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But all that being said, there's no way to deal with climate without collaboration. And one thing that concerns me about Biden, again, reading his climate plan, his plan for reducing fossil fuel subsidies by governments, which he says he'll do in the United States, but is to give the belt and road initiative countries an alternative form of financing, and in other words, to fight China over these alliances that China is building. And whether that's a good idea for those countries or not, I don't know. That's a separate issue, but it's all couched in this virulent anti-China rhetoric.
So what is the underpinnings of this rivalry? Why is that some people argue this is because it justifies massive military expenditure, which I think there's truth to. But is there more going on? Why why is there this such underlying rivalry, which seems like it's going to make it impossible to collaborate on climate?
Rana Faroohar
I can jump in on that. I think that there was a belief in foreign policy circles and in economic circles that once China opened up and once they were brought into the WTO and the traditional structures, Bretton Woods structures, et cetera, that they would become more prosperous and move towards liberal democracy.
I frankly haven't been in and out of China for the last 20 years; never really saw that as a possibility. I just think it's really quite arrogant. I mean, old country, five thousand, six thousand years of civilization, kind of with its own ideas about things. And so I was always curious that there weren't more CEOs and asset managers and there were certainly military tacticians that would have sounded the alarm and have but saying, you know what, if it doesn't go that way, what if basically at some point China decides it is independent of Western technology, it can run its own supply chains. It is a giant single market, much like the U.S. in the World War Two period that can go it alone. Then what?
Well, here we are. And I think China would have given another 5 to 10 years before it made its move. But Trump kind of threw the bomb in the middle of the big hypocrisy of the one world two systems paradigm. And so now we have decoupling that's not just on the U.S. side, but very much on the Chinese side.
I had a fascinating conversation actually a couple of years ago with Kaifa Lee, who is a big Chinese venture capitalist. He helped start Google China. And he said, you know, we hope this doesn't happen in the best Chinese investment community, but we are prepared for there to be decoupling. And we believe that it will be easier for China to make up what it still needs within the supply chain and innovation ecosystem, which is not much. I mean, it kind of owns a lot of that ecosystem right now. Just slap Chinese consumer brands on the top of it. Then it will be for America and the Western world to rebuild its entire supply chain because we kept the brands and all the I.P., but we didn't keep that kind of manufacturing ecosystem. The military is obviously very worried about that. COVID has exposed the vulnerability of supply chains. So we're going there no matter what. I do not think that the whole Council on Foreign Relations like let's get a big super committee together and come up with a set of agreements on climate change that China and the U.S. can agree with. That's not going to happen.
Here's where I am somewhat optimistic. I think that it is possible for the world to become more regionalized, maybe a tripolar world, U.S., China, and Europe, with kind of different strengths and ecosystems to exist, to coexist. And in that model, I would look for optimism around climate change to come more from innovation, maybe state-driven innovation. China has done so much on wind and solar. You know, I think if we did in the U.S. and Europe is doing this to a certain extent, did a big push to incentivize research and development and five, six or seven areas of technology, including cleantech, we could probably really do a lot.
I mean, one small example, vertical farming. You probably never heard of this, but it's about to be huge. This is basically the idea of growing food on walls that are controlled in minute ways by light and temperature. It means you don't have to ship vegetables across the country and have them lose 50 percent of their weight, which was water anyway, and have a bunch of emissions. I'm looking for things like that. When I think about climate change, I'm not looking for some big new grand bargain.
Paul Jay
Mark.
Mark Blyth
So let's put a couple of things on the table. The background assumption here, whether you like Biden's climate policy or it's going to amount to more than a hill of beans, is that he's allowed to win. And it's not far from clear for me this is the case because the tweeter in chief, if he loses, will continue to mobilize, delegitimate, fractionalize and polarize this country. With a set of forces that we've begun this shot by identifying have been 30, 40 years in the making.
So it's not clear that you're going to get a Biden victory or even the United States basically emerges from the next 12 months as a kind of credible and stable place to invest. Now, what the United States has done to make its money over the past 30 years was basically to invest in the protection of intellectual property rights, and by some estimates, about 80 percent of the value in global supply chains accrues directly to U.S. companies. The famous example being you make a seven hundred dollar iPhone in China, but 50 bucks of the value remains in China, and the rest basically is remitted not to California, but to a series of tax havens. But nonetheless, most of it goes back to the American side.
So that's why you invest in American stocks because they grow faster, and they grow faster because of the IPR control. What is it that China wants to do? It wants to develop. It wants to become rich. What does that mean? That means it's coming for Europe.
So there's a real conflict of interest between these two, if you will, global business models.
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