I'm John Datsu with my good colleague, Gordon Chang, and we're speaking with Alan

Tunnelson, our guide on manufacturing and trade. Gentlemen, I'd like to speak to the future.

And Gordon, now I unleash the Gordon wit about China. Where is China now that it, and what is its projection about what it wants?

Not best case scenario, but something realistic given the poor performance of the economy.

I don't think it's realistic for China to think that it can flood the world with products

that it would have otherwise sold to the U.S., but which have been shut out by President

Trump's tariffs. Xi Jinping talks about increasing the consumption rate in China, but never does

anything that would actually do that other than short-term government handouts. So, for instance,

May we saw a 6.4% increase in retail sales, but that was

due almost entirely to government subsidies, which will not last long. So Xi Jinping has a problem

because he is hoping to flood the world with Chinese goods, and the world is not going to accept the Chinese and decimating their manufacturing sectors.

Alan, I was surprised this morning at the FT writing an essay about what they called the

vulnerabilities holding back Chinese industry.

You're going to be shocked what the vulnerability number one is.

Quality control.

Are you shocked, Alan? Quality control. Right. I mean, who to thunk, right? That Chinese manufacturing might be riddled with quality

control problems. I mean, this is, after all, a country that clearly doesn't care

about environmental problems. It clearly doesn't care about labor rights. It clearly doesn't

care about factory conditions. And it's been counting on keeping prices super, super cheap in order to penetrate global markets.

But I think global markets are finally catching up and recognizing that that China price,

although when we're talking about that surface price looks very low, the actual China price in terms of how it's going to affect larger manufacturing operations,

that's way too high.

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