Fri. Dec 3rd, 2021


This is an audio transcript of the FT News Information Session podcast episode: China’s game-changing hypersonic technology

Joanna S Kao
Good morning to the Financial Times. Today is Tuesday, September 23rd, and this is your FT News Briefing.

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US President Joe Biden has nominated Federal Reserve Chairman Jay Powell for a second term. Our American economic editor Colby Smith will talk about that decision. And our US-China correspondent Demetri Sevastopulo will talk about his latest scoop on China’s hypersonic missile technology.

Demetri Sevastopulo
What’s really interesting here is that it’s not clear if the US can do this kind of technology. In that sense, it’s almost a “Sputnik moment”.

Joanna S Kao
I’m Joanna Kao, in for Marc Filippino, and here’s the news you need to start your day.

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US President Joe Biden has nominated Jay Powell for a second term as chairman of the Federal Reserve. The move is a vote for continuity at a delicate time for the Fed and the US economy. This comes despite harsh criticism from progressive Democrats, especially Senator Elizabeth Warren. She called Powell a dangerous man because he was not tough enough on benches. Our American economic editor Colby Smith says this was not ultimately a factor in Biden’s decision.

Colby Smith
Just because Jay Powell’s tenure with the Fed during his first term was considered so successful. So, yes, on the regulatory front, there has been a very gradual downsizing of some of those regulations after the global financial crisis. But in fact, I think people who have judged Powell’s time at the Fed have pointed to his success in navigating the U.S. economy through one of the worst contractions, really since the Great Depression during the Covid crisis last year. . And even by this point now in the US recovery, he is truly seen as this kind of firm hand leading the economic recovery through this heightened period of inflation. And I think in many ways, that continuity has really overshadowed any form of criticism that has been put in its way on the regulatory side of things.

Joanna S Kao
So Colby, with Powell staying at the helm, what does that mean for monetary policy?

Colby Smith
Well, the Fed is at a very interesting time. We see how these very slow and subtle policies are turning away from them in a way. Over the summer months, you know, you’re constantly heard that inflation is transient. You also hear that the Fed is going to approach any kind of policy normalization or move there in any way, form or form in an extremely slow way. Now, we have not seen a complete departure from that approach. But on the other hand, the remarks you hear from several senior officials certainly give the impression that they take inflation a little more seriously, a little more sensitive to the current economic background.

Joanna S Kao
Another thing Biden did was nominate Lael Brainard as vice president. What is the calculation behind that move? And was it in any way an attempt to provide some balance to President Powell?

Colby Smith
Well, Lael Brainard has always been seen in a way as one of the Democratic Party’s most capable economic policymakers. Also within the Fed, she is also seen as a leader in her own right, so I think she was always seen as someone who would be elevated to a senior position within the institution. And she was really even a top contender for Powell’s position as well. Certainly on the regulatory front, she is seen as a balance for Powell. During her tenure as governor, she therefore came out against many of the reforms and adjustments to banking regulations put forward by the former vice president of supervision, Randal Quarles. And those were changes that Powell also endorsed as chairman of the Fed. What Brainard actually did was that she did not agree on many of those decisions, so she wrote some sort of formal opposition to some of those adjustments. And I think that in many ways earned her a lot of praise from progressive lawmakers who were critical of Powell’s position on regulation and his propensity for deregulation in a way. So I think Brainard’s appointment as vice president is definitely a sign that the Biden administration wants to take regulatory matters a little more seriously.

Joanna S Kao
Colby Smith is the FT’s American economic editor.

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The FT has new details on China’s hypersonic weapons test this past summer. It included a technological advancement that enabled it to fire a missile as it approached target, moving at least five times the speed of sound. It is not known that other countries have done this. And Pentagon scientists were caught off guard. I am now joined by our US-China correspondent Demetri Sevastopulo. He breaks the news. Hello, Demetri.

Demetri Sevastopulo
Hi.

Joanna S Kao
So what is the significance of this latest development?

Demetri Sevastopulo
Well, I think you should kind of step back and put that in the context of what China did on July 27th. It did several very important things. First, what is called the hypersonic glider has launched into space. It sounds very technical now, but it’s basically a kind of spacecraft that is no different from the spacecraft that flies more than five times the speed of sound. So on July 27, China launched this HGV on a rocket system that could approach the US across the South Pole. And this is very important because most of the US missile defense systems are actually focused on the North Pole. This means that China can now supply a nuclear weapon to anywhere in the US. But really, the most important part of this test was what you just described, which was the hypersonic weapon that flew around the earth, and as it crossed the South China Sea, it fired a missile during flight. And it’s the ability that no nation has ever mastered, and it’s incredibly difficult to do so at such a high speed. And that’s why the Pentagon is kind of scratching its head, trying to figure out how China did it? And they do not yet know, I think, the answer.

Joanna S Kao
Yes, I mean, you write in your story that they fired a missile as it approached its target, at least five times the speed of sound. Like I can not even get my mind around the idea of ​​five times the speed of sound. So how would you describe it to someone?

Demetri Sevastopulo
Well, what’s great is that to fire a missile from another weapon, you kind of have to open a bomb chamber or a missile bay and fire something. But when you drive at that kind of speed, the limitations of physics, you know, the aviation limitations are very, very difficult to overcome. So when you open a bay that is going to fire a missile, it in itself has a huge impact on the flight of your weapon. So the fact that they were able to master it and shoot something out is staggering. And it’s not clear if that was what the Pentagon would call an air-to-air missile or if some people in the Pentagon think it’s designed to fire and take out US missile defense systems that were on ships in the western Pacific. Ocean placed. So the Pentagon is still trying to figure out exactly what it is, but the capability itself is what they would think is just amazing.

Joanna S Kao
And is the meaning really that because it is so fast, there is another country that will be able to neutralize it when they see it go down?

Demetri Sevastopulo
Well, it’s actually less the speed. So when people hear the speed of sound five times, they go, wow, and it’s fast. But an intercontinental ballistic missile goes much faster than that. The difference is a hypersonic missile is maneuverable so it can dodge targets, it can change its trajectory, make it much harder to detect and make it much harder to shoot down. So it’s a combination of it pretty fast and the fact that it can fly, you know, like a fast plane, which makes it very, very powerful.

Joanna S Kao
So, what do your sources say now, how upset are US military officials and how much of a “Sputnik moment” is it?

Demetri Sevastopulo
Well, recently, General Mark Milley, who is the top U.S. military officer, said it was very close to a “Sputnik moment,” and it sparked a lot of controversy. But at the time, people did not realize that he was really referring to the hypersonic weapon that the missile fires. It was the kind of key technology. And I think if you think back to 1957, when the Soviet Union launched a Sputnik satellite into space, you know, they demonstrated a capability that no one else has done so far, even though the US, probably at the time, could do. It. What’s really interesting here is that it’s not clear if the US can do this kind of technology. In that sense, it’s almost a “Sputnik moment”.

Joanna S Kao
Is the US now planning any kind of response?

Demetri Sevastopulo
Well, I do not think there will be an immediate response to what China has done, because honestly, you know, both countries are consistently and over time testing new types of weapons. But what I think it does is reinforce concerns in the Pentagon that the Chinese military is expanding rapidly and making great technological advances and has pulled ahead of the US in some areas. So I think, you know, on Capitol Hill, legislators are going to pay attention to this. And people who say the US is not investing enough to counter China will use it as one example of why they need more money to develop new types of weapons. So I think that will be part of the debate, but I do not expect the US to do anything in the short term to respond to this test itself.

Joanna S Kao
How does this affect the relationship between the US and China and especially the US strategy towards China?

Demetri Sevastopulo
Well, I think it comes at a very interesting time. And I say this because a few weeks ago, the Pentagon released a report on the capabilities of the Chinese military, and they revealed in it that China is really building up its nuclear forces. It is expected to quadruple the number of nuclear warheads it has by the end of the decade. And you see a big shift and a proposal that Beijing, after five decades, abandons a core position called “minimum deterrence”. The combination of building up nuclear power, these new hypersonic weapons and sliding vehicles that can carry nuclear warheads, therefore, means that the US clearly does not have nuclear power over China. And the way it would have done in the past, and what you have now, is something that experts call a kind of mutual vulnerability. And some people in the US are very concerned about that, because what it means is that if the US and China entered a conflict over Taiwan, the Chinese could essentially neutralize the ability of the Americans to threaten nuclear weapons as part of that conflict . It therefore has many different strategic implications. But actually, the bottom line is that it underscores how fast China’s military is modernizing.

Joanna S Kao
Demetri Sevastopulo is the FT’s US-China correspondent. Thank you, Demetri.

Demetri Sevastopulo
Thank you.

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Joanna S Kao
Before we go, Uber adds cannabis to the list of items people can order through its Uber Eats app. Although customers still have to pick it up now. This is nevertheless the first time that Uber offers direct access to the purchase of the drug. The company claims the move will reduce the illegal marijuana market and the number of drivers on the road who are under the influence. The service will begin Monday. For now, however, it’s only available to customers in the province of Ontario, Canada. Cannabis is still illegal under US federal law.

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You can read more about all these stories at FT.com. This was your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript was generated automatically. If there is an error, please send the details for a correction to: tikfout@ft.com. We will do our best to make the amendment as soon as possible.



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