Return to Transcripts main page
Fareed Zakaria GPS
Did NATO Expansion Cause the War in Ukraine?; How Will the War in Ukraine End? Roots Of The Racist Theory Behind Buffalo Shooting; Why U.S. Conservatives Want To Emulate Hungary; Effects Of China's Lockdowns On Global Economy. Aired 10-11a ET
Aired May 22, 2022 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FAREED ZAKARIA, CNN ANCHOR: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria coming to you live from New York.
ZAKARIA: Today on the program, Finland and Sweden have now officially applied for NATO membership. Their entry into the alliance would mean Russia's border with NATO would double in size.
Is the West provoking Vladimir Putin again or finally putting in place a strong deterrent? We have a great panel to discuss.
Then the Buffalo shooting suspect was obsessed with the idea that white people are systematically being replaced by other races. He's not alone. Why are these demographic fears going mainstream in countries around the globe? I'll talk to two experts.
ZAKARIA: But first, here's "My Take." President Biden says that combating inflation is his top domestic priority. But he certainly isn't acting that way.
He has in plain sight several measures that would reduce inflation significantly, and yet appears hesitant to do them.
As many distinguished economists have noted, the repeal of most or all of Donald Trump's tariffs would be the single most effective way of reducing inflation in the near future.
As a reminder, a tariff is a tax on goods paid by the American consumer who buys those goods. It is by definition inflationary. It raises the price of the good like an imported car.
But it causes even more inflation than that because it raises the price of the domestically made equivalent good as well. If a Mazda sells for more, then Ford and General Motors also raise prices on their cars.
The reverse logic applies as well. If you cut tariffs, that also has a broader effect. When the Mazda gets cheaper, Ford and GM will cut prices on their products to compete.
In March the Peterson Institute for International Economics produced a study estimating that reversing most of the Trump tariffs would reduce inflation by 1.3 percent points.
Larry Summers, who has been prescient on many things in this economic crisis, endorsed that study concurring that trade barrier reduction was the single biggest micro economic measure by far that could be taken to alleviate inflation in the near term.
The second one he noted would be immigration reform. This is the time to reverse Trump's restrictions on immigration, many done by executive action, which, of course, have severe worker shortages in industries like farming, construction and health care.
The problem, however, is not one relating to facts or logic. No one seriously disputes the validity of these claims.
During the campaign Biden lambasted Trump's tariffs on China and much of his immigration policy.
Yet after entering office, the Biden White House has behaved on these issues like a deer caught in the headlights, paralyzed from fear that any major shift might get attacked by Republicans.
This defensive crouch is not just visible in economic policy but foreign policy as well.
Biden campaigned on the notion that Trump had been a dangerous aberration in American politics, that his policies had been far outside the mainstream and that Biden would return the country to normalcy.
Imagine if Biden had in his first week in office changed a slew of Trump policies ending the tariff wars, re-entering the Iran nuclear deal, restoring some normalcy to America's relationship with Cuba.
Instead almost a year and a half into the Biden administration, on issue after issue, we are still living in Donald Trump's world.
Biden might have paid a small political price initially had he done what I suggested, but that would have been short-lived and he would have reaped the gains of more sensible policies for the rest of his term.
The Democratic Party has learned the wrong lessons from Trum['s narrow victory in 2016. It believes the only way to woo white working-class voters is engage in a set of Trump-like economic policies, chiefly protectionism and mercantilism.
But Trump voters are motivated largely by cultural issues. Just listen to Republican Governor Ron DeSantis or Ohio Senate candidate J.D. Vance, Pennsylvania candidate Mehmet Oz and others rail about cancel culture, gender identity, woke corporations and, of course, now abortion. In that realm Democrats need to listen more and adjust some of their
rhetoric and actions. On economics voters are looking for results, some of which Biden could easily deliver by reducing tariffs and easing certain immigration restrictions.
Inflation hurts the poor and the lower middle class the most because they spend a much larger share of their income on items like food and clothing. Those get cheaper thanks to global trade.
Getting cheap stuff at Walmart is a much bigger boon for someone making $30,000 a year rather than $300,000.
In Britain, inflation, which is at a 40-year high, mostly caused by Brexit, is having a particularly adverse effect on lower-income groups.
Similarly, studies show that tariffs are also regressive, hurting the poor much more than the rich.
A conventional wisdom has congealed in the United States that decades of free trade have led to stagnant wages for the middle class and misery for the working class.
That view conveniently excludes the massive benefits that have accrued thanks to dramatic and sustained reductions in the costs of crucial aspects of life such as food, clothing and technology.
We are witnessing what happens when the economic winds move in the opposite direction, and costs start spiraling up. It might even make us all a little nostalgic for globalization.
Go to CNN.com/fareed for a link to my "Washington Post" column this week. And let's get started.
On Monday Russia's deputy foreign minister declared that Finland and Sweden joining NATO would be a mistake. On Wednesday the Nordic neighbors officially submitted their applications to join the alliance.
On Saturday Russia then shut off its gas pipeline to Finland claiming the move was due to a payment dispute.
The debate continues. Is NATO expansion a good idea?
Let me bring in the panel. Charlie Kupchan is a professor of international affairs at Georgetown and a senior fellow at the Council on Foreign Relations.
He was senior director for Europe in President Obama's National Security Council. And Radek Sikorski was both foreign minister and defense minister of Poland. He's now a member of the European Parliament.
Charlie, let me give you a chance to start by stating your case. Why were you, as I recall, back in the early 2000s and late '90s, why were you opposed to NATO expansion? What is the case against it?
CHARLES KUPCHAN, SENIOR FELLOW, COUNCIL ON FOREIGN RELATIONS: Well, just to set the record straight, I'm now for it and supportive of Finland and Sweden joining the alliance precisely because Russia has invaded Ukraine and Finland and Sweden now are looking for more protection.
But going back to the 1990s, when this debate took place in the Clinton administration, my view was that to proceed at that time with formal NATO enlargement violated two basic principles.
One, include the defeated adversary in the post-war settlement and by enforcing a new line further east I fear that the message to Russia was you're not included. And secondly, the principle of not in my backyard.
Major powers generally don't like it when other major powers come into their neighborhood. The United States spent much of its history pushing Europe's great powers and others out of the Western hemisphere.
And so my sense was let's move forward with what was called the partnership for peace, a more flexible vehicle that would have allowed Russia as well as other countries to work with NATO. That decision was not taken.
How much did NATO enlargement play in the fact that Russia went down a dark path? Very difficult to say. Clearly flawed democratization, flawed privatization. Putin comes into power, doesn't build a modern economy.
Turns to Eurasian nationalism, a mystical claim about Russia's importance in the Eurasian sphere. This all played a role in his decision to invade Ukraine. It's very difficult at this point to say how much weight can we assign to the enlargement of NATO.
ZAKARIA: Radek, what about that argument? Russia is a great power. It does have a legitimate interest. And it was not just Putin who was opposed to NATO expansion. It was Yeltsin.
And despite repeated Russian objections saying this is a red line for us, there were five waves of NATO expansion, right, 15 countries including your own, about 100 million people brought into the alliance. Isn't that provocative?
RADOSLAW SIKORSKI, FORMER POLISH DEFENSE MINISTER: Russia has legitimate security interests but so do Russia's neighbors. In particular the right to exist, which President Putin is denying to Ukraine.
Sweden and Finland wants to join NATO for the same reason that everybody else wanted to join NATO, for common defense, for common protection. And when President Putin now says no big deal, we'll watch if there
are any deployments, that just proves that those so-called realist theories were all wrong because Putin should now be invading Finland and Sweden because supposedly even the intention of wanting to join NATO invites invasion.
No, President Putin has turned out to be a revisionist aggressor. We need to stop him in Ukraine. If we don't stop him in Ukraine, we will find him on the borders of Poland and Finland.
So it's very important that the Ukrainians be given the means to not only defend Kyiv but to recover territory. And I'm very glad that President Biden has signed the package of assistance to Ukraine and I hope Ukraine will be able to become secure and enjoy the security guarantees that were given to it in the 1990s.
ZAKARIA: Charlie, I want to dwell on this historical point because it is so crucial. So when I think about this issue, what I wonder about, isn't Ukraine an interesting test case for the thesis that NATO expansion is what caused or what provoked Russia?
Because Ukraine is not a member of NATO, and Ukraine's desire to be closer to the West, remember, it was their desire to be closer to the E.U. in 2014 provoked the Russian expansion and aggression.
So imagine a scenario in the 1990s where your advice had been heeded and NATO had not extended membership to Poland. Poland clearly wanted its historic destiny to be in the West.
It would have made moves in that direction. If Putin had regarded those moves as, you know, illegitimate and he might have done some military action in Poland and the West would face the same problem it faces in Ukraine, not a member of NATO but a democratic European country that wants to be closer to the West, are we really not going to help it?
KUPCHAN: Well, you know, Radek and I now end up in the same place, and I would agree with Radek that Putin is a revisionist aggressor and he needs to be stopped.
We'll never be able to replay history. We'll never be able to know whether things would have turned out differently had we proceeded with a strategy that led to the formal enlargement of NATO only if necessary as opposed to putting the cart before the horse and moving even while Russia was still trying to figure out its future.
Me, you, Radek, we're going to be debating this issue until the end of time, and we're never going to get an answer.
But I do think that what we're seeing here is a test case and that Russia has invaded Ukraine. The United States, its NATO allies have made a decision not to go to war with Russia over this issue. Not enforcing a no-fly zone.
They're not putting boots on the ground and that an indication of the desire not to see this escalate, not to see World War III over Ukraine.
If that's the case, then why would we want to give a security guarantee to Ukraine? There's a fundamental tension here that we need to resolve. But I do think, yes, it's good to give Ukraine the ability to defend itself.
Let's push the Russians as far back as we can. Let's also in my mind try to bring this war to a close sooner rather than later given the risks of escalation, given the blowback on economies around the world.
I think, Fareed, this is probably the most dangerous point since the Cuban missile crisis. Maybe more dangerous because this is a hot war. Bombs are dropping, missiles are flying. This is a very dangerous situation.
ZAKARIA: All right. Stay with us and we are going to talk to Radek and Charlie Kupchan about how to get out of this, what is the resolution? When we get back.
ZAKARIA: And we are back with Charlie Kupchan and Radek Sikorski talking about Finland and Sweden's applications to join NATO and how Putin will react.
But let me ask you, Radek, what should we do with Ukraine? What should the West do with Ukraine? I think there's general agreement that the 2008 Bucharest declaration was badly done because it vaguely promised NATO and -- Ukraine and Georgia membership but didn't provide a known pathway, no timetable.
So it was sort of enough to anger Putin without doing enough to protect Ukraine.
But how do you resolve that? Should, going forward, Ukraine be given security guarantees by the West?
SIKORSKI: Actually, you're talking about the 2008 NATO summit, which I attended. The Budapest declaration was earlier in 1994 and on that declaration --
ZAKARIA: Sorry, Bucharest. I said Bucharest, sorry.
ZAKARIA: Bucharest was the NATO summit. The Budapest declaration was the agreement whereby Russia, primarily, the United States, Britain and then later France and China gave Ukraine the guarantees of independence and security of borders in return for Ukraine giving up what was then the world's third largest nuclear stockpile.
And Russia has clearly broken the security assurances that it has given. So it's very difficult to deal with a head of state like Mr. Putin who customarily lies and breaks international agreement. ZAKARIA: But what to do about Ukraine, give it a security guarantee
SIKORSKI: Well, we are giving Ukraine something better than security guarantees, namely the means to do what they want to do anyway, which is to defend their land from purges, from war crimes, from deportations to gulags in Russia.
You know, Charlie was in the Obama administration, which advised the Ukrainians not to fight in Crimea. That led to Donbas. They didn't then arm Ukraine.
So Putin thought that he could take all of Ukraine and extinguish it as an independent nation without paying a price. Well, I'm very glad the lesson has been learned and that he is now paying a price, and we need to expel him from Ukraine because if we don't, we'll find him on the border of NATO.
ZAKARIA: Charlie, you disagree because you've written a piece in "The Atlantic" saying the Ukrainians should essentially pocket what gains they have and stop at this point, not try to kind of regain all their territory, right?
The problem with that, I just wonder, is the Russians don't seem ready to negotiate even on those terms.
I mean, the Ukrainians do seem to want to recover more of their territory but the Russians, as far as I can tell, are not seriously negotiating about anything at all to end this conflict.
KUPCHAN: Well, first point I'd make is kudos to the Biden administration for putting together an amazing coalition and putting on the ground in Ukraine the arms that Ukraine needs to defend itself.
I do think, Fareed, that we're getting to a phase of the conflict in which the war is going to be more difficult for the Ukrainians.
They're now more on offense than on defense trying to push back positions that Russia took in 2014.
And as a consequence, I do think we're going to see more of a stalemate and that will provide an opportunity for a conversation with the Ukrainians about their war aims.
And yes, it is up to the Ukrainians but I think the United States, the Poles, other NATO allies should be discussing how to bring the war to an end sooner rather than later.
I don't have in my mind some sense of exactly where to stop, should we push the Ukrainian -- should we push the Russians out of Donbas but not try to retake Crimea?
This is the conversation that needs to take place. But do keep in mind, number one, the risks of escalation. Number two, the blowback effects. I'm very worried that as we head to the midterms, the America First
wing of the Republican Party is going to get stronger and stronger. We've seen primary candidates, J.D. Vance in Ohio, he won that primary.
What was his policy towards Ukraine? I don't care what happens on the border between Ukraine and Russia.
So it's for these reasons that I worry that the staying power, the bipartisan staying power of the United States is uncertain. The unity that we've seen across the Atlantic is uncertain.
The Italians have just put forward a peace proposal. This is the time in my mind to begin having a conversation with Ukraine and ultimately with Russia about ending the war sooner rather than later.
ZAKARIA: Radek, I have 45 seconds left but I want to ask you, fair to say your solution to resolving this conflict is defeat Russia, expel Russia?
SIKORSKI: Well, we've just had a meeting of the E.U.-U.S. delegation here in Paris and that was bipartisan also on the American side view that Putin needs to be defeated.
Only then will Russia reform itself. And if Russia reforms itself, perhaps under different leadership, maybe she would join the West, which would be a good thing.
ZAKARIA: Radek Sikorski, Charles Kupchan, pleasure to have both of you on. This debate and discussion will, of course, continue.
Next on GPS, last weekend's shootings in Buffalo were believed to be inspired by something called replacement theory.
That is a false conspiracy theory that says there is a concerted, intentional, ongoing effort to replace white populations in Western countries. It's not just in the U.S. that this kind of conspiracy theory is going mainstream.
We'll tell you about this global problem in just a moment.
ZAKARIA: The Buffalo shooter murdered 10 people in a supermarket he appeared to have carefully chosen for being in a predominantly black neighborhood.
Judging by his writing, the suspect was obsessed with what is known as replacement theory, the idea that the white race is being systemically supplanted by others.
As you will hear from today's panel, it's an idea that's been spreading around the world. Cynthia Miller-Idriss runs the Polarization and Extremism Research and Innovation Lab at American University.
She's the author of "Hate in the Homeland: The New Global Far Right." And Ishaan Tharoor is a columnist for the foreign desk of the "Washington Post." He had a great series published this week on Viktor Orban and the American right.
Cynthia, let me start with you and just help us understand where does this idea of replacement broadly speaking come from? What are the sort of intellectual roots of this?
CYNTHIA MILLER-IDRISS, AUTHOR, "HATE IN THE HOMELAND": Well, the theory, I should say false and dangerous theory, right, I don't want to give it any more credence, than it has as a conspiracy theory that has age old roots and ideas about threats from immigrants or replacement.
But as a concept the great replacement which is what we're talking about here was coined about 11 years ago by a French scholar and very quickly taken up by White supremacists globally because it was a concept that unified what had been sort of desperate conspiracy theories that were related.
So in the U.S. a conspiracy theory called White genocide, in Europe a conspiracy theory called Eurabia, both of these in one hand anti- Semitic conspiracy theory the other Islamophobic in its roots.
That said that either Jews or Muslims were orchestrating a -- you know, as puppet master sort of this nefarious plot to either expand the caliphate or to get more power by bringing in, you know, multicultural societies through demographic change and immigration that would eliminate White or Christian civilizations.
That's the basic roots of the conspiracy theory.
ZAKARIA: To my mind what's interesting as I recall reading that stuff about -- or as you said about10 years ago, maybe. And most of it had this ominous predictions about a demographic title wave that was going to sweep Europe and America.
And what's striking to me is that none of that has happened. These predictions about how Europe was in 10 years going to become a third Muslim and things like that, haven't really happened.
Does that -- has that deterred people much?
MILLER-IDRISS: No. I mean, it's not -- it hasn't deterred people, in part because it doesn't matter what the facts are. It's positioned as a sense of threat.
And whether it's true or not that there's demographic change, the idea is that the demographic change is an existential threat and one that is called upon to be acted against with violence.
And it's why they often portray themselves as heroic martyrs and they're trying to get others to imitate them. I will say that, you know, one of the things that made the great replacement catch on so quickly among global White supremacist extremists is that it became infused with a social media landscape and an online ecosystem in which jokes and memes and video snippets and live streaming enable a whole different way of encountering the conspiracy theory.
So you don't have to just read an academic text or, you know, analyze something that comes out of a newsletter that you signed up for, but young people, teenagers are encountering it on -- in the chans and 4chans and elsewhere, you know, where they just share it but -- sort of discount it to adults as a joke.
And then the Christchurch shooter named his manifesto the great replacement and, of course, live streamed that attack and that launched a lot of kind of copycat imitators, including the shooter in Buffalo.
ZAKARIA: So, Ishaan, when you look at the American right or the American far right or extremists, however you describe it, how much do you think they are being inspired by these characters like Breivik in Norway or the Christchurch shooter? Is there a kind of -- is there an ongoing connection?
ISHAAN THAROOR, FOREIGN AFFAIRS COLUMNIST, WASHINGTON POST: I think there's a very strong and enduring link between, you know, the kinds of actions we are seeing now, the kind of very overheated extremist rhetoric that we see now and this tradition of White supremacist violence that has set in over the past decade, two decades in various parts of the world.
I think it's really important to stress that this is a theory that has gone quite mainstream in the West. We're not just talking about isolated extremists writing online manifestos.
We're talking about French presidential candidates openly touting it. We're talking the most popular cable anchor in this country, apologies, Fareed, essentially espousing it himself.
And this is -- it's fascinating when we think about how we spent the better part of the past two decades really obsessing over, you know, western media and, of course, the security states in the West have been really focused on the threat of Islamic extremism, the threat of the ideologies represented by these -- or believed by these jihadists.
And you really have to think that in a lot of Muslim majority countries, the ideologies that drive the jihadists are nowhere near as mainstream as the very explicit racist conspiracy theory that is fueling White supremacist violence in the West.
ZAKARIA: Ishaan, I want to ask you, though, about what is the difference between the past stirs like this in American history and this one, which seems to be much more violent? In other words, there were similar concerns in the 1920s about America
being overwhelmed by in those days Italians and Irish and to a certain extent Jews. And that's part of why the 1924 restrictions were put in place. But this one seems to be breeding a good bit more violence.
THAROOR: I don't think we should discount the very long history of nativist violence in this country. Obviously the KKK and so many other histories of lynchings and more violence against immigrants and minorities of various stripes.
But, yes, what you're seeing right now is a kind of global conversation feeding into the American conversation. The sense of kind of all-consuming threat.
The thing about the great replacement theory, it's not just that there is demographic change it's that there is supposed kind of orchestrated political project to engineer that demographic change.
And so that really whips up in extremist circles this idea that you have to take down an entire liberal establishment. It's wrapped up in a very hard line nationalist pose that bleeds into the mainstream.
And I think that crossover from fringe, aggressive xenophobia to a kind of political backlash that is far wider than just small circles of people online, is new and incredibly concerning for the health of this democracy.
ZAKARIA: Next on GPS, what do American conservatives' replacement theory and Hungarian Prime Minister Viktor Orban have to do with each other? Find out in a moment.
ZAKARIA: The Conservative Political Action Conference, or CPAC, is one of the most influential organizations on the American right. For the first time ever this week, it held a meeting in Europe.
On Thursday Hungarian Prime Minister Viktor Orban was the opening speaker at a CPAC conference in Budapest. Why Orban? Why Hungary?
We are back with Ishaan Tharoor and Cynthia Miller-Idriss. Ishaan has been writing smartly about this in the "Washington Post."
Cynthia runs the Polarization and Extremism Research and Innovation Lab at American University and has many books about extremists as well.
Ishaan, tell us what in a nutshell is the fascination that American right has with Viktor Orban?
THAROOR: Well, you know, it is -- it is fascinating. You know, Hungary should not -- is not a geopolitically important country on its own right. It has a population just above 9 million. It has a middling economy of no great consequence that still depends
on E.U. handouts in many cases. It has seen a big brain drain over the last couple of decades of its best and brightest.
But because of Viktor Orban who has been -- who is now entering his fourth consecutive term since 2010, really occupies a fascinating space in the imagination of the European far right and indeed the American right wing movement.
That's because -- I would suggest that Orban represents not just a template for illiberal right wing nationalist political victory but also for victory in the culture war.
I mean, obviously here in the United States you have Republicans who nurse all sorts of cultural grievances and really see whether it's true or not the kind that they're up against the kind of liberal hegemony, whether it's media or big tech or sort of universities and educational institutions, and they look at Hungary where Orban has essentially smashed all of that.
Where Orban has set about, you know, re-creating a media ecosystem that is very pro government and very nationalist. Where Orban has set about cowing educational institutions in his favor. Where he set about bringing major conglomerates to make -- to make them toe his party line.
And while all of this is deeply damaging for Hungary's liberal democracy and you could argue that Hungary is no longer a genuine liberal democracy but instead something else, maybe a kind of competitive autocracy, this is something that is actively cheered by right wing nationalists elsewhere in the world including here in the United States.
ZAKARIA: Cynthia, one of the things that you're highlighting for a long time is this rise of cultural issues relating to race, religion, things like that. And it feels like Orban really occupies that space.
As Ishaan says, it's not a particularly free market country. It's not a particularly --there's nothing about Hungary's economy that's interesting. It has a lot of state subsidies. A lot of -- receiving E.U. subsidies but what is distinctive is this cultural conservatism.
MILLER-IDRISS: Yes, I absolutely agree. I think we're seeing that a praise for the strongman approach also for anti-LGBTQ, you know, for anti-feminists kinds of arguments and ideas, a call for traditionalism.
I mean, a lot of I think conservatives and far right folks in the U.S. see their feelings and emotions and that political ideas echoed in what they're seeing as a success.
It's the reason why some of them will praise Putin. And even on the extreme right in the fringes, we saw occasionally last summer praise for the Taliban based on the same grounds.
This idea that you're standing up against the West, against a supposed hegemony of a leftist liberal multicultural agenda that is eroding tradition and values.
And so, you know, that's by no means unified across the fringe. There are also other takes on Putin, for example, and on Russia and we see that in the Ukraine/Russia conflict.
ZAKARIA: Ishaan, the Putin point though is an important one, which is that in many parts of the far right, in Europe certainly and a few in the United States, very few, you did see praise of Russia for precisely that reason.
He was a kind of white nationalist celebrating cultural conservatism.
THAROOR: Absolutely. He and his allies have long set themselves up as this kind of anti-liberal pole in western politics or in European politics, standing athwart this tide of liberalism that's watching over the West and, you know, doing things like making sure that gender and gay rights aren't prioritized. Going about -- there's a structure in society in such a way that traditional, national values endure.
One thing that really hangs over a lot of these countries in Russia, Hungary, especially, is declining birth rates. And in Orban's case, you see a ruler who is actively and incredibly dogmatically opposed to immigration and demonizes immigrants and -- especially those who are not Christian, including Muslim refugees, and instead promotes a very committed program to boost birth rates in this country.
Now he has led the improved fertility rates and this is something that is taken up by even -- you know, would-be Republican Senate candidates like J.D. Vance here who has celebrated Orban's policies around promoting families and incentivizing couples to have babies. And it's done in such a way that you argue that these birth rates will mean that we don't have to have immigration.
Orban is constantly saying that the European project is about replacing Europeans. It's about bringing in immigrants and not boosting their own native populations.
And so there is a very strong connection between the idea of the great replacement and these demographic anxieties that weigh on the far right and especially national leaders who are in power.
ZAKARIA: Cynthia Miller-Idriss, Ishaan Tharoor, thank you both.
Next on GPS, China's economy is in trouble. But that is nothing to celebrate, and I will tell you why in a moment.
ZAKARIA: And now for the "Last Look." This week officials in Shanghai pledge that soon they would begin to ease the city's draconian, weeks- long lockdown that has left residents often short of food, factories shuttered and families sequestered in their homes. But the lockdowns in Shanghai and elsewhere in China have left their
mark. Just-released economic data for April shows that industrial outputs, what factories produced, fell by 2.9 percent. Consumer spending fell by 11.1 percent.
The numbers are worse than some experts expected and represent the worse level since early 2020 when the economy, of course, ground to a halt at the outbreak of COVID-19.
Now this may seem like a China-specific story, but don't forget, for years China has driven global economic growth both through its market of more than a billion consumers and through its manufacturing sector, which is the backbone of international trade.
Last year China accounted for 18 percent of global GDP, that is a smaller share than the U.S. but a larger one than the entire European Union.
China is responsible for close to a third of global manufacturing output, according to U.N. data, and about 12 percent of global trade. So any downturn in its economy hurts the world.
Shanghai holds particular importance for the global economy. It's the center for tech and car manufacturing. Its port is the world's busiest. In 2021, it moved four times the amount of cargo handled by the port of Los Angeles.
As "The Economists" reports in mid-April, 506 vessels were waiting to unload outside of Shanghai's port, compared with 260 in February.
Companies can't find truck drivers to move cargo and these kinds of logistical problems during the lockdowns have led to supply constraints for all kinds of companies.
Take Apple, as reported "Nikkei Asia" reports half of the company's top 200 suppliers are located in and around Shanghai. Apple had said it could lose between $4 and $8 billion in sales on account of the lockdown.
Then there's the car industry, as "The Wall Street Journal" notes, BMW reported a 19 percent decline in production in the first quarter of this calendar year compared to last year.
In part because China's lockdowns forced it to suspend operations at factories. Tesla's troubles are particularly illuminating. The company began housing workers at its Shanghai factory to get around lockdown restrictions.
But as "Reuters" reports, it still had trouble manufacturing cars because of the shortage of parts including wire harnesses which bind the cables of electric vehicles together.
So Tesla sold just about 1,500 cars made at its Shanghai plant in April, in March it had sold 65,000.
There's trouble elsewhere too. Sony and Microsoft have had trouble producing Xboxes and PlayStations. And hospitals all over the world are facing a shortage of the contrast dye used in some X-ray and CT scans because the Chinese factory that produces the dye was shuttered for weeks.
And the supply chain disruptions could exacerbating the worst domestic problem in America right now, inflation.
The world economy is intertwined in unimaginably complex ways. Even if you chaffer that reality, as many in Washington and Beijing do, you can't ignore it.
A looming economic down-turn in China may have some hawks in Washington rejoicing but the truth is, it will hurt Americans. We are finding out the hard way that while many worry about the consequences of China's strong economic growth for America, the opposite, China's economic stagnation, might pose even more problems for Americans.
Thanks to all of you for being part of my program this week. I will see you next week.