TEXT OF INTERVIEW
Bill Radke: Marketplace’s Scott Tong joins us from Shangahi. Scott, how much can we read into today’s Asian stock rally?
Scott Tong: I wouldn’t read too much into it, Bill. After all,
we’ve seen so much volatility in this side of the world, as well as your’s. If anything, some of the traders say this is a relief rally.
Radke: Now Scott, during the campaign, Obama criticized China for manipulating its currency to keep its exports artificially cheap here in the states. And Obama has also said he would consider restricting Chinese textile exports. How did China’s leaders react to those statements?
Tong: Well, I spoke with some advisors in Beijing to the central government, and basically Beijing is not very worried about this. First of all, these threats eminate from Washington periodically, so none of this is new. And they also know this is a political campaign, this is political rhetoric that’s largely meant for domestic political consumption in the United States, and they’re betting that it’s not going to happen.
Radke: What about the other way around? China, of course, holds a lot of U.S. debt. How much does an Obama White House have to fear from China?
Tong: Well, the spooky scenario is China takes that debt, which is somewhere around a trillion dollars in loans to the U.S., and it dumps them. And the U.S. dollar spirals downward, and all kinds of bad things happen after that. Well most serious thinkers discount that theory. Now why? Because China’s the investor here. If it dumps its investments, the value plummets, it loses a whole lot of money there. Washington needs Beijing to keep financing its deficit, to keep producing low-cost things to keep inflation down. And China needs the U.S. to turn its economy around so the U.S. consumer returns and then export-led economies, export-dependent economies like China and the others in this part of the world, they can return, too.
Radke: Marketplace’s Scott Tong in Shanghai. Thank you, Scott.
Tong: OK Bill, thank you.