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We’re talking about the Chinese Bible in so here’s a little Tick Tock to get us started on Saturday, two Saturdays ago, January 28, a spy balloon made in China solar powered and caring surveillance equipment about the size of several school buses.

1:07

Began, a controlled and deliberate drift into u.s. territory first entering Alaskan Air space the next day.

It drifted over Canada and headed south on Tuesday across the u.s.

Canadian.

Border into Idaho on Wednesday, it passed into Montana near a US Air Force base with intercontinental, ballistic missiles.

1:29

And that’s when the shooting began, civilians, noticed a big white blob floating across the US.

China said it was just collecting.

Meteorological data, American Security, officials called bullshit cable, news Grand, 48 consecutive hours of a white.

Orb floating in a blue sky, which is not compelling footage by the way, unless it is accompanied by the felicitous.

1:48

Ray’s Chinese, spy balloon some politicians including many notable Republicans insisted that we shoot the thing out of the sky, the White House rejected, those suggestions and instead waited for the thing to drift across the u.s. for the next two days, on Saturday afternoon, this past weekend, several f-22s, took down the balloon with a Sidewinder missile off the Carolina coast where it’s remains are now being harvested for analysis.

2:15

So we’re talking about this, I think for two reasons, the first is that if we’re being honest, the whole thing is kind of funny.

Nobody’s dead except the balloon but it also offers like a useful hook to evaluate the relationship between the US and China.

2:33

The two, most powerful countries in the world, the two largest economies in the history of the world to countries that are undergoing, a kind of conscious uncoupling at the moment that will have a huge effect on geopolitics and Global economics.

So, we have two guests today.

First Juliet, Cayenne is a contributing writer at the Atlantic lecturer at the Kennedy School.

2:54

Of government at Harvard, former assistant secretary for intergovernmental Affairs in the Department of Homeland Security under Obama.

And she is on this show to talk about the Homeland for the geopolitical angle.

We’ve got James Palmer, Deputy editor at foreign policy and the author of The FPS China brief newsletter.

3:16

I’m Derek Thompson.

This is plain English.

3:39

Juliet khayyam.

Welcome to the podcast.

Thank you for having me and James Palmer, welcome to the show.

Good to be here, Juliet, let’s start with you, the US and China spy on each other, all the time.

We have been spying on each other for decades.

3:56

We look at them with satellites.

They look at us with satellites.

What makes this story different?

Yeah, so the story is different for two reasons, and one is at the use of a balloon, has a specific surveillance purpose because balloons, when they are under operational control of the spine, country can hover.

4:20

And that hovering allows for greater detail, understanding of, say atmospheric releases of your over, a nuclear facility to things that you.

And I would think, why would anyone want to know?

But a foreign country may want to know this.

The second reason besides the hovering is they, of course, got caught.

4:37

So we’ve now learned That this has happened before three times, at least in the Trump Administration, but the getting caught only occurred when the balloon was in, what we would call NORAD space.

So that’s the space that governs, the US, and the northern command and is pre space altitude.

4:59

So it would be both commercial flights.

If a commercial flight had a hostage taking situation, and the space between that, and what is called, you know, International Space.

We’re satellites are allowed to do essentially whatever they want, right?

So the Chinese satellites are going around around so that’s essentially the difference and the answer to the to the why would they have done this?

5:22

Or what benefit the the whether they intended it.

I you know I’d leave to China us experts.

But this is the why James?

I was reading some of your great work.

And you wrote that this is not the first time that Geo political adversaries in an Cold War have spied on each other.

5:42

We’re in one party gets caught and lies about trying to collect weather information.

Isn’t that right?

Yeah, exactly.

The most famous incident causes the 1960 you to shoot down when the US was running over flights in planes that it believed were Way Beyond.

6:00

Soviet capabilities to tackle.

One of these got shut down and the u.s. probably came up with an incredibly elaborate lie.

They claimed that it was a weather came there with the it was a weather maintenance plane being run by NASA.

6:17

They painted an entire play, another you to in different colors, they came up with all this background.

The problem was that all this time.

The Soviets had also captured the pilot but they deliberately didn’t give out that they had captured the pilot and so they were able to send these spring this and reveal that everything.

6:36

The US had said was a lie.

It was a deeply embarrassing.

Incident.

And also one that blew up of a promising set of talks that were kind of about to happen in the context of relative to taunt between the US and Soviet Union at the time.

But even before that, the u.s. tried to make great use of balloons during the Cold War.

6:55

The early Cold War before satellites were really developed project Moby Dick in 1957 involved, hundreds of balloons that were floated over the Soviet Union.

Obviously, that can be controlled at the time.

But they had prepared a weather balloon excuses and in fact, they contained a little a little thing saying this, you know, this is part of a weather monitoring program.

7:19

If it brought down these return to xxs.

So both both the the spying and the excuses have been part of these have great power relations for a long time.

Can you quickly gloss over James?

Why a balloon?

7:35

Like, when it first I have to imagine like If we’re all being honest are part of what makes this story catchy is the fact that Chinese spy balloon is like kind of a funny phrase like it’s a little bit ridiculous like maybe we are in cold world Cold War 2.0.

7:51

Maybe this is going to kick off a geopolitical disaster but if we’re honest with ourselves, Chinese spy balloon is like kind of funny why why have not only the Chinese but also the u.s. you’re saying going back to the 1950s, maybe even earlier.

Why are you even playing around with balloon technology as A surveillance tool.

8:09

So in the 1950s it was just that we didn’t have satellites and so anything we could get over the Soviet.

Union was useful.

In fact, we got quite a bit of information I believe at least one major Soviet nuclear site was detected via the balloons.

Now, the question is, why do it in an era of, you know, the eye in the sky when you can pick out a you know, a fly on the back of a farmer in Siberia, from thousands of miles, thousands, hundreds of miles up, and I’m basically seems to be a question of cost so in Theory, if you could get a decent balloon Network.

8:41

And I love saying those words who get a decent Bloom that weren’t going.

It’s too much.

You can hear a, my wife laughing in the background because decent balloon Network sounds like Savage act.

Yeah.

Rock band from high school.

Yeah, exactly.

It’s a lovely phrase and I do think we should remember that.

8:57

These are not like little balloons, like this was a yeah, this was a 200 foot high balloon carrying a payload, the size of a jet line.

But this thing it was massive and You sort of think of it in terms of like unmanned Airship, it feels a little bit more serious than balloon, but balloon is a lovely word and I think we’re going to say, many times.

9:17

Of course it has not passed, so if you can get this, this network kind of going in theory, you have something that’s cheaper and easier to maintain than satellites because you don’t have the math of launch costs of getting them into space yet.

9:33

Also balloons, as we mentioned earlier, can potentially loiter that is they can say Sighs of course it going round and round.

So you’re getting stuff on a very predictable kind of time frame.

But a balloon can stay in place and like keeps over one side.

9:48

Keep picking up information.

So in theory, there’s a real usage hint that the Pentagon has actually been researching surveillance balloons itself again.

Since at least, I think 2019 and they spent about four million on them.

At least that we know about one of the other big changes of the late 2010’s was Machine learning technology developed by Google.

10:10

Originally made it possible for balloons to effectively steer themselves.

Using the wind in a much more purposeful way than just throwing them up in the air.

And seeing where they where they went, this is pretty wild.

So I wrote a cover story for the Atlantic, maybe five five and a half years ago about this weird little project coming out of Google’s R&D lab called loon and loon was their effort to build a decent balloon Network.

10:37

Could provide internet coverage for places in the world that couldn’t build their own terrestrial internet.

And it was exactly what you mentioned.

If they could use machine learning technology to figure out, which crosscurrents thousands and thousands of feet in the air 80,000 90,000 feet in the air.

10:53

Which cross currents were blowing which way they could, essentially use the crosscurrents kind of like highways and navigate down at certain cross currents and over in order to move toward the rural area, they wanted to provide coverage to, then Elevate, the balloon order to float it back to some other area to And network coverage in that direction.

11:10

So it is this there is this or this consequence of private and public balloon technology for both covering an era and area for internet.

But also surveilling an area for a state Juliette.

This gets us back to you, Republicans is spend a lot of the last week saying that we should have just shot the balloon down.

11:29

Even saw several relatively prominent, conservative media personalities, say you know, it’s just a balloon.

Why can’t we just pop it your response?

Well, it is as days were saying, it is not just a balloon, the size of the balloon itself was huge but the amount of what, you know, in the basically, the cargo hold of the balloon, the balloon had things attached to it.

11:49

The balloon was just a means of transportation.

That was an airplane, right?

And so, are you going to volunteer?

Are you going to shoot down an airplane, over, even not populous states.

This was my favorite part of the Republic as well, Montana is not that crowded.

12:07

I was like Okay, there’s also wind currents so you don’t know where this material is going to go.

If you honestly if you look at just where it is in the ocean, I think that there is a 8 to 10.

I read a seven mile diameter, 7 Mile seven mile diameter.

12:23

So just think about what that would have.

You know, if you were over people is not like, oh, we can land it, we can land, all the debris on, you know, in Yellowstone or something.

So so the the Republican notion of Oil risk calculation was based solely on their on the politics and that’s going to go on for a while and sort of not worth it because what we now know is, right?

12:48

The the mission the the bring it down order from Biden came Wednesday, the military either advises him or pushes back on him saying we’re not going to do this.

This is the head of NORAD.

We are not going to do this because we know what happens to debris in are.

13:04

We’re not going to risk civilian life and this You know what I wrote about like this, there’s a difference between a national security tool and a Homeland Security tool.

Why?

Because the burden falls on US citizens, who may have an expectation of not being killed by NORAD and what is so what is cellphone, right?

13:24

I mean, can you imagine the Chinese have this balloon out there and we’re looking to kill are like you put at risk our own citizens because because Twitter wasn’t happy.

We knew that it would be over water.

I think the general sense is that China had lost some capacity to move.

Move the thing that it would be over water within two days.

13:42

It is you shoot it.

It’s actually landed in really shallow Waters and what I want to remind people wasn’t like those days were lost, you know, we got, what is it?

The scent was launched from.

No, I wrote down my notes, but now, let me find the sent, the the combat sent.

14:01

I want to make sure I got this right was sent was sent and this is just a loitering airplane, it’s taking pictures of Saying from above From Below, we’re getting so many pictures of the sink as its operational.

If then is coming over.

We’re also taking measurements.

Those measurements are going to be relevant.

14:17

What is you know, what frequencies?

What is it M8?

And it doesn’t have.

People were saying oh it could have bio weapons, whatever, I mean.

And then it comes over the ocean, right?

Then it gets shot down and now the cleanup is a relatively easy cleanup.

They do, they, they were monitoring people.

14:35

I talked to you on Saturday, they are monitoring of course by Radar.

As it comes down, they have a good sense of where things are.

They know where the balloon is?

They know exactly where the balloon is.

They do anticipate some debris coming on Shore.

So, the, the how, the Chinese did this is now ours, right?

14:50

And that is, that is an intelligence Victory.

I if you are in China in the head of their equivalent of the CIA, you are not happy today, let alone the leadership.

There’s there’s you know why they did?

This is a bigger conversation or did But no, did they, did they intend to do this?

15:10

But that’s exactly why these three days of patients were not just waiting.

There was a lot going on, in terms of what we were learning.

And meanwhile, you know, the Chinese are bending over backwards to come up with a plausible deniability because they know that they’ve been gone, the Chinese have expressed.

15:30

I think what they said profound dissatisfaction that we destroyed their equipment.

Was there a case?

Just blowing up the balloon.

Was there a case it to say?

You know what, we caught your satellite style, like what you could, we call your surveillance equipment, write the equivalent of a satellite, but 10,000 feet over over land.

15:50

Rather than, rather, than Miles and Miles, was there a case to just say we’re just going to let it go.

Oh no, no, no.

I mean, once it once, I mean the Chinese, that’s what the Chinese are arguing.

But from our perspective, this would be the equivalent of the Chinese send tanks onto Homeland soil.

16:07

So weird.

We’re going to, we have rules.

They have rules.

They have the same rules, which is right.

The aerial space is the above.

Our homeland is the same.

As, if you brought, you, you, you send tanks, let me just think of a weaponized drone, right?

Simply because it wasn’t, it wasn’t a direct threat to the US.

16:28

It was maybe long-term a threat because of the its surveillance capacity.

And that’s what, you know that I think that was the challenge for the B Administration.

It was true or what?

I’m pasta believe it’s true.

This was not an immediate threat to u.s.

Citizens or to military or Aviation capabilities but it could not stay right at me.

16:47

You just so you’re just figuring out.

What our am I gonna?

Am I going to make those two things work?

I have one more question Juliet for you about the homeland security aspects of this.

Before we go back to James about the geopolitics in your time, with you about Administration, did you ever faced anything like this that you can talk about, No, no, I’m not.

17:09

Well, all of them are public.

I was thinking about this, you know, we had our Aviation thread.

So think about the, the Christmas attempted bombing in which you, you know, you know, you’re aware of and use of a ticket have sent back and tell us about that.

17:24

Oh, sorry.

That was the case in which that was the underwear.

Bomber case in which a other airline passengers.

Basically got hold of this guy.

Whoo.

He’s trying to he’s trying to light stuff in his underwear to blow up the plane, that’s happened on Christmas Day.

17:44

And now my years are melding together, but I think it was 2009 and then and so, you get, you, get whatever you need to do.

On the aviation side, on the maritime side, I am much more used to this simply because of things like you could think about.

This is the is this like an oil spill you’re going to protect the aviation, you’re going to take the Aviation Space which they’re doing, you are going to get Community State and locals ready to Find the oil.

18:08

So to speak or to, to find the debris.

So that was a key message of NORAD.

The last couple of days was, if you, if you see a wire, do not touch it, right?

The call us and then and then the third piece is, of course, the maritime retrieval, which is, as I said, we’re going to going to be relatively easy as being run out of the Navy is sort of what, you know, what you would call the incident command in the stage and we’re sending out both unmanned capacity.

18:37

T think of like, you know, just like the little little Clippers that are picking up stuff and then scuba divers and also, but this is what people train for it.

It’s not that the pickup is not that unique.

It’s just obviously what we’re picking up.

18:55

I don’t, I don’t remember anything classified or unclassified in this regard.

James.

It’s possible that the most significant thing that comes out of this isn’t the balloon or what we recover from the payload under the balloon.

But what happens in diplomatic relations between the US and China in the aftermath.

19:11

So US Secretary of State Antony blinken has postponed.

A critical diplomatic visit to Beijing, that was scheduled for last weekend.

I want to take a step back and offer some context here.

The relationship between the US and China has been deteriorating for years.

19:28

What happened to this relationship in the last few years that has brought us to the beginning of what some people are thinking of, as a And Cold War.

So to some degree was a kind of elastic band effect for a long time.

US policy towards China was very accommodationist and it was very much geared towards the idea that China was going to change everything, things were going to get more, like America was going to be this kind of natural effect whereby.

19:56

Everybody was going to watch, you know, Two and a Half Men and Sex in the City and then they were going to become a good Democratic citizens.

And I am Slightly, I’m slightly making fun of that, but that was to some degree working, the Chinese public, was becoming more friendly to the u.s. it was demanding more culturally.

20:19

The US was kind of on the ascendant in China, in a way that I think people a lot of people missed.

Now, starting from 2013, you start you saw a significant like track down and in China on cultural content on freedom of speech which was already pretty bad but became a lot worse on on on.

20:37

Online content.

So you have this kind of domestic push against the US that got mixed with increasing aggression, Beyond China’s be on China’s borders.

Particularly at seen the South China Sea and with a bunch of spying on the United States and spying in ways that were particularly aggressive.

20:57

And I think what, for many for a big part of the American kind of security intelligence establishment.

The final straw was the US and China signed a big.

Rement basically on cybersecurity and then the Chinese conducted even bigger hacks including the OPM hack which basically got personal information of pretty much every serving us officer.

21:23

So then Frank came along and Trump was much more ambiguous and trying to himself than then people.

I think realize he was often.

In fact pushing for kind of reconciliation with she behind closed doors.

He was he was canceling measures against Chinese companies like cuz ZTE because he had promised she, you know, Trump really had has Trump has no principles basically.

21:49

So he was very much a kind of Being blown both ways here like the balloon and he would you know, Steve Banning would be telling him that the Chinese were with the you know, the great evil of the world and then Steve Winwood be telling him that he needed to do business with them.

22:06

And, you know, to keep the casinos open in Macau.

And then I assume Trump would probably get confused about which teams, which it would be a whole process, but there was a very hardcore group within the Trump administration.

Led by Matt pottinger that really pushed hard.

22:22

To go more hawkish on China and they kind of picked up the prevailing wind in DC, which at the same time d.c. was getting very excited about the Chinese belt and Road initiative.

This big kind of geopolitical push that was called a Chinese, martial plan, all these kind of things and they were getting very excited about made in China. 20, 25, 23.

22:42

I forget, which was this kind of plan to move up the value chain.

And they saw this is signs that China, which is true had Geo.

Political Ambitions to overtake the United States.

These were very clearly being put into play.

Now, the irony of this was that all this came in true sort of think tank d.c. he’ll fashion.

23:02

The a couple of years after these big projects have mostly failed.

The Bri has mostly not been good for China.

The maiden and trade program has not bought sort of semiconductor manufacturing home or anything like this, but it provided a real spur to push this forward.

23:20

Then comes the pandemic and the pandemic, pretty much crashes.

Everything, it crashes people-to-people relations between the two countries because nobody nobody is going to on trips to the other countries.

So from everything, from students to tourists to the sort of track to diplomacy, that normally kind of provides some, some oil on the wheels of great power diplomacy and the two sides, start, exchanging conspiracy theories, China, very rapidly, Is to cover up the fact that the pandemic, it originated in China, probably from very, very bad Chinese agricultural practices that they were supposed to have changed after the first SARS outbreak by coming up with a whole conspiracy theory that it started in the US with Fort Detrick or this, that it was done by like secret US military experiments.

24:12

The u.s. comes up with a whole range of conspiracy theories ranging from the mildly plausible to the lunatic, And try to react very aggressively to any country that calls for an investigation of the origins of covid, alike, Australia, being the most prominent example.

24:30

And because this kind of, this kind of contingent of xenophobes and Hawks has risen within China Chinese diplomacy their system.

Where everybody is kind of working towards the fuhrer that all trying to do what they think.

24:46

She drinking wants basically turns them into a bunch of Fix.

So you have all this stuff and this has a big impact on the way that the US officials, see the Chinese the fact that you’re getting these basically online trolls, who are the spokesman for the Ministry of Foreign Affairs or the US ambassador that Chinese ambassador to Brazil, or the Consular the the constellation Island are doing that stuff.

25:10

That is really nasty and vicious.

And that is almost the final straw.

So, it’s not just so you have trying to relations collapse and Sections of China around the world collapsed too.

Like China is more unpopular than it’s ever been.

Particularly amongst neighbors, the, the country with a single highest anti-china, kind of poll ratings in the world is South Korea.

25:35

They track the South Koreans.

Now, dislike the Chinese more than they dislike.

The Japanese that’s really hard.

It’s a and it’s remarkably comprehensive story and I really appreciate you naming all those different elements that have soured relations, both materially and attitudinally.

25:53

I think it’s important that you put emphasis on both of that, it’s important.

I think for our full understanding of the situation to note that China has tried to execute, it seems to me a bit of a pivot in regard to its relations with the us and that this meeting between the Chinese and secretary.

26:12

Can might have been a really important piece of that pivot.

James going to pick up the story from there, so he has since last fall.

Also, we seen a an effort by the Chinese side to dial down, the aggressive diplomacy to reach out to the US.

They become much milder in their tone behind closed doors.

26:31

We saw this.

She Biden meeting.

I get large.

I forgot what it was October.

I think, which was pretty friendly, you know, they were, I mean, you know, biting is very good at glad handing people in all kinds of ways and that worked that seems to have worked with.

26:46

She, you didn’t get any of the kind of aggressive posing or Fit Body Language you had to, you know, to people getting along and there there seems to be this real effort to kind of, you know, take things back a notch and I think that was coming from two impulses.

One was the realization by some of the Chinese side that there was a real danger of major conflict here, perhaps even war and, and nobody wants that.

27:10

So, they in the back, Miss tration share interest in putting a floor on us, China relations and saying it can get this bad, but it can’t get worse.

The economic aspect was also really important though because the US has been trying, very hard to snip ties between us businesses and China particularly in Tech and while there’s still a lot to be done and while it’s the, you know, the u.s. is a country under the rule of law.

27:37

It can’t the u.s. can’t just tell countries tell companies to stop doing business in China for me.

Spot.

They can challenge it, they can push back.

There’s been lots of that.

It pulls the real challenge to China.

China is still very dependent upon the US markets and upon and upon supply of things like semiconductors from the u.s. from Taiwan.

27:56

And so on, they’ve been trying to deny it to bring into China, but haven’t had much luck with on top of that.

They clearly got some pretty bad economic news that winter.

Like the Chinese GDP either, Groove, a little Or possibly even shrunk last year at a time when everybody else did surprisingly.

28:16

Well, this caused the big reversal in zero covid policy in December.

And, and they’re clearly trying to push to get the economy moving again and having semi-decent relations with the us as part of that.

Juliet back to you.

28:32

Joe Biden is delivering the State of the Union Address this week.

Yeah, already in that address.

I’ve come to read are all sorts of passages about what essentially amounts to an industrial policy of America.

First manufacturing, that is an economic story that absolutely clicks into a James.

28:50

Just talked about that.

There is an economic decoupling already underway between the US and China and China floating surveillance balloons over Montana and over potential nuclear sites.

Montana Is not going to make us want to re couple at all.

So taking that what else do you expect?

29:06

Joe Biden to do with balloon gate in this moment?

He has room.

I mean he’s got this opportunity to have maybe his highest rated appearance before the American people.

Yeah.

All year.

This is not a guy who gives a lot of Primetime speeches.

What do you think he’s going to do with this gate?

29:24

So this gate falls into I think, sort of consistent narrative by the administration of which Afghanistan is actually a major counter.

I mean in other words if you just look at their strategy everything that from China to everywhere, which is what I, what I wrote about, what I call just that you know, extending the runway which is all of these things are going to be potential conflicts.

29:48

If we can just sort of delay, the hot moments, right?

Because this could have been a hot moment.

Right that the Chinese balloon falls on us, soil and kills people.

Those are victories.

And so this seems to be consistent with the the sort of, you know, the sort of like we’re just going to respond and not actually think through the consequences.

30:12

It also I think is a narrative that’s consistent with you know the the sort of mature is a nice way to put it.

Some people may say too mature for biting, but this sort of nothing His new, I’ve been around the block, this was just a little blip, this isn’t going to be enough, isn’t going to be a footnote, you know, at that.

30:32

And when the story is written about this new Cold War and he might be right about that, actually, I mean, you’re always given all the other things that we’re going to be fighting fighting about.

So I I would expect him to in his conversations about China and say, you know, when there is an incursion on homeland space, we think clearly, I think the narrative And and look at the long, the Long View.

30:57

I think the narrative that Biden also has in his favor is you cannot find a single person in the Pentagon to counter the recommendation that was given to him by The Joint cheese which is just wait, two days from NORAD.

I mean, it’s not like one of those things where Afghanistan, where like the second we withdraw, you hear your 20 guys from the Pentagon saying we told him not to do this, we told him not to do this.

31:19

So I think that that’s going to be I think part of an of an overall A narrative that he met that he will get into on the China side.

I don’t think he’s going to get into it on the Homeland so I can remember people remember.

State of the unions are divided into two parts.

31:35

We’re always were always great at home and we are always great abroad.

But the at home part, I think on the Homeland front is going to, you know, he’s going to have to just address the Border issue.

I would love to just pick up on one thing at James said, about China’s struggles.

I’ve, as I was, you know, talking to you Derek about sort of I feel comfortable talking about and nods because I think it’s good to stay in Lanes.

31:58

I do want to note that the challenges that China had with its covid policy which I’m very familiar with.

In terms of threats was came to a head.

If you just look at the calendar during the World Cup, it was then that the Chinese watching teams play seen every other country in the world partying, it It up on Mast that those first protest started.

32:29

And you’ll, you know, the sports have always had a lot of influence on foreign relations and foreign policy that image of a world partying, so to speak playing and partying.

And what has happened to China is an image that the Chinese are going to have to figure out in the years to come.

32:50

But it is it is I think it is telling that it was in fact the world Up and and and this idea that China had was too isolated.

That has now been pushing China towards a greater, a greater sort of floor setting as James was describing.

33:08

Yeah, I myself am ambivalent on whether or not this is an inflection point where things get worse where this is like some kind of Sputnik moments that accelerates a cold where I’m not.

I’m not equating the achievement of you know sending a satellite into space for the first time with floating a balloon over the US for the 1 million Time.

33:25

But there’s that fear, that it’s an inflection point, for the worst, like 1957 between the US and Soviet Union.

It could also theoretically this year, could theoretically Market inflection point for the better.

We might be at a local Min in terms of our relations between the US and China, that things got so bad with covid 0, the effect of watching the World Cup was so powerful on people in, for example, Shanghai that they said we can’t live under these conditions anymore as James.

33:53

You just said They just got this economic reading.

Who knows how honest the public reading of it at what the world knows of it is.

They might have gotten economic reading that says a country that we expect to grow 5% a year just shrunk by 0.5% in the last quarter.

That’s catastrophic.

34:08

We can’t have this anymore.

We have to think about a re coupling strategy that brings in the United States.

You put all this together and maybe it’s an inflection point for the better Julia.

Julia, you can pick up on that and then James, I go to you.

In this moment, is this going to be a After the balloon.

34:25

Is it a paragraph?

Is it a footnote?

Remember, the incentives are really interesting for both countries.

The Chinese want to forget it.

This is, I mean, in the long haul, this is such an embarrassment for them because they either lost operational capacity that we now have their gear.

We now know what they can do.

34:41

You know, the idea that this was they infiltrated our airspace.

Without impunity, it none of that makes sense to me.

This is an embarrassment to them, and we want to keep it quiet because we now have there.

Off and we’re not going to advertise what we found out.

34:56

So the incentives are for both parties to treat this like a footnote.

There is a select committee on China, right now, in Washington.

And I do wonder whether that’s like committee might be comprised of people that are interested in advancing and economic agenda of industrial policy, right?

35:14

That makes the us more committed to, for example, manufacturing Advanced semiconductors right here in within our borders, that might use this as As or, or dramatize, this moment for the purpose of achieving objective, it is even military based at all, it’s more economic James.

35:32

I wonder what you see as some of the potential Domino effects here.

You know, I saw some people saying if China is going to claim probably falsely at, this was a balloon for collecting climate science research against the interests of the parties that they are spying on that.

It could make it more difficult for to collaborate with China, in terms of international, climate policy are there, other dominoes that we’re not Yeah, let me set up the question in a different way, because I don’t even know if that’s a very compelling entry, what are the most interesting, Domino’s to think of coming out of this event.

36:06

So I think it depends on on what happened with the balloon in the first place.

And there’s two possibilities that on the Chinese side.

But the overwhelming I would say, likelihood there’s an 80 percent likelihood, is that?

It was a mistake, is that they had a system that was designed to be run, probably off.

36:24

Assure you know not to cross into the the continental United States and that something went wrong, they lost control of it.

Possibly the polar vortex blue, like had some kind of effect and so this was basically a screw up and it’s grew up in a program that might not even have been a good idea in the first place.

36:43

You know China is just as capable of big and stupid and wasteful programs as the United States perhaps even even more.

So the Chinese military is pretty.

I see pretty corrupt and not always incomplete, not always talking to each other.

37:01

So if it’s a, if it was a screw-up, then the overwhelming interest is to stop talking about it and I think that that’s what they’re trying to do.

I think they put out a kind of pro forma protest because China is incapable of accepting any kind of blame on the world stage.

37:19

They haven’t talked about it in domestic media.

Well I think they’ve mentioned in a couple Of newspaper articles.

It hasn’t been on the TV news at all.

They’ve really been playing it down.

They’re not trying to make a big deal out of this and normally they love to make a big deal out of things.

37:36

So I think that the dress going to try and shove it to the side that the blinkin trip probably goes ahead in, you know, two to six weeks anyway.

And everybody just sort of quietly forgets it except that it becomes part of the Litany of complaints.

37:54

It’s by the the hawkish lobby in in DC.

Now, there is a chance that this was deliberate, but and that it was an attempt by like basically hardliners and her us hardliners to screw up the blinking trip.

38:10

I don’t think that’s very likely but it’s it’s faintly possible and if that was the case, I think with it’s possible that they tried that and basically got squashed internally for it that they get the that they send the balloon over was a deliberate provocation.

38:27

But now track, but now that probably majority faction, which ones at least, some reconciliation for economic purposes, basically sat on them at home and we’re not going to get anything more out of that.

And as with so much in China, we really, we really can’t know.

38:42

Well, we’re doing sort of guess work, and kremlinology to try and determine these things.

So, we’re really just going, bye-bye probabilities, but most of the time it’s cock-up rather than Yeah, Juliet last question to you cock-up conspiracy.

38:58

Where do you fall on that spectrum is I cannot imagine under any scenario that they would have done something.

This aggressive in our homeland that was so clumsy.

Made them look like idiots seemed very 18th century.

39:16

I mean if you’re going to do something aggressive in the Homeland, like come on.

If you like did like, you know, get me worried.

I was never worried the seem to me to be a mistake.

Maybe there’s some internal debates in China.

That would suggest why it is but why it happened?

But this is we, as I was saying earlier, the conflict and in quotes with China is generational at this stage.

39:43

There are going to be moments where it is all not at all, clear that there is a resolution that that ends up on the ocean floor, with no one wanting to talk.

About it, let’s take these when we can then and, and not and, and, and not Trot around.

40:01

I mean, this is, you know, this, this is my general senses.

Let’s save our, let’s save our bandwidth for another time.

Juliet, James.

Thank you so, so much.

Thank you.

Thank you.

Thank you for listening.

40:17

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