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Examining the growing gap in the U.S.-China relationship

STEVE INSKEEP, HOST:

Secretary of State Antony Blinken is staying tonight at this hotel behind me. They've already set out the metal detectors in his honor. He's to meet China's president here in Beijing. And as he does, we're getting a glimpse of China in 2024, which is not easy to do, because in a way, the United States and China have moved farther apart, as we learned when we started our journey here from Washington.

UNIDENTIFIED PERSON #1: Ladies and gentlemen, Group 1 and 2 in the blue lane. Group 3 in the green lane. Please have your passports open to the photo page. (Speaking German).

INSKEEP: That was the flight attendant as we boarded at Washington's Dulles Airport. She's speaking German because we will stop in Frankfurt, Germany, on the way to Beijing. Before the pandemic, nonstop flights connected the two capitals, around 14 hours. Now our editor Reena Advani and I needed about 22 hours, including a layover spent at a German airport restaurant.

UNIDENTIFIED PERSON #2: Working on the food, or I'll take it already?

INSKEEP: You can take this unless you want it, Reena.

UNIDENTIFIED PERSON #2: No need, no need?

INSKEEP: I could use some more coffee, though.

And a zigzag course across Central Asia, which Reena monitored from her seat.

REENA ADVANI, BYLINE: The plane went a different course than was expected.

INSKEEP: Avoiding the faster route over Russian airspace, as most flights have since Russia invaded Ukraine. When we reached Beijing, where airport traffic is still below pre-pandemic levels, I mentioned our longer flight to Qian Liu (ph), who's a Chinese economist.

QIAN LIU: It's a great metaphor in the sense that COVID changed China and its relationship with the rest of the world big time. Even though COVID was completely over the beginning of 2023, a year ago, unfortunately we have not fully resumed to everything back to normal.

INSKEEP: Qian Liu stresses that China still has the world's second-largest economy. That was obvious looking around. We were sitting on a bench in a courtyard surrounded by City of Oz-style skyscrapers. In an upscale mall nearby, the staff serves spicy fish and cheers every customer who enters.

UNIDENTIFIED PERSON #3: (Non-English language spoken).

UNIDENTIFIED GROUP: (Chanting in non-English language).

INSKEEP: But new foreign investment is down. Distrust between China and the U.S. is way up. Qian doesn't think Americans understand this place much at all because it's been harder to visit. And she recently quit her job with a firm advising global businesses. She used to see herself as a bridge between China and the rest of the world.

LIU: There was a point in time where being a bridge was a lot more valued. Both sides value you and know you can help to make a difference with the other side. But increasingly, over the past several years, my Chinese friend would be, don't you forget you're Chinese. And my foreign friends would be, you've lived in China for too long - you've been brainwashed by the Chinese Communist Party. And it's very saddening.

INSKEEP: One stated purpose of Secretary Blinken's meetings here in Beijing is to rebuild bridges, though nobody expects that to be easy. And we plan to ask Blinken about that on tomorrow's MORNING EDITION. While waiting for him to arrive in Beijing, we got a look at China's economy from the bottom. We spent an hour on a Beijing block lined with motorbikes, delivery vehicles. The drivers take their breaks here.

The quiet of this really busy city street is a sign of China's economy. All of these bikes are lined up here, coming and going, and they're electric. They're being passed by, in many cases, electric cars making hardly any sounds at all. And the delivery people themselves are a sign of China's economy because they're doing the physical work of delivering the stuff that somebody bought online.

We chatted with drivers and learned that some moved here from small towns to work. One said, all of our stories are the same. We are all poor. Others said the job offers freedom. And Liu Shiwei (ph) says it at least earns enough that he's been able to save some money. He was having lunch, noodles and beer in a food court just off the street.

Is that good beer?

LIU SHIWEI: (Through interpreter) Quite nice.

INSKEEP: He was wearing the yellow shirt of a service that delivers meals, groceries, clothes and more.

How's business?

LIU: (Through interpreter) Not good.

INSKEEP: Why?

LIU: (Non-English language spoken).

INSKEEP: He says orders are down, and too many people are taking work as drivers. That reminded me that youth unemployment last year climbed so high that the government temporarily stopped publishing statistics about it.

I've heard a lot of younger people have trouble finding work. Do you think that's true?

LIU: (Through interpreter) Of course it's true, otherwise there won't be so many delivery guys now.

INSKEEP: Oh, you think there's more delivery guys because people can't find other kinds of jobs?

LIU: (Through interpreter) Yes, of course.

INSKEEP: China's economy is still growing, but consumer spending is down, which affects a bar owner we met on a narrow street of historic brick homes.

(SOUNDBITE OF WIND CHIMES)

INSKEEP: Sun Kai's (ph) bar has outdoor tables with wind chimes hanging overhead. The owner sat at one of those tables as he explained why business is slower than he would like.

SUN KAI: (Non-English language spoken).

INSKEEP: "People are definitely spending less," he said. "They're less likely to get an extra drink after dinner." To understand what's happening, we ordered not whiskey, but tea with Dan Wang. She is the chief economist at China's Hang Seng Bank.

DAN WANG: You came to China at the right time. There are a lot of interesting things going on simultaneously. One thing is that the consumer confidence is at a historical low. And when we look at how much people spend comparing to four years ago, now is about 40% less. And that's the average urban resident. So it's quite significant. People save way more than before.

INSKEEP: Weren't people already saving a lot in China compared to the United States?

WANG: Oh, definitely. China was already one of the biggest savers in the world, and now it's even more so. Currently, there is about $20 trillion saved up as household deposits in Chinese commercial banks. So that's a lot of money.

INSKEEP: You said consumer confidence is low. So people are not spending because they have dark feelings about the future?

WANG: People generally don't feel that optimistic about the economic growth anymore.

INSKEEP: Part of the problem is real estate. Home values rose for decades, making the owners feel richer. Then prices stopped rising, making people feel poorer. And there's another issue. China's government is less focused on promoting consumer spending. That's because of the growing competition with the United States and its allies.

WANG: This is a big change in China's economic agenda because when it comes to what industries get more policy support, it usually would be associated with consumer market before the trade war. So the Chinese government had been quite keen to develop a large enough middle class so that the domestic demand was strong. And that was also in line with the common prosperity agenda. But since the trade war started, you can feel that narrative has changed quite drastically.

And when it comes to the industrial decisions, there were way more support towards the heavy industries, towards the high tech, because the government is quite keen to fend off the threat from the U.S. In my opinion, the China-U.S. relationship is pretty much beyond salvation, so it doesn't matter how many conversations are going on or how friendly one side appear from time to time. They have their long-term agenda as an adversary or competitor.

INSKEEP: The government is making national security decisions rather than pure economic decisions. Is that right?

WANG: Oh, for sure. In the long term, the national security would dominate China's economic agenda.

INSKEEP: That is one part of the backdrop for this week's diplomatic meetings as U.S. Secretary of State Antony Blinken meets Chinese leaders here in Beijing. The world's second-largest economy is still adjusting to life after the pandemic. And both countries are trying to find their balance at an unstable time. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Steve Inskeep is a host of NPR's Morning Edition, as well as NPR's morning news podcast Up First.
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