 00:07:14,734 --> 00:07:16,002 CLOSE RELATIONSHIPS WITH HIS 275 00:07:16,002 --> 00:07:17,837 PARTNERS ABROAD, PARTICULARLY IN 276 00:07:17,837 --> 00:07:19,472 THE U.S. 277 00:07:19,472 --> 00:07:20,940 >> WE WORK WITH OUR PARTNERS IN 278 00:07:20,940 --> 00:07:24,177 THE STATES AS A FAMILY. 279 00:07:24,177 --> 00:07:25,878 THAT'S WHY WE CAN BECOME SO 280 00:07:25,878 --> 00:07:26,712 CLOSE. 281 00:07:26,712 --> 00:07:27,647 >> Yu: THAT SUPPLY CHAIN 282 00:07:27,647 --> 00:07:29,649 INTEGRATION HAS BUILT UP OVER 30 283 00:07:29,649 --> 00:07:31,384 YEARS, AND IT MEANS THE TRADE 284 00:07:31,384 --> 00:07:32,919 WAR HAS HIT SHANGHAI GENERAL 285 00:07:32,919 --> 00:07:34,420 SPORTS AND MANY COMPANIES IN 286 00:07:34,420 --> 00:07:36,823 CHINA THAT SELL TO THE U.S. 287 00:07:36,823 --> 00:07:38,891 LEI HAS HAD TO LET GO ABOUT 30% 288 00:07:38,891 --> 00:07:40,193 OF HIS STAFF. 289 00:07:40,193 --> 00:07:41,294 IT DOESN'T HELP THAT CHINA'S 290 00:07:41,294 --> 00:07:42,762 ECONOMIC GROWTH HAS SLUMPED TO 291 00:07:42,762 --> 00:07:44,630 ITS LOWEST LEVEL IN NEARLY THREE 292 00:07:44,630 --> 00:07:46,332 DECADES. 293 00:07:46,332 --> 00:07:47,733 >> OH, WE HATE THIS. 294 00:07:47,733 --> 00:07:49,368 IT'S JUST MORE DIFFICULT THAN 295 00:07:49,368 --> 00:07:51,437 EVER. 296 00:07:51,437 --> 00:07:53,406 OF COURSE, WE FEEL DISAPPOINTED, 297 00:07:53,406 --> 00:07:55,508 AND WE FEEL UPSET, BUT THERE'S 298 00:07:55,508 --> 00:07:57,543 NOTHING WE CAN DO. 299 00:07:57,543 --> 00:07:58,744 >> Yu: THIS FACTORY PRODUCES UP 300 00:07:58,744 --> 00:08:02,048 TO 13,000 BICYCLES EVERYDAY. 301 00:08:02,048 --> 00:08:02,882 THEY'RE SENT TO COUNTRIES SUCH 302 00:08:02,882 --> 00:08:05,451 AS AUSTRALIA, CANADA, AND JAPAN. 303 00:08:05,451 --> 00:08:08,020 BUT 80% OF THEM ARE MADE FOR THE 304 00:08:08,020 --> 00:08:09,956 UNITED STATES. 305 00:08:09,956 --> 00:08:10,890 >> Schifrin: AND ARRIVE IN THIS 306 00:08:10,890 --> 00:08:12,758 SOUTH CAROLINA FACTORY. 307 00:08:12,758 --> 00:08:14,026 >> WE'RE PRODUCING THIS YEAR 308 00:08:14,026 --> 00:08:15,761 ABOUT 300,000 BICYCLES. 309 00:08:15,761 --> 00:08:16,829 >> Schifrin: ARNOLD KAMLER IS 310 00:08:16,829 --> 00:08:18,231 ONE OF THE PRIMARY BUYERS OF 311 00:08:18,231 --> 00:08:20,533 SHANGHAI GENERAL SPORTS' PARTS. 312 00:08:20,533 --> 00:08:21,968 HE'S THE CHAIRMAN AND C.E.O. OF 313 00:08:21,968 --> 00:08:23,836 KENT BIKES, ONE OF THE LARGEST 314 00:08:23,836 --> 00:08:26,038 BIKE WHOLESALERS IN THE U.S. 315 00:08:26,038 --> 00:08:27,440 ON EVERY BIKE FRAME IMPORTED 316 00:08:27,440 --> 00:08:29,141 FROM CHINA, KENT HAS TO PAY A 317 00:08:29,141 --> 00:08:31,944 36% TARIFF TO U.S. CUSTOMS. 318 00:08:31,944 --> 00:08:34,280 ON EVERY TIRE, IT'’’S 30%. 319 00:08:34,280 --> 00:08:36,482 WHEN YOU PAY THAT AMOUNT TO U.S. 320 00:08:36,482 --> 00:08:38,184 CUSTOMS, DO YOU THEREFORE 321 00:08:38,184 --> 00:08:41,320 INCREASE YOUR PRICES TO YOUR 322 00:08:41,320 --> 00:08:42,288 CLIENTS? 323 00:08:42,288 --> 00:08:42,855 >> OH, OF COURSE. 324 00:08:42,855 --> 00:08:44,156 THE BICYCLE BUSINESS IS A VERY 325 00:08:44,156 --> 00:08:46,392 HIGH-VOLUME BUT-- UNFORTUNATELY 326 00:08:46,392 --> 00:08:47,426 FOR ME-- A VERY LOW PROFIT- 327 00:08:47,426 --> 00:08:48,928 MARGIN BUSINESS. 328 00:08:48,928 --> 00:08:50,463 AND SO, WHEN WE HAVE AN INCREASE 329 00:08:50,463 --> 00:08:53,666 OF THAT SIZE, WE HAVE NO CHOICE 330 00:08:53,666 --> 00:08:55,234 BUT... BUT TO RAISE PRICES. 331 00:08:55,234 --> 00:08:55,935 >> Schifrin: AND THOSE HIGHER 332 00:08:55,935 --> 00:08:58,538 PRICES HAVE LED TO A 20% DROP IN 333 00:08:58,538 --> 00:09:00,740 SALES SINCE THE TRADE WAR BEGAN. 334 00:09:00,740 --> 00:09:02,341 AND THAT'S MEANT KAMLER'S HAD TO 335 00:09:02,341 --> 00:09:03,743 LAY OFF A QUARTER OF HIS 336 00:09:03,743 --> 00:09:05,311 EMPLOYEES. 337 00:09:05,311 --> 00:09:06,312 >> THESE TARIFFS ARE HURTING US 338 00:09:06,312 --> 00:09:08,114 VERY BADLY, BUT WE'RE A SMART 339 00:09:08,114 --> 00:09:08,848 COMPANY. 340 00:09:08,848 --> 00:09:10,016 AND SO, WE'LL OVERCOME THIS 341 00:09:10,016 --> 00:09:12,618 CHALLENGE BY SOURCING ELSEWHERE 342 00:09:12,618 --> 00:09:13,886 OVER TIME. 343 00:09:13,886 --> 00:09:15,021 >> Yu: AND THAT'S EXACTLY WHAT'S 344 00:09:15,021 --> 00:09:15,888 HAPPENING. 345 00:09:15,888 --> 00:09:17,290 GENERAL SPORTS WILL TURN THIS 346 00:09:17,290 --> 00:09:18,624 FIELD IN CAMBODIA INTO A 347 00:09:18,624 --> 00:09:21,861 500,000-SQUARE FOOT FACTORY. 348 00:09:21,861 --> 00:09:23,329 LEI SAYS IT'S AN INVESTMENT HE 349 00:09:23,329 --> 00:09:25,464 WISHES HE DIDN'T HAVE TO MAKE 350 00:09:25,464 --> 00:09:27,066 BECAUSE HE FEARS LABOR COSTS 351 00:09:27,066 --> 00:09:28,467 WILL RISE. 352 00:09:28,467 --> 00:09:31,437 >> I PREFER STAYING IN CHINA. 353 00:09:31,437 --> 00:09:35,141 I SPEAK THE SAME LANGUAGE, AND 354 00:09:35,141 --> 00:09:37,109 IT'S EASIER TO... TO FIND 355 00:09:37,109 --> 00:09:38,244 WORKERS. 356 00:09:38,244 --> 00:09:39,011 >> Schifrin: IT MAY NOT BE GOOD 357 00:09:39,011 --> 00:09:40,479 FOR BUSINESSES, BUT DRIVING 358 00:09:40,479 --> 00:09:42,348 COMPANIES OUT OF CHINA IS MUSIC 359 00:09:42,348 --> 00:09:43,182 TO MANY IN THE TRUMP 360 00:09:43,182 --> 00:09:44,650 ADMINISTRATIONS'’’ EARS. 361 00:09:44,650 --> 00:09:46,085 SOME SENIOR ADVISORS WANT TO 362 00:09:46,085 --> 00:09:47,820 CONTINUE ECONOMIC INTEGRATION 363 00:09:47,820 --> 00:09:49,422 WITH CHINA, BUT OTHERS SEE CHINA 364 00:09:49,422 --> 00:09:51,090 AS A NATIONAL SECURITY THREAT 365 00:09:51,090 --> 00:09:52,124 AND WANT TO SEPARATE THE TWO 366 00:09:52,124 --> 00:09:53,292 ECONOMIES. 367 00:09:53,292 --> 00:09:54,760 PRESIDENT TRUMP HAS VACILLATED 368 00:09:54,760 --> 00:09:55,995 BETWEEN THE CAMPS. 369 00:09:55,995 --> 00:09:57,496 IN LATE AUGUST, HE TWEETED: 370 00:09:57,496 --> 00:09:58,798 "OUR GREAT AMERICAN COMPANIES 371 00:09:58,798 --> 00:09:59,865 ARE HEREBY ORDERED TO 372 00:09:59,865 --> 00:10:01,367 IMMEDIATELY START LOOKING FOR AN 373 00:10:01,367 --> 00:10:02,969 ALTERNATIVE TO CHINA." 374 00:10:02,969 --> 00:10:04,670 BUT AT THE G7 IN FRANCE JUST 375 00:10:04,670 --> 00:10:06,105 THREE DAYS LATER, HE SAID 376 00:10:06,105 --> 00:10:07,506 AMERICAN COMPANIES COULD STILL 377 00:10:07,506 --> 00:10:08,808 THRIVE IN CHINA. 378 00:10:08,808 --> 00:10:10,409 >> IF WE MAKE A DEAL, I'D LIKE 379 00:10:10,409 --> 00:10:11,877 TO SEE THEM STAY THERE AND DO A 380 00:10:11,877 --> 00:10:13,212 GREAT JOB. 381 00:10:13,212 --> 00:10:14,380 >> Yu: ON CHINESE MEDIA, 382 00:10:14,380 --> 00:10:15,881 COMMENTATORS ARGUE PRESIDENT 383 00:10:15,881 --> 00:10:17,917 TRUMP'S FLIP-FLOPS SHOW HE'S 384 00:10:17,917 --> 00:10:19,218 UNRELIABLE. 385 00:10:19,218 --> 00:10:20,786 >> YOU CANNOT BE IN A SITUATION 386 00:10:20,786 --> 00:10:23,155 WHERE I DON'T... I DON'T BELIEVE 387 00:10:23,155 --> 00:10:24,190 WHAT YOU'RE SAYING, AND I DON'T 388 00:10:24,190 --> 00:10:25,524 BELIEVE YOU'LL CARRY OUT EVEN IF 389 00:10:25,524 --> 00:10:26,459 YOU DO. 390 00:10:26,459 --> 00:10:27,727 HOW CAN I HAVE A NEGOTIATION 391 00:10:27,727 --> 00:10:28,661 WITH YOU? 392 00:10:28,661 --> 00:10:29,829 >> Yu: CHINA HAS TAKEN STEPS TO 393 00:10:29,829 --> 00:10:31,364 ENSURE IT'S LESS VULNERABLE TO 394 00:10:31,364 --> 00:10:32,999 TRUMP'S TRADE WAR SHOTS, FROM 395 00:10:32,999 --> 00:10:34,367 BOOSTING DOMESTIC SUPPLIES OF 396 00:10:34,367 --> 00:10:36,736 SOYBEANS, CORN AND COTTON, TO 397 00:10:36,736 --> 00:10:38,671 EXPANDING EXPORT MARKETS BEYOND 398 00:10:38,671 --> 00:10:40,573 THE U.S. TO AFRICA AND SOUTH 399 00:10:40,573 --> 00:10:43,809 AMERICA. 400 00:10:43,809 --> 00:10:45,111 WITH NO NEED FOR DEMOCRATIC 401 00:10:45,111 --> 00:10:47,179 ELECTIONS AND WHAT IT CALLS A 402 00:10:47,179 --> 00:10:48,514 HIGHER ECONOMIC "PAIN 403 00:10:48,514 --> 00:10:50,783 THRESHOLD," CHINESE TV SAYS 404 00:10:50,783 --> 00:10:53,919 CHINA CAN OUTLAST TRUMP. 405 00:10:53,919 --> 00:10:54,954 >> ( translated ): ANYONE WHO 406 00:10:54,954 --> 00:10:56,989 MISJUDGES CHINA WILL SURELY PAY 407 00:10:56,989 --> 00:10:58,557 THE PRICE OF THE CHINESE 408 00:10:58,557 --> 00:11:01,827 PEOPLE'’’S STEEL WILL. 409 00:11:01,827 --> 00:11:02,628 >> Schifrin: BUT PRESIDENT TRUMP 410 00:11:02,628 --> 00:11:05,031 HAS SAID HE CAN OUTLAST CHINA 411 00:11:05,031 --> 00:11:06,766 AND VOWS TO HOLD HIS GROUND, 412 00:11:06,766 --> 00:11:08,300 EVEN IF THAT HARMS THE U.S. 413 00:11:08,300 --> 00:11:09,902 ECONOMY SHORT-TERM. 414 00:11:09,902 --> 00:11:11,637 >> I AM DOING THIS, WHETHER IT'S 415 00:11:11,637 --> 00:11:13,773 GOOD OR BAD, FOR YOUR... YOUR 416 00:11:13,773 --> 00:11:15,074 STATEMENT ABOUT, "OH, WILL WE 417 00:11:15,074 --> 00:11:16,575 FALL INTO A RECESSION FOR TWO 418 00:11:16,575 --> 00:11:17,943 MONTHS," OKAY? 419 00:11:17,943 --> 00:11:18,911 THE FACT IS, SOMEBODY HAD TO 420 00:11:18,911 --> 00:11:19,812 TAKE CHINA ON. 421 00:11:19,812 --> 00:11:20,946 MY LIFE WOULD BE A LOT EASIER IF 422 00:11:20,946 --> 00:11:22,214 I DIDN'’’T TAKE CHINA ON. 423 00:11:22,214 --> 00:11:23,315 BUT I LIKE DOING IT BECAUSE I 424 00:11:23,315 --> 00:11:24,216 HAVE TO DO IT. 425 00:11:24,216 --> 00:11:24,817 >> Schifrin: WHICH MEANS 426 00:11:24,817 --> 00:11:26,452 U.S./CHINA COOPERATION IS 427 00:11:26,452 --> 00:11:28,821 DECREASING AND CONFRONTATION IS 428 00:11:28,821 --> 00:11:30,022 INCREASING. 429 00:11:30,022 --> 00:11:30,756 >> Yu: AND THE TRADE WAR 430 00:11:30,756 --> 00:11:32,892 CONTINUES AS TWO ECONOMIES THAT 431 00:11:32,892 --> 00:11:34,727 HAVE BEEN INTEGRATED FOR DECADES 432 00:11:34,727 --> 00:11:37,029 ARE ALREADY DRIFTING APART. 433 00:11:37,029 --> 00:11:38,531 FOR THE PBS NEWSHOUR, I'M 434 00:11:38,531 --> 00:11:39,565 KATRINA YU. 435 00:11:39,565 --> 00:11:40,266 >> Schifrin: AND I'M NICK 436 00:11:40,266 --> 00:11:41,200 SCHIFRIN.