Yeah, and another thing too

that opened our eyes on this trip is about the labor force or the lack of a labor force, the need to develop a labor force for quantum.

When we were going from lab to lab, and we took this trip a year ago when we were going to quantum labs and some of the top universities that had quantum programs, spent a lot of time on the road listening to experts explain to us what we needed to know and what we didn't know.

One of the things that sort of blew our mind was the need to actually rethink the labor force on this.

How are universities are rethinking programs, not just, you know, Ph.D. level physics programs, but how you need to have graduate level programs beyond physics.

You need to have college courses that are and other type of sort of engineering type programs that will allow us to create a quantum workforce.

Because the idea that you just need a bunch of math majors to do equations, that's not the way quantum works.

What else are you guys working on? What else do you want to call out here in terms of really pressing issue that you have your teams furiously trying to figure out and come up with recommendations for Congress?

What would your message be to investors that think potentially they could ignore this (laughs) relationship for the next 12 months?

Well, I think, look, uh, uh, uh, an agreement to not do something for a year only holds as long as the Chinese decide they're not gonna do something, they don't feel like they've been provoked or, or something else.

You know, so there's an issue that, that...

A one-year, one-year truce doesn't mean a one-year truce.

It means a truce until one of the sides decides that truce doesn't work anymore.

But the larger point is, I think on tariffs, you know, the president's moved back tariffs by 10%.

You know, so you have a headline rate of 57%, that sound... going down to 47 or so.

How well are they doing at rebalancing their economy into more of a consumption, less of just simply an output-based, uh, economic, uh, model?

Is that the right play?

Well, the playbook for years and years and years, particularly since the 1990s, has been that markets should control everything.

They should make all our decisions for us.

And I think most of the time that's probably a very good idea.

But what we've started to run into is the fact that there's certain national security priorities that we can't allow be controlled by the markets.

And the reason for that is if China controls a lot of the supply, it knows this, and it can just cut prices in order to knock us out of that market.

And then all of a sudden we've de-industrialized in something that has a national security priority.

Where are we at? What is the state of trade, particularly with China, but around the world? And what is sort of the thinking inside the administration? So let's talk about phase two.

Is that the right play?

Well, the playbook for years and years and years, particularly since the 1990s, has been that, you know, markets should control everything.

They should make all our decisions for us.

And I think most of the time that's probably a very good idea.

But what we've started to run into is the fact that there's certain national security priorities that we can't allow be controlled by the markets.

And the reason for that is if China controls a lot of the supply, it knows this and it can just cut prices in order to knock us out of that market.

And then all of a sudden we've de-industrialized in something that has a national security priority.

Where are we at? What is the state of trade, particularly with China, but around the world? And what is sort of the thinking inside the administration? So let's talk about phase two.

How do you see that evolving? How close can they get given how incredibly contentious the relationship has been for decades?

Yeah, look, it- it... you know, India considers itself a non-aligned country, and a lot of countries do in Southeast Asia too that- that have, you know, said they're not gonna be a US ally directly or a Chinese ally.

They're gonna, they're gonna manage relations with both.

I mean, you've got Indonesia, you've got Vietnam, you've got a lot of other countries.

But within that non-alignment, uh, label, there have been-... tightening relationships, uh, for years and years in the United States.

It's been geopolitical, it's been economic, it's been trade.

These things have been very advantageous to, to US policy goals, trade and foreign policy and even military in the Pacific region.

Do you see any sign of that whatsoever?

I want to start with this question of, what is at stake in order to even get a phone call between Xi Jinping and Donald Trump? Something that we've heard a couple times before, but that, from what we understand, hasn't yet happened.

A phone call should be very easy, but I think the reality is that- that the- the Chinese side is very skeptical that the (laughs) US side will keep whatever commitments that it, uh, that it- that its- that it, uh, asked for, and that it will convey exactly what it wants, and that it will have a point person that will be able to have the authority to be able to make a deal for what, you know, for- for whatever the US side wants.

So, uh, you know, a- a call is easy, a meeting is easy, there's nothing that you really have to give away in order to do that, but I think that, uh, in Beijing right now, (clears throat) there's a worry that if they come to the table and- and- and President Xi looks bad, uh, then this- this'll, uh, you know, this'll be a net negative for the- for the, uh, for the relationship and for, uh, for China's leverage.

So, they're holding off on that until they think that they have a- have a better hand.

We'll see if it happens this week.

What are your thoughts on- on China as an investment destination? From the perspective of a US institutional investor, is China investible now?

Well, I think you made a nice distinction between, uh, you know, institutional investors and those companies that are in there with hard assets and- and a- and a presence throughout China, very difficult to extricate themselves at that point.

If- if you're an institutional investor and you're looking at China, then you have to be asking yourself, "What edge do I have here? Am I just waiting for this ridiculous thesis of, you know, things have been down for 11 years, been...

I want to start with this question of what is at stake in order to even get a phone call between Xi Jinping and Donald Trump, something that we've heard a couple of times before, but that from what we understand hasn't yet happened.

A phone call should be very easy, but I think the reality is that the Chinese side is very skeptical that the US side will keep whatever commitments that it asks for and that it will convey exactly what it wants and that it will have a point person that will be able to have the authority to be able to make a deal for whatever the US side wants.

You know, a call is easy.

A meeting is easy.

There's nothing that you really have to give away in order to do that.

But I think that in Beijing right now, there's a worry that if they come to the table and President Xi looks bad, then this will be a net negative for the relationship and for China's leverage.

So they're holding off on that until they think that they have a better hand.

institutional investor, is China investable now?

What's the thing in the zeitgeist on the China-U.S., U.S.-China trade war that's not talked about enough?

Well, I think too much is being made of the idea that Xi can't come to the table and Trump can't come to the table, because each of them has to have the other one go to the table first.

It's in the bo- interest of both these countries to eventually move towards some sort of negotiation.

That doesn't mean that the negotiation's going to move to anything, but the tariffs are in a very, very high level, uh, both directions.

They don't even serve an economic purpose past a certain point.

And if you have tariffs at 145%, even at half that, you're not making an economic difference, because no Chinese goods are cost competitive at even half of 145%.

So the tariffs are sort of arbitrary at a certain point.

Shanxi, S-H-A-N-X-I, huge manufacturing appliance place, uh, what do they do? I mean, when they're out of a job are they, like starving or is there a social net in this trade war for people deep into China in all those manufacturing jobs?

What's the thing in the zeitgeist on the China-U.S.-U.S.-China trade war that's not talked about enough?

Well, I think too much is being made of the idea that she can't come to the table and Trump can't come to the table because each of them has to have the other one go to the table first.

It's in the interest of both these countries to eventually move towards some sort of negotiation.

That doesn't mean that the negotiation is going to move to anything, but the tariffs are in a very, very high level of both directions.

They don't even serve an economic purpose past a certain point.

I mean, if you have tariffs at 145%, even at half that, you're not making an economic difference because no Chinese goods are cost competitive at even half of 145%.

So the tariffs are sort of arbitrary at a certain point.

Leland, can you give us a sense of where you think China is in terms of its relative strength in negotiating with the United States? Give us a sense of how things are in China and how they might impact its ability to negotiate with the U.S.

Are you seeing any sign that China is willing to come to the table?

Not yet, but, uh, I don't think coming to the table is that big a lift for either side.

Uh, you know, if you- if you read the headlines, it makes it look like United States is spiraling in one direction, China's spiraling in the other direction.

There's just nothing that could bridge the gap.

But the real gap right now is these enormously high tariffs, th- but there's, [laughs] there's just not that much difference between 145% tariffs and 145,000% tariffs because you just don't have Chinese goods that are competitive at anywhere near that- that level.

So there is a, you know, whether it's 145 down to- to some other level, to 125, 105, 85, there's- these are arbitrary levels.

There's nothing economically significant about staying at these levels, which means the President could take these levels down, not be giving up anything of economic substance, but bring the Chinese back to the table.

And Leland, when the negot- once the negotiations begin, what would you anticipate the negotiations would be over?

What levers does China have to pull to help support its economy in the middle of a trade war?

Well, you know, markets have been expecting there to be some sort of giant stimulus response for years.

And they were always disappointed because it wasn't in Xi Jinping's interest to sort of reduce the economy after they've gone through, maybe not deleveraging, but certainly a tightening of credit to areas of the economy outside of their priorities, like advanced manufacturing, etc.

We're entering... a very new era here.

And so depending on how severe geopolitics and the trade wars get going forward, they're going to start looking at these levers more seriously.

Obviously, one of the big one is fiscal spending.

They don't want to do a bazooka like 2008.

But in terms of the U.N. devaluation, for example, how orderly can China keep that?

What is Trump 2 trade theory compared to what it was in Trump 1?

Well, I think Trump trade theory is very similar.

I think Trump trade practice is diverging a little bit f- from the theory so far.

Uh, look, the, the first term, i- it's correct.

It was very different in a lot of ways than, than, than, than this Trump second term, in that Trump was, uh, constantly looking for victories.

You know, he renegotiated NAFTA, he renegotiated KORUS, he, he negotiated a, a, a trade deal with, with China.

These were victories.

And Leland, are, is there a valid concern that some in the marketplace are reflecting today in, in asset prices that that policy that you just articulated, uh, may result in slower economic growth and certainly higher inflation?

What is Trump Two trade theory compared to what it was in Trump One?

Well, I think Trump trade theory is very similar.

I think Trump trade practice is diverging a little bit from the theory so far.

Look, the first term, it's correct, it was very different in a lot of ways than this Trump second term, in that Trump was constantly looking for victories.

He renegotiated NAFTA, he renegotiated chorus, he negotiated a trade deal with China.

These were victories.

He was using tariffs for the most part as negotiating leverage towards an outcome.

And Leland, is there a valid concern that some of the marketplace are reflecting today in asset prices that that policy that you just articulated may result in slower economic growth and certainly higher inflation