The COVID-19 pandemic began in China, but after putting into place harsh lockdown measures in the winter and spring, the country has found its economic footing as most of the rest of the world continues to struggle. On the latest episode of the Pivot podcast, Kara Swisher and Scott Galloway discuss China’s rebound and what Asia’s relative success at controlling the coronavirus means for the global economic future.
Kara Swisher: China’s economy grew by nearly 5 percent in the recent quarter. This means China’s likely to be the only major economy to expand this year. Meanwhile, the International Monetary Fund expects the world economy to contract 4 percent. And, by the way, here in the U.S., the budget deficit has soared to $3.1 trillion over the weekend. Also, this week, Alibaba, China’s biggest e-commerce company and Amazon’s strongest global competitor, is buying one of China’s biggest grocery chains, Sun Art. Sun Art is Walmart’s biggest competitor. There’s a lot to unpack here, but China is doing great. So talk about all this and what it means for the competition. We really got them with our trade deal — I can see that. I can see that they’re really suffering from the blows we’ve put upon them.
Scott Galloway: Well, first off, mind blown. I mean, just mind blown there. I think it’s so ironic that the real victims of a crisis are usually not where the crisis originates. The crisis originates in China, and, wouldn’t you know, China is going to run through it. They’re basically the Amazon of geopolitics right now. That is, they’re going to accelerate through the pandemic.
K.S.: That’s a great way to put it.
S.G.: And there’s a real lesson here. We like to think we’re exceptional, meaning we can’t learn from anybody else because we have our head up our ass and think that anything we do, even if it’s terrible, we do it the right way. But let’s distill it down to three reasons why China has been so successful at the way they have addressed the pandemic. The first, and it’s the most important thing, is that they locked that shit down. There was no excuse. There was no bullshit about freedom. There were no complaints about tyranny. Their economy contracted more severely than any economy in the world, because they said, “Okay, we actually have this thing called epidemiology and respect for science. And as far as we can tell, until there’s a vaccine, we’ve got to create these nodes of distribution and create distance between them.” And they locked down more harshly than anyone.
And stage two was once they felt they had control of the pandemic, they got their supply chain back up and humming. They opened their factories and their supply chain first. And then phase three was to get their consumers back out spending money again. And you know what? It’s worked. And here we are with a series of half-measures and complaints and no coordinated strategy.
The lesson here, and nobody wants to hear it — we make these bullshit statements about Asia that, “Oh, but they’re more compliant,” which is our way of saying they’re weak. Well, you know what? We were pretty fucking weak in World War II. We slowed down to 30 miles an hour. We bought war bonds. We didn’t sit around waiting for a stimulus. We sacrificed hugely. We were very compliant, if you will. They have absolutely demonstrated a master class, and, as Fareed Zakaria said, so has Taiwan.
K.S.: Taiwan’s amazing. I’m just writing a column about Audrey Tang, the head of digital there, this week. She’s just amazing.
S.G.: If you were to look at every country and think of them as a stock and predict, relative to where they are now, whether they’ll go up in value or down in value relative to their current place in the geopolitical world — you could do a heat map. You’d say, “Well, the places most likely to shed from where they are now are parts of Western Europe and the U.S.” There’s just nationalism, narcissism, things that aren’t forward-looking indicators. I’m not trying to be anti Anglo-Saxon. I think New Zealand, Canada, Australia have done a pretty good job.
K.S.: The prime minister just won a big victory there, too, because of her behavior.
S.G.: She’s fantastic. She’s fantastic. But if Asia was a stock and an ETF, you’d want to buy it. If you did a map of your perception of which countries and which nations are going to thrive, it’s like a heat map of coronavirus. Coronavirus and the way these nation states have handled COVID-19 is literally a forward-looking indicator of our position in power in society. And it’s a very negative-looking forward indicator.
K.S.: For us — I agree. It was really interesting because I was noticing that there’s voting now in Florida, early voting, and people who were voting were six feet apart, standing in the rain with masks going to do their duty. And the number of virus cases just soar. And you look at China and you’re like — you can say “China virus” 20 times a day, but the fact of the matter is they’ve shut it down effectively. And here we are indulging ourselves, being sloppy and being resistant. And we joke about Scott Atlas, but I don’t even know what to say. He should be removed from the White House if Joe Biden wins this election — just removed and never allowed to come back in again, because this is about the economy. This is about getting back to work.
Everyone’s got pandemic fatigue. I have pandemic fatigue. I want to go to a restaurant. And this ridiculous indulgence … we’ve extended the life of this thing and not done everything we can to shut it down. And you see China returning to growth. And, by the way, they had a backlash and then they handled it. They handled their backlash. And they’ll have another one into the fall, I’m sure. But it’s just something else when you look at it.
So, does that give companies like Alibaba a chance to become more powerful than Amazon? And if Biden does win, what would you do? If you were now appointed to the Biden administration and you have to deal with the China situation, Scott — this will never happen, obviously, but what would you do?
S.G.: Instead of “Make America great again,” I think the right call sign for, hopefully, the Biden-Harris administration is “America again.” I think countries that trade together are just less likely to go to war with each other. And I think that it’s important that we understand China. I just don’t think there’s any getting around it. China was supposed to overtake the U.S. in terms of geopolitical power in ten years. We don’t like to admit it, but I think it’s happened in the last ten weeks. I think just as we withdraw from the World Health Organization, they fill that vacuum and they go in. So I think our relationship with China is really important. If I were Joe Biden, I would go to Barack Obama and say, “Boss, I was a good soldier for you for eight years. I need you to be secretary of state for the next 24 months and go on the world’s biggest repair tour. Just as the Rolling Stones went on the Steel Wheels Tour, I need you to go on a repair tour.
Pivot is produced by Rebecca Sananes. Erica Anderson is the executive producer.
This transcript has been edited for length and clarity.