Shehzad Qazi, Managing Director of the China Beige Book International, joined Closing Bell's Kristen Scholer to discuss Treasury Secretary Janet Yellen's comments in South Korea, where she criticized China's 'unfair trade practices' and called for sharing of key resources among U.S. allies.

Closing Bell

Yellen Calls for Increased Trading Among Allies amid Global Chip Shortage

Welcome back to cheddar. News is closing bell. Everyone I'm kristen Schouler down here on the floor of the stock exchange and Treasury Secretary Janet Yellen is on the final leg of her Asia trip today. She was in South Korea and called on US allies to work together to create more resilient supply chains in order to combat quote unfair trade practices from china. Take a listen. We remain vulnerable to countries using their market positions in raw materials technology or products to exercise geopolitical leverage or disrupt markets and trading activities for unrelated reasons. One such example is china which has directed significant resources to seek a dominant position in the manufacturing of certain advanced technologies including semiconductors while employing a range of unfair trade practices to achieve this position, Yellen saying that china is using its market position to disrupt the global economy and create geopolitical leverage and for more I do want to bring in Shehzad Qazi, managing director of the China Beige Book International which does provide data on china's economy shows that it's good to see you so yelling calling out china by name here. What do you make of our comments in South Korea? Yeah look I think christian you know various US administrations. Well at least the last two have had quite a bit to say about china's unfair trade practices. I think you have several U. S. Agencies specifically the office of the U. S. Trade representative which now for years has been calling out these unfair trade practices? The real question is is there political will within the United States and is the political will specifically within the White House to actually do something about this? It's important to keep in mind that this is the White House that has been torn apart because they simply can't even come up with a china policy or a china strategy. So it's all good and fun to talk about near shoring and friend sharing and all of that. The real question is, what are you gonna do about it? And I'm afraid when you ask that question, all you get is a pin drop silence. Right? So to reference your point there shows that I know Yellen did mention friend shoring increasing trade with allies. That is unless with geopolitical rivals like china in particular. Her trip of course coming two months after President biden was actually in Asia on his own tour trying to shore up confidence in some sort of trade pact to that can basically strengthen ties between the U. S. And South East Asia. Does this take it a step further Yellen's trip to the region? It's it's really hard to say. I really don't think so. Let's keep in mind, you know, Secretary Yellen is a Treasury Secretary. She's she does not deal with trade primarily. Also, there are very serious questions about how long she's going to be in this job to begin with. We may very well be looking at a new Treasury Secretary taking over in the near future in any event. So this this is an important diplomatic event. Sure. But does it really mean anything in terms of actual action? No. Any type of trade deal. As far as that's concerned, there is no prospect of that getting done any time soon at all. Even if you were to somehow get Congress to agree on basic tenets of what should go into a deal to begin with any hope that this can actually ease some of the supply chain issues she's on of course Yellen's trip and the comments that we've been hearing coming out of her Asia tour. Yeah, that that was the key point here. Right. So we need supply chain stress to ease today, not 10 years from now and and and these big highfalutin concepts. That sounds great. But what are the actual action items on the ground that we're looking at today that will ease supply chain pressures. What are some concrete policy actions that we're seeing taking place? Unfortunately, the answer is not much or nothing at all is being done. And we have to keep in mind it's easy to blame rivals like china and geopolitical tensions on supply chain stress. Sure, that's part of it. But we've got a real problem with monopolization that is part and parcel of all this. We've got a real problem with price gouging that's in there. So there's certain things that I think the White House could be doing today in addition to of course making America supply chains more resilient. But we're not really seeing any concerted action out of the White House on any of those things. I am not optimistic at all that we get any type of resolution simply because of visits such as these. Well South Korea we know uh the world's top producer of memory chips and we talk about just the growing importance of semiconductors really across the entire world. So South Korea its stockpile increasing 50% in this past year. That would certainly be good news as I know companies across the board to try to build up inventories in case we do have another covid lockdown or some sort of other exogenous shock to the very system. Is that a positive for the U. S. Look it certainly can be a positive for the U. S. So long as we are the purchasers off the you know of that technology so long as it's coming to us. But at the same time South Korea has diverse trading relationships and of course has pretty strong trading relationships with with china. So you know at the end of the day. Again our ability to control other countries and what they do, you know, especially with private companies in those countries do visit me there. Business relationships and who they sell technology to which is a key national security concern to the United States. That's still pretty limited more and more companies as she tried to move their supply chains here to America actually even chip companies setting up shop in Arizona, for whatever reason, I'm thinking of intel spending billions of dollars on its own chip manufacturing plant there. L. G. T S M. C. These are international multinational companies but also focusing, I'm building out some of these new plants in Arizona. How does that work to improve some of the supply chain issues that have persisted these past few years? Look, that is absolutely, I think the future of what we need, especially when it comes to sensitive technologies such as chips, which is why the chips bill that has just been languishing in Congress really quite frankly for the last, you know, year or so at this point um is so important. Now, it doesn't look like we're going to get any type of healthy bill to pass that that's going to have a very big impact. We'll see what happens after the midterms. But really from a policy standpoint, uh it's it's really the on shoring of some of these critical supply chains that any future administration or Congress needs to increasingly get its act together and focus on because when you talk about easing supply chain pressures, that is probably the real solution at hand here. Alright. Suzette Kazi, managing Director of the China Beige book. International thanks so much for coming on the show. It's good to see you