Season 2 Episode 38
China’s Global Rise with Phil Chritton
With more than 30 years of international legal experience, Phil Chritton has guided global business leaders in managing enterprise risk and navigating complex regulatory environments. Having spent much of his career in East Asia, he brings deep insight into the region’s legal, political, and cultural dynamics.
Now serving as the Sonoco Visiting Fellow Executive in Residence at the University of South Carolina’s Darla Moore School of Business, Phil shares his global perspective and passion for mentorship with future business and legal professionals. A former senior legal executive at UPS, he led a global team supporting the company’s international growth. Based in North Carolina, he also serves as a councilor of the International Law Section of the North Carolina Bar Association.
Topics include:
To learn more about Sonoco Visiting Fellows Program, click here.
To learn more about Phillip Chritton, click here.
Photo Courtesy: Reuters
Kasie Whitener (00:02):
Good morning and welcome into Moore Impact. My name is Kasie Whitener, and I'm your host for our show from the Darla Moore School of Business. That brings in our scholars and our practitioners from the Darla Moore School over there at 1014 Greene Street, into the studio here on Millwood Avenue in Columbia, South Carolina, to share with our local audience, but also our audience on MakethePointradio.com, and also our podcast audience, our Moore Impact conversations. And with me today, who is a Folk Center scholar. You all know the Folk Center for International Studies housed inside the Darla Moore School of Business. So he's a scholar with the Folk Center and a former UPS Deputy General Counsel International. And we're gonna talk a little bit about China today, which I'm excited about, and you get to do a guest speaking gig in my class on Friday and tell my students about China. So, welcome, Phil. I'm glad you're here.
Phillip Chritton (00:50):
Right. Thank you, Kasie. I'm really, uh, pleased to be here and, uh, thanks to the Folk Center for having me.
Kasie Whitener (00:55):
Yeah. This is exciting stuff. So tell us just a little bit about your background. Give us kind of the, the high level view of what was your career like at UPS?
Phillip Chritton (01:02):
Yeah, well, I'll go back a little further. Um, I've been a close observer of China for over 40 years, and it was never part of a plan. I was a senior in college and I was trying to figure out what to do with my life as is very difficult.
Kasie Whitener (01:16):
Liike a lot of our listeners and students. Sure.
Phillip Chritton (01:18):
And, uh, I was applying to law school, but I wasn't quite ready. But I saw a, uh, flyer on the wall, um, at school, and it said, teach English in China.
Kasie Whitener (01:27):
Okay. So where were you? This is an undergrad. Where were you?
Phillip Chritton (01:29):
Uh, I was at Stanford.
Kasie Whitener (01:30):
Okay.
New Speaker (01:31):
And, uh, so I went and talked to the people and, uh, signed up, and of course, my parents said, you're gonna do what?
Kasie Whitener (01:50):
I imagine so. Yeah.
Phillip Chritton (01:51):
Yeah. Um, but, uh, I, so I taught English and then eventually did go to law school. And, uh, after, uh, those initial two years in Beijing, I, um, joined a law firm in New York, uh, and they sent me back to Beijing.
Kasie Whitener (02:07):
Okay.
New Speaker (02:07):
So I was there for another four years, and I was there in the mid nineties when a lot of multinational companies from all over the world, American, but also European, even Asian companies.
Kasie Whitener (02:19):
Sure.
New Speaker (02:20):
Were investing heavily in China. And one of the companies I was representing was UPS. And UPS was setting up in China, and later UPS recruited me. So I came and worked for them, and it ended, ended up being 24 years with them. And during that time, they sent me back to Asia for another 11 years. I was sent to Singapore. So I spent a lot of time in Asia, and it's been fabulous. And now about 10 days after I retired from UPS, I got a phone call from, uh, professor Jerry McDermott.
Kasie Whitener (02:52):
We know Jerry well.
Phillip Chritton (02:54):
And, Uh, he's, he's a wonderful guy. And he says, Hey, would you like to come and be a Sunoco Visiting fellow? And the idea is really to bring people who have professional experience, uh, to come and talk about lessons from the field.
Kasie Whitener (03:07):
Sure.
New Speaker (03:07):
So it's been re really a great experience, a real honor.
Kasie Whitener (03:10):
This is exciting. So it's fun to have somebody come in with this level of experience in a foreign country, in a foreign region, especially right now as our president is currently there.
New Speaker (03:21):
Yeah.
Kasie Whitener (03:21):
He's currently visiting Southeast Asia and having conversations. Yesterday we saw he made a deal with the Prime Minister of Japan. Uh, we know that he's meeting with a Chinese president at the end of the week. So these kinds of things all happening in real time while you're here and getting to share your story with us on more impact, but also visit with our students and faculty on Wednesday and Thursday and Friday. So you're here all week to get an opportunity to share your story and your insight on these kinds of things that are very current and relevant right now. Which is really exciting. So tell us just a little bit about your, uh, perspective. Um, let, let's go back to kind of when you first got there and as you watched China grow and change, what were some of the things you can share with us as far as insights are concerned on that?
Phillip Chritton (04:02):
Yeah. I think, uh, this year has been really, um, sort of a watershed year because, uh, as we all know, that after President Trump came into office, uh, he, you know, he had his Liberation day tariffs. And China was really at the center of that tensions had been building between the US and China on a number of fronts, military, political, but also economic. And when those tariffs went in, uh, that, that was a big deal. And as we all know, he threatened tariffs up to 145% at one point. And that sent markets kind of into a tailspin. And then China, uh, it, it seemed that things had calmed down. But then, as we know, a couple of weeks ago, China threatened to control, uh, rare earths and strategic minerals, and that sort of sent the whole thing. So I, I guess my main point is that China is not going away. So even if Trump is able to make a deal this week, China is a, you know, huge economy, the world's second largest economy. It is very strong. Um, it, you know, we don't wanna underestimate China. We don't want to overestimate China, but it's not going away. I think, you know, if you, you know, ask me about my perspective when I sit down and talk to students and I talk about China, you know, yesterday I was talking to a group where I always start is with a little bit of context.
Kasie Whitener (05:20):
Sure.
New Speaker (05:20):
Because I think what a lot of Americans do, whether you know, of any age, is that they sort of imagine that this just started here, but it didn't. And you have to understand the Chinese perspective. I mean, when I landed there 40 years ago, 80% of the population was in villages, and they were what the Chinese call peasants. And, you know, very poor, no private automobiles.
Kasie Whitener (05:46):
Right.
New Speaker (05:46):
No, no private cars.
Kasie Whitener (05:48):
Just as recently as 40 years ago.
New Speaker (05:49):
Yeah.
Kasie Whitener (05:49):
Right. And when we think about that, that's like the seventies where we were coming up and we had automobiles in every home. Moms were working outside the house. Like there was, there was in the eight, you know, late seventies, early eighties, there's an economy here that closely resembles our current economy. Um, but you're saying there they were still very rural and peasants and just abject poverty.
Phillip Chritton (06:09):
Yeah. I mean, it was very, very poor country. And now if you go to China, I mean, you see gleaming cities, bullet trains, uh, you know, EVs, uh, you know, really, um, and, and of course the production facilities are amazing, these factories with 10,000 people producing every kind of product that we use. But I, I think to kind of get inside the, the Chinese mindset as they approach the United States, uh, you have to look back even a little further. Just over a hundred years ago, China was ruled by an emperor. So think about that, until 1912. Right?
Kasie Whitener (06:44):
Right.
New Speaker (06:45):
And China was a very weak country. Uh, they were invaded by Japan. It was a very brutal conflict. You know, they lost tens of millions of people. Um, and then when the communists took over after a bitter, bitter civil war in 1949, then the communist, uh, leadership experimented with a lot of kind of crazy agricultural and industrial experiments.
Kasie Whitener (07:08):
Right.
New Speaker (07:09):
That were complete disasters.
Kasie Whitener (07:10):
Right.
Phillip Chritton (07:12):
So by the end of the seventies, the leadership said, enough, we're going to, you know, we've had enough, uh, being humiliated, being weak of having all this chaos. And so they started to say, we're gonna try market reforms. We're gonna allow little bits of, you know, people to have their own businesses. We're gonna allow peasants to keep some of their agricultural production. And sell it. And lo and behold, once they started, the more they sort of took the, the controls away and let Chinese entrepreneurial spirit take over. You know, within 20 years you had billionaires. Which was mind blowing to me. You know, I was there, I watched a lot of this happen.
Kasie Whitener (07:54):
Right.
New Speaker (07:55):
Then you had huge investments from the west, but also Chinese companies growing. Um, there was a great story when, when we lived in Singapore, we had a neighbor across the street, they were, uh, from China, and they started out absolutely poor, and they had become like a billionaire, and they sent their son to Singapore to get education, and they said, would you like to see our house
Kasie Whitener (08:27):
And we're gonna, um, run to our first break here real quick.
New Speaker (08:29):
Yeah, great.
Kasie Whitener (08:30):
So that's actually the, the, the right place for us to stop for just a second. And, uh, I want to think a little bit more about what you saw as things were unfolding in China to get China to where it is today. All right. We are visiting with Phil Chritton. We will be right back. It's Moore Impact. Don't go away.
Kasie Whitener (08:56):
All right. Welcome back to Moore Impact. Kasie Whitener here visiting with Phil Chritton, who is one of our Sonoco visiting fellows with the Folk Center for International Business. And we were talking about China. As we went to break, you were sharing with us this, uh, a personal anecdote of a neighbor who had amassed this incredible wealth. And as we were talking off the air, was saying that my, my curiosity around this is there, we think of a communist government as having ownership, a state ownership of all of the industry inside the, the nation. And you mentioned that they had kind of allowed entrepreneurship to flourish and allowed this private, private, private ownership of companies. And that's how people started to pull themselves out of poverty. How much of that ownership exists in that communist experience? Or like, how much of it is free market? Because our understanding is there's this technocratic class that is guiding, you know, what the government invests in and, and how, which industries they're going to be encouraging and which industries they're gonna be suppressing. And so, can you talk a little bit about how China is pulled, how these, 'cause we know so many people, a billion people come out of poverty in the eighties and the nineties and the early two thousands. This is an incredible transformation for China as a nation.
Phillip Chritton (10:07):
Uh, thanks Kasie. So these are great questions. And I think I spoke to a class yesterday about this exact issue. And I, the way I framed it up is I said, China has been this giant laboratory of kind of swinging back and forth between the state, owning everything, controlling everything, and then sort of allowing those controls to ease back and let Chinese entrepreneurs and not, and not just like the, you know, billionaires and millionaires, but also kind of everyday people, you know, run their own businesses. And they've been swinging back and forth between those extremes. When I got there, absolutely. Everyone was a state employee, you know, whether you were teacher or, you know, you were working in a coffee shop, whatever it was. And then by, it sort of peaked by, say, the early two thousands where, you know, businesses were really allowed to go as far as they wanted to go. And it you know, and I think a lot of us who were observers of China were thinking, are these state owned companies basically gonna become dinosaurs and go away?
Kasie Whitener (11:13):
Right. That eventually those privately held firms would overtake the state owned entities.
Phillip Chritton (11:19):
Yeah. And displace them. And, and, you know, and those would lead to freedoms in other areas.
Kasie Whitener (11:24):
Right.
New Speaker (11:24):
And I think there was a lot of optimism by a lot of us that,
Kasie Whitener (11:27):
In the early two thousands.
Phillip Chritton (11:27):
Yeah. The early two thousands. But then when the current leadership came in, you know, Xi Jinping, the current leader, uh, he came into power in, uh, 2012. And I think we thought, well, this guy, you know, he suffered a lot during the cultural revolution, and it seems like he's gonna continue the good times.
Kasie Whitener (11:45):
Right.
New Speaker (11:46):
But he slowly started turning his screws and pulling back, and he did things like billionaires, some of the, the richest, uh, people in China would disappear for a while. If they, you know, Jack Ma was the, you know, I guess the best example of that. He's the, uh, he started out as an English teacher. And he became China's richest man, uh, by starting this company called Alibaba.
Kasie Whitener (12:10):
Right.
New Speaker (12:10):
Which is kind of like Jeff Bezos. And, and Amazon.
Kasie Whitener (12:13):
And Amazon. Yeah.
Phillip Chritton (12:14):
But at one point, um, Jack Ma made a, a statement critical publicly of the government and how slow it was moving and improving one of his IPOs. And next thing you know, he disappeared for a while and, and, and came back out. So I think now we're in a place where, um, you know, we're looking at the Chinese model. 'cause they seem, you know, it seems like the country's doing pretty well. And in 10 years ago, they started something called, made in China, 2025. So Xi, China was producing all these goods that we buy at Walmart and Target and, and everywhere on Amazon.
Kasie Whitener (12:53):
Right.
New Speaker (12:54):
But they wanted to move up the value chain and produce more sophisticated goods. And not only that, but to dominate certain industries like solar panels and EVs and, um, and also things like rare Earth. Um, and they did this very effectively. And, you know, in all, and meanwhile they're building, uh, you know, these bullet trains and power lines. They have these solar farms way out in Western China out in their deserts. And they move, they move power on grids all the way across the country. They're building huge dams, bridges, and so on and so forth. And it sort of looks like China has figured it out. Now, the government is very involved in the economy, and we are starting to think maybe they're the ones who have this right. Because we have this debate in our country about, you know, we need to learn how to build things again, we maybe we can learn something from the Chinese.
Kasie Whitener (13:50):
Right.
New Speaker (13:51):
Personally, though, I think we need to be believing in our own system. And I think that there are costs associated with the government deciding, you know, how, how to, you know, run the economy.
Kasie Whitener (14:06):
Yeah. So I wanna, I wanna unpack just a little bit the Chinese experience, when we think about how much they put into production of, say solar panels. How the government decides this is the industry we're gonna go into, and then they put those, those resources behind it. It's not necessarily like, talk us through how that, what that looks like. It's not like, Hey, we're going to, you know, lend some money and hope the entrepreneurs are building these solar panel factories as much as it's like the government builds a solar panel factory and puts people to work in the factory. Is that correct?
Phillip Chritton (14:38):
Well, the way, the way this has been working, whether it's, you know, solar panels or pretty much any industry I'm more familiar with, like the logistics industry.
Kasie Whitener (14:46):
Sure.
New Speaker (14:47):
But the way they typically have done it is they've sort of allowed private, uh, Chinese companies to develop.
Kasie Whitener (14:54):
Okay.
New Speaker (14:54):
And then they pick out of the, of the litter, if you will. And sometimes the litter is pretty big. Um, 'cause if you look at EV companies that are producing, you know, ev cars, there's a lot of them. There are dozens of them in China. And so what they'll do though is over time, they'll kind of select out what they call national champions, and those are the ones that the government will get behind. And like that happened in the logistics business, there were five sort of UPS type companies.
Kasie Whitener (15:25):
Right.
New Speaker (15:26):
But then they favored a couple of them to, and then they've kind of discouraged the little ones and let them wither a bit.
Kasie Whitener (15:33):
So, um, so when we think about it from that approach, right? Does are the companies that become national champions, those are Chinese held companies, if a company like UPS has come in there and is competing against this Chinese held company, does UPS become one of the ones that doesn't get government backing? It doesn't get support, and therefore it's expected to kind of wither away?
New Speaker (15:55):
Well
Kasie Whitener (15:55):
Or I should say not just UPS, but like any Western investment, because you mentioned the Western investment that came in in the late nineties, you know, and, and all these countries, not just ours, but Great Britain and France and all these other countries going, Hey, there's opportunity in China. What happens to those companies when they come in and those, they, you know, they're Western owned?
Phillip Chritton (16:13):
Well, I think the, you know, if you look over the last 40 years, the Chinese been very pragmatic about it. You know, in the initial, say 20 years or so, everything had to be done through joint ventures. And so, like, when I was working at the, uh, law firm, a lot of our clients were automotive companies, General Motors, and, and you know, and all sorts of industrial companies from all over the world. But you could not set up in China unless you had a joint venture. And, and then there was always a technology transfer agreement. And the, the foreigners hated this.
Kasie Whitener (16:44):
Yeah.
New Speaker (16:45):
You were forced to have a local partner. You were forced to transfer technology and license it and so on. And, and so it allowed, it did exactly what the Chinese wanted. Um, you know, they, they learned. And then over time, you know, um, after China joined WTO in 2001, foreign companies were allowed to be a hundred percent owned, including UPS. And we were very excited about this. But then as the Chinese companies started to grow up and become competitors to those Western companies,
Kasie Whitener (17:16):
Backed by their government.
Phillip Chritton (17:17):
Backed by their government, um, the Chinese have a lot of ways to kind of, you know, put their hand, you know, their finger on the scale, right? They can create regulatory obstacles for you and so on. So for foreigners investing and operating in China, you've gotta find a way for them to appreciate what you're doing. And like for UPS, um, they had great domestic logistics companies, these national champions I'm talking about. But where those national champions were weak is they did not understand international markets. And so they needed companies like UPS, FedEx, DHL, who understood the global network piece of it.
Kasie Whitener (17:56):
Right.
New Speaker (17:56):
And if, you know, and let's talk about phones for a minute. So, Apple, Chinese, Chinese phone makers have become, again, through the learning process of producing Apple phones and, and others, they've learned a lot. Chinese phones are very good. But Apple is still there. So how does Apple do that? I mean, they've got a great brand, but they also have to walk a fine line of, you know, investing in universities. And, you know, they, they have to be very astute on how they deal with the leadership in China. And I'm not saying they're doing anything improper, but, um, you're, you'll be allowed to continue to do business in China, but you have to be very careful how you do it.
Kasie Whitener (18:41):
And this is their government protecting how the businesses are operating in a way that gives their own Chinese owned companies an advantage and makes it harder for Western companies to compete.
Phillip Chritton (18:52):
Yeah. And gradually, yeah. I think in an ideal world, it probably the Chinese, uh, leadership would love to see just Chinese companies there. But they, they acknowledge and realize that they, you know, in the short run, they have to allow, you know, foreign companies to be there and sell their products. And
Kasie Whitener (19:08):
So even just for that technology transfer, that knowledge transfer, right?
New Speaker (19:10):
Yep.
Kasie Whitener (19:11):
Wow. Okay. So understanding now that Chinese, the Chinese government very involved at, in the economics of how companies are growing up, how they're building, how they're trading, how they're interacting with Chinese citizens, and, uh, with each other. And now here we are looking at how are they interacting overseas? So at what point does China start to invest in overseas markets, and how are they building out that global presence in a way that's made them even more competitive?
Phillip Chritton (19:37):
Well, there's this little thing that, um, Xi Jinping led in, uh, 2013 called the Belt and Road Initiative.
Kasie Whitener (19:46):
Okay.
Phillip Chritton (19:46):
Which is a, a really kind of goofy name. It sounds,
Kasie Whitener (19:49):
I love that you said this little thing, but it's a huge trade policy.
Phillip Chritton (19:52):
Kasie Whitener (20:32):
Right.
Phillip Chritton (20:33):
So, but it's, it's absolutely extraordinary. This Belt and Road initiatives, uh, it involves 150 countries, and it's not just, of course, it's in Africa, it's in Latin America. Um, it's in Southeast Asia, but it's also in countries like Italy.
Kasie Whitener (20:49):
Right. And this is Chinese direct investment in these countries. It's not the way the US was doing it, where we have the World Bank and the International Monetary Fund, and we were sort of indirectly investing in these countries. In this case, it's direct investment from the Chinese government.
Phillip Chritton (21:04):
Yeah. It's an, it's an interesting, they're sort of partnerships. So they'll come in, um, and it's not like they'll hire, uh, a lot of local employees to build the port. I mean, they may have some, but they basically bring in like an army of, you know, workers,
Kasie Whitener (21:18):
Chinese citizens
Phillip Chritton (21:19):
Yeah. Who come in, they build it. And, uh, maybe they have to get a loan
Kasie Whitener (21:23):
On the other side of the break. We're gonna talk about the culture and, uh, some of the opportunities that are still existent here in this relationship with China. We'll be right back.
Kasie Whitener (21:49):
Welcome back to Moore Impact, Kasie Whitener here, your host for our show, where we bring our Darla Moore School of Business scholars and practitioners into the studio at Millwood Avenue to talk with our local community and also makethepointradio.com listeners. And as well as our Moore Impact podcast listeners, a little bit about what's happening at the Moore School and how we are having an impact on our local community and on our global community. And part of our partnerships include the Folk Center for International Business and with the Folk Center are Sunoco Visiting Scholars. And today, Phil Chritton is talking to me about China, and we're learning more, I'm learning more about how the regular Chinese government interventions in their economics and in their markets has, uh, shaped where we are in terms of this kind of international standoff we're in with China right now. In the last segment, we were talking about how they've gone into these, uh, deals worldwide, 150 different nations to help build infrastructure. And my question for you was, how does the regular Chinese citizen feel about these kinds of government interventions, either overseas or domestically? And you were sharing with me just a little bit of insight as far as, uh, the, the local Chinese citizen, regular, everyday Chinese citizens. What are their thoughts?
Phillip Chritton (22:59):
Well, I think, um, Chinese and Americans are more like each other than they would ever imagine, um,
Kasie Whitener (23:06):
Or admit. Yeah,
Phillip Chritton (23:07):
Yeah. Or admit. Um, one of the, kind of talk about the Chinese family a little bit, 'cause I think this is central to a lot of this, is, you have to remember, China had a one child only policy, uh, that was in place for decades.
Kasie Whitener (23:21):
Right.
Phillip Chritton (23:21):
Started, there was this fear that they, you know, the population was gonna boom. So they came out with this draconian solution, which just kind of goes against a lot of things that are very, you know, the family is so central in China and the next generation. So you would see these families, like in shopping malls in Shanghai, where you would have the, the little child in the stroller and trailing behind, you'd have the parents and, you know, several sets of grandparents. All, you know, trying to, you know, the expectations around this child.
Kasie Whitener (23:54):
Right.
Phillip Chritton (23:55):
Getting this child through the right education, so on. So I think people are very worried about the future. You know, the birth rate has really gone way down. Now, the, the one child policy has been relaxed.
Kasie Whitener (24:07):
Right.
Phillip Chritton (24:07):
Um, now they're trying to go the other way. You need to all have children
Kasie Whitener (24:11):
Right.
Phillip Chritton (24:12):
Um, but people are very concerned that domestic economy is quite weak, actually, in things like youth unemployment is very high. And so, while Chinese are, you know, we sort of look at China as this juggernaut, um, all these products that we buy this, all this infrastructure. But for the average families, they're very worried. They're very concerned about the future of their kids. Now, you asked about the government intervention. I mean, Chinese are taught, it's sort of drilled into everybody about the weak parts of Chinese history. Some of those things I mentioned at the beginning about, you know, the Japanese invasion and about the Civil War, the poverty, the foreigners who took chunks of China and all of that stuff.
Kasie Whitener (24:56):
Right.
Phillip Chritton (24:57):
And the instability. So they've, you know, Chinese and rightly so, are very proud of the fact that, you know, hundreds of millions of people have been lifted out of poverty, have, you know, pretty good lives over
Kasie Whitener (25:08):
The last 40 years as you were explaining this was, yeah. I mean, this is, it's incredible.
Phillip Chritton (25:11):
And they're very proud of the fact that China's sort of holding its head high. That, uh, you know, Trump, their leader, uh, Xi Jinping is now gonna meet with Trump, as, you know, as an equal. Uh, they're, you know, they play up the military. China now has the, you know, depending on how you wanna look at it, the world's largest navy, you know, all. So all these things are points of pride for them, but they're also very concerned about, you know, the family. And, and the social safety net is something that is talked about a lot. Although China has this amazing infrastructure that they built, and in many ways, kind of superior to what we have here. You know, try to ride a train, you know, in this country versus the bullet trains over there that they take every day. But the social safety net is really lacking things like, you know, retirement, healthcare, and some of those things that we take for granted, they don't have there.
Kasie Whitener (26:07):
Right.
Phillip Chritton (26:07):
And they haven't been investing. So it's very, and then of course, you can talk about the politics. I mean, the, you know, dissent is completely suppressed. And people are sort of willing, you know, the bargain is, we won't, uh, ask for things. Um, we won't speak our minds, you know, it doesn't apply to everybody. There, there are dissenters, but, um, the bargain is you give us a good life.
Kasie Whitener (26:30):
Right.
Phillip Chritton (26:31):
And, you know, and that's sort of been holding it, it, it broke down during COVID because the government had these, these really strict crackdowns and lockdowns on COVID.
Kasie Whitener (26:42):
Right.
Phillip Chritton (26:42):
And it went on for months. Finally, there was, you know, people said enough they couldn't take it, and the government had to back off.
Kasie Whitener (26:48):
Right. I, and what I'm wondering too, I think that COVID and the lockdowns, uh, sparked descent in a lot of nations. There are a lot of populations that started to say, wait a second, uh, either our government can't be trusted to protect us. Or we don't want our government's form of protection. I mean, you see, uh, places, even Australia, Europe, where folks are like, whoa, whoa, whoa. When we went and asked you for help, you were ill-equipped to fix this scenario for us. And maybe now we need to start relying upon ourselves or fixing things ourselves. Uh, and I'm wondering if there's in China, as we, what's, how are things evolving? Right? So the solar panels, we talked about them sort of flooding the market with that particular technology. There's a technocrat driven mentality over there where the, the government technocrats are figuring out, where should we invest next? What should we do next? Now we've got this rare earth standoff, uh, between, uh, China and the United States. The deal with Japan yesterday was meant to be, I mean, it's not a coincidence that it happens a few days before President Trump comes to China to say, well, we already made a deal with Japan. So are, what are some of the, how are things kind of unfolding right now in a way that, uh, that is it going the way China wants it to go? Or are do you think that we've got them on their heels? Like, is this, what does this competition look like, I guess is the question I'm asking Phil? I wanna understand, um, if we're making the right moves, or if this is just a big chaotic mess.
Phillip Chritton (28:14):
Well, I think that probably the leadership in Beijing feels pretty good about where they are right now. Um, you know, they, again, they have, and it's not something they just did a year ago. I mean, these are plans that were laid, you know, over the last decade and, and longer to build up these key industries. It was all part of a plan. Uh, and Chinese had these vast factory networks. They were really good at making things. I mean, still, when you walk around your house and you look on the back of any product, you know, made in China, now they're being made in more places. Mm-hmm
Kasie Whitener (29:33):
Right.
Phillip Chritton (29:33):
And so there, anytime any of that pops up on the Chinese internet, it's, you know, quashed.
Kasie Whitener (29:39):
Right.
Phillip Chritton (29:39):
And so they're very, they're very, very concerned. So I think we're at a very interesting point right now where, you know, you think about what does, you know, what are the sort of leverage points that the US and China have in this trade war? 'cause again, China's not going away.
Kasie Whitener (29:56):
Right.
Phillip Chritton (29:56):
This is not like the Soviet Union collapsing.
Kasie Whitener (29:59):
So that was my question that when you and I were prepping for this show was like, can they keep this up? Do they have the resources to continue to back these companies and to continue to invest in these areas? I mean, at some point, is China gonna run out of money in this 150 countries sprawl that they've got going?
Phillip Chritton (30:16):
Yeah. I think that their, their funding that they're, they're finding that their own resources are not limitless. And they've got a big debt crisis. They've overbuilt their infrastructure, although it's admirable. They've got, you know, sort of bridges to nowhere and, and apartment complexes that are empty, that are empty and so on. And, and that's been publicized. But for the most part, I think they feel pretty good. I think the, the sort of leverage points the US has is obviously like market access. And Trump is, this has been the, you know, number one policy of, you know, the tariffs of saying, you cannot, we're gonna limit what you can come and sell in this country. And China, you know, they, they have to keep all these factories running, and the the other countries in the world are not gonna just say, okay, send all your goods here.
Kasie Whitener (31:01):
Right.
Kasie Whitener (31:02):
Um, so there, there are limits there. The Chinese leadership is concerned about getting cut off from US technology, you know, from AI chips and some of those things. And the US has been sort of ratcheting some of those controls in place and, and limiting that. I think there was concern where we started to say student visas Because there were, you know, historically there have been a lot of Chinese who have come to US universities, and there was talk about sort of shutting some of those visas down. That was a big problem for the Chinese leadership. So there's some vulnerabilities there. But China, you know, um, I think this, uh, rare earth thing is really, really interesting. And I, and I was kind of surprised that they came out a couple weeks ago and said, we're gonna put this worldwide program in place to limit this. I mean, that was a, a very, you know, and, and there was a lot of debate whether they overplayed their hand. I kind of think they did. And, and I don't fully understand why they did it. And that usually they're much more subtle.
Kasie Whitener (32:02):
Right.
Phillip Chritton (32:03):
But the way that China got control over the sort of global rare earth industry is very interesting. I mean, they, they invested in, and it's a kind of a dirty business, you know, mining this stuff and refining it and processing it. And you, you, you know, and they, they kind of said, look, we're not so worried about the environmental issues.
Kasie Whitener (32:22):
Right.
Phillip Chritton (32:22):
We'll, we'll figure that out later. And then when any foreign company, uh, popped up to, you know, start making, you know, producing these things, they would flood the market with supply and basically put them outta business.
Kasie Whitener (32:35):
Right.
Phillip Chritton (32:36):
'cause prices would drop. And then in some cases, they entered into joint ventures. And then, you know, I was reading about some, uh, processing plan in, I don't know, Indiana or somewhere where they bought the equipment and moved it to China. So, you know, they've been very, uh, clever about that. But as I said, China also has these vulnerabilities, the birth rate declining, um, you know, the domestic economy. So I think China can't quite go its own yet. They can, you know, so they, they need us and we need them.
Kasie Whitener (33:10):
I think that interconnectedness is gonna take us into our final segment here. We're gonna talk a little bit more about that. And, and my, my big question for you is about a peaceful solution to this. And where do we get to a place where we don't see the Chinese as adversaries anymore, but instead we see them as important trade partners and, and in this kind of thing together. Uh, is that even a, a potential stance for us to have with them? Um, when you mention the rare earths being kind of a surprise that maybe they overplayed their hand just a little bit. I'm wondering too about this technocratic, uh, the, the central planning design of the Chinese economic infrastructure and, uh, and, and whether or not, um, it's showing that it's not the right model. Um, so we're gonna get into that too. On the other side of the break, we're gonna talk a little bit more about China. We've got one segment to go, me and Phil Chritton breaking down China on Moore Impact. We'll be right back.
Kasie Whitener (34:11):
Welcome back to Moore Impact, Kasie Whitener, your host, and with me, Phil Chritton, who is one of our Sunoco Visiting fellows. Fellow fellows,
Phillip Chritton (35:52):
Yes. Xi Jinping.
Kasie Whitener (35:52):
Yes. Xi Jinping. And so, uh, the, what does this look like now? And then my big question for you, and where I wanna take it is, is there a peaceful solution to this? Is there a chance that we and the Chinese start to see each other as, as unlikely friends, as opposed to being competitors?
Phillip Chritton (36:08):
Yeah. Well, like I said, I think that, uh, Americans and Chinese have an amazing amount in common, both big countries. And I think, you know, on a sort of person to person, uh, level, uh, they're really good contacts. You know, I, I lived in China for a long time. I've been in involved with Chinese, uh, you know, here in the us I think there's a lot of good commonality, um, in the culture. But, um, I think the contrast with the Soviet Union is, is really important to, to recognize. I mean, it, it was a bit of a facade in the Soviet Union, and when it collapsed, we kind of said, why were we so worried about this? Right. Um, but China's different. I mean, when you go to China, I mean, there are these, again, vast factories. The universities are good, the focus on education, and people work really hard.
Kasie Whitener (36:57):
Right.
Phillip Chritton (36:58):
You know, the ability to put things together, whether it's assemble a product or build a bridge, I mean, it's, maybe it's not perfect, but it's something to really admire.
Kasie Whitener (37:08):
A sophisticated economy.
Phillip Chritton (37:09):
It's, it's real. It's real. But I think kind of stepping back, the thing that I worry about is how, um, there could be a misunderstanding. I mean, the two countries now have these vast militaries. Right. And it, it sort of came home to me. Uh, I had an epiphany in a way. I was, I went to visit my college, uh, roommate, and he's from Hawaii. And we went out, uh, to the Arizona Memorial where the, when, when the Japanese attacked Pearl Harbor, they sunk a number of battleships, as everybody knows. And one of them, the USS Arizonas on the bottom of the harbor, and it's a very solemn place if anybody's ever been there. Right. There's still 80 some years later, there's still drips of oil coming to the surface from the, the oil tanks of the Arizona. And I'd been there once before, but what was different this time was that was very moving. But I looked down and they've got another battleship, uh, docked about 300 yards away. And it's the USS Missouri. And that's important because that was the battleship in 1945, 4 years, you know, after Pearl Harbor where the Japanese signed the surrender in Tokyo Bay on the deck of that ship.
Kasie Whitener (38:25):
Right.
Phillip Chritton (38:25):
And I thought, you know, both sides misunderstood each other. Uh, the, the Americans and the Japanese, they underestimated each other. And remember, some of the final straws, uh, with Japan was we had cut off their oil supplies, and, and we had, and so the Japanese attacked the US fleet with the idea, not that they would necessarily defeat the United States, but so that they could have their way in Asia to get the oil and all the resources they needed. And I thought, you know, that sort of feels like, you know, hopefully not, but it sort of feels like where we are is that the two sides really misunderstood each other. So how can we avoid that from happening? I have a couple thoughts. One is we need to maintain engagement with each other. And one of the things that I'm really concerned about right now, uh, you know, having been involved with China all these years is how the two sides are kind of pulling apart. You don't have as many student exchanges as you used to. You used to have congressional delegations that would go to Beijing, used to have a lot of CEOs that would go into China. Now, there were a lot of reasons why people did that. Um, but that's sort of broken down. And I think the more people talk to each other, the more they get to know each other. And if nothing else, they avoid underestimating the strengths of the other. So we need to do that. The thing that I'm also concerned about is we need to, the US needs to maintain alliances. We're sort of in this place right now where we've been picking on some of our allies just, uh, even more than adversaries in some cases. I think we need alliances. Now. There's been some good news out of the president's visit to Asia. You know, they're proclaiming a new, uh, you know, US Japan relationship.
Kasie Whitener (40:12):
Right. They're new Japanese Prime Minister. She's a
Phillip Chritton (40:23):
We have some, you know, the US China is, is going to be a competitive rival for the, for our lifetimes and way beyond. Um, so, but we shouldn't be afraid of that. But we can help our be more safe and more secure and better positioned if we have good alliances like the Australians, they're great allies.
Kasie Whitener (40:43):
Right.
Phillip Chritton (40:43):
It doesn't mean we agree on everything. They're great allies, and we need them, and they need us, so let's work with them, you know, the, the Europeans. So we need to, we need to focus on those alliances.
Kasie Whitener (40:53):
Can we, um, go back to the question?
Phillip Chritton (40:55):
Yeah.
Kasie Whitener (40:55):
The, the statement that you made about being a competitor for a long time. I mean, is this a, a sense of there's a limited pie? Is this a, like the economic resources, the natural resources, that they're all limited resources and we're fighting for a share of it? Or can there be a sense that this, these resources are abundant and if we work together, we can, we can do even more if we determine, Hey, this is what's good for America, and that's what's good for China. And like, let's share this opportunity that exists you know, worldwide. Globally. As opposed to like, well, if, if, you know, if we have it, China can't have it, and if China has it, then we can't have it. And so we're gonna have to duke it out. Right. I mean, it seems to me two very different global approaches. The one being let's, let's share and compromise and figure out what's best for everybody. And then the other side being like, uh, you took it and we want it, and I'm gonna punch in the face to get it. And, and that's the concern, is that we are gonna drive closer toward that second.
Phillip Chritton (41:55):
Yeah. No, uh, Kasie, that is a perfect point because I think right now we're there, there are many who are seeing China as a threat to be contained. Like we wanna stop them.
Kasie Whitener (42:07):
Right.
Phillip Chritton (42:08):
Uh, there are a rising power, we need to stop them. But I, I read something interesting, a a way of looking at the us We are also a rising power because our economy is, you know, it continues to grow, continues to evolve. And that's where I think we need to focus. Maybe there's some areas, points of competition that could be dangerous. You know, mentioned rare earth or a possible, uh, conflict that could break out over, you know, China trying to take Taiwan back. So there are a number of very delicate points, but I think instead of worrying about containing China, let them grow in their way. You know, we have to compete with them, but we need to focus on our own house, getting our own house in order. We need to work on our education system, our infrastructure, and liberate our forces, so our economic forces so that we can continue to grow. That's the best way to avoid this.
Kasie Whitener (43:02):
And to find those areas where, rather than following them into red oceans, so to speak, why not, uh, find those places where we have particular strengths and we have particular core competencies, and be investing in those spaces. Yeah. Um, to really say, well, okay, yeah, you've got that, but we've got this and we need each other, so let's, let's compromise, let's share here.
Phillip Chritton (43:22):
Yeah. And I think.
Kasie Whitener (43:24):
Yeah, I feel like it feels childish to even say it. Like, why are we not, you know, being friends and partners here, but global trade helps everybody.
Phillip Chritton (43:31):
Yeah. And on that point, I think that, um, again, there's talk about decoupling from China. I mean, I, I think that's kind of ridiculous because the supply chains are so deep. I mean, even if we want to, it's probably very difficult. But I think another way to look at the positive side of those interwoven supply chains is countries that are trading with each other are maybe less likely to, you know, go to war with each other.
Kasie Whitener (43:59):
Right.
Phillip Chritton (44:00):
Because it's like mutual assured destruction.
Kasie Whitener (44:02):
Right.
Phillip Chritton (44:03):
The, the Chinese know that if they attack Taiwan, they saw what happened when Russia invaded Ukraine. Everybody pulled out of Russia.
Kasie Whitener (44:13):
Right.
Phillip Chritton (44:14):
All these multinationals. Now it'd be a lot more difficult, which China, but they know that they're going to pay a tremendous price. Now they're weighing, is that price worth it?
Kasie Whitener (44:22):
Right.
Phillip Chritton (44:23):
You know, and the, you know, when you're looking at a thousand years or something, you know, this is a small thing, but I think trading is good, and it, it, it weaves us together.
Kasie Whitener (44:32):
I think it needs, the question I would have, and maybe this goes back to our conversation about the Chinese culture and Chinese people. How do you trust what their intentions are? How do you know what their intentions are? And then, and then trust that to say they're not here to take from us.
Phillip Chritton (44:49):
Well, I, the, I have to be careful here.
Kasie Whitener (44:53):
Yeah.
Phillip Chritton (44:54):
But I think the, the Chinese Communist Party does not have a great track record of, you know, how they have, you know, led in, in a lot of areas. And I think we have to be rightly concerned about sort of blindly saying, Hey, they're gonna do the right thing.
Kasie Whitener (45:11):
Right.
Phillip Chritton (45:11):
But we have to find a, a way to coexist. They're also, the leadership in Beijing is also very pragmatic, and they need to see that we're strong and that we mean business. And so we have to have a strong military, we have to have a strong economy. Uh, you know, they, um, they greatly admire our education system and, you know.
Kasie Whitener (45:34):
I hate that that's the end of our conversation. But I'm so glad that you're gonna come to my classes and share Phil Chritton, our Sonoco Visiting fellow. Thank you for being here. This has been Moore Impact. When you learn more, you know more, when you know more, you do more. Thanks for listening.