Author: Alec Krishna

Seaweed is being advanced as a potentially important future food source, the greater farming and consumption of which could avoid environmental impacts associated with other agricultural production, especially of beef. Scott Spillias has recently submitted a PhD thesis at the University of Queensland on seaweed farming, and he’s been getting a lot of attention regarding his findings on seaweed’s potential. Show host Gene Tunny and Tim Hughes talk with Scott about the potential of using seaweed as an alternative food source. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. What’s covered in EP188.

You can listen to the episode via the embedded player below or via podcasting apps including Google Podcasts, Apple Podcasts, Spotify, and Stitcher.

What’s covered in EP188

• The importance of plant-based foods in our diets. (1:36)
• The market for plant-based foods is growing. (9:39)
• Estimating the environmental impact of food production – the Economist’s banana index. (14:03)
• Scott’ Spillias’s research on seaweed farming. (27:27)
• How do you farm seaweed? What does it involve? (30:04)
• Where can we grow seaweed in Australia? (35:14)
• Seaweed has the potential to remove 2.6 billion tonnes of CO2 from the atmosphere per year. (40:02)
• What kind of seaweed is growing in the world? (44:49)
• How does seaweed farming prevent biodiversity loss and climate change? (49:50)

Links relevant to the conversation

Scott Spillias’s UQ page:

https://sees.uq.edu.au/profile/13311/scott-spillias

Australian ABC News article on Scott’s research “Seaweed researchers find bright future for underwater crop”:

https://www.abc.net.au/news/rural/2023-01-27/seaweed-research-uq-future-farming/101895072

Guardian Australia article on Scott’s research “Food, feed and fuel: global seaweed industry could reduce land needed for farming by 110m hectares, study finds”:

https://www.theguardian.com/environment/2023/jan/27/food-feed-and-fuel-global-seaweed-industry-could-reduce-land-needed-for-farming-by-110m-hectares-study-finds

Economist article featuring the banana index:

A different way to measure the climate impact of food | The Economist

UN and World Bank reports on food and climate:

https://www.un.org/en/climatechange/science/climate-issues/food

Chapter 5 : Food Security — Special Report on Climate Change and Land

What You Need to Know About Food Security and Climate Change

Review of scientific evidence on “Risks and benefits of consuming edible seaweeds”:

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6551690/

Please note the key message of the above review:

“If the potential functional food and nutraceutical applications of seaweeds are to be realized, more evidence from human intervention studies is needed to evaluate the nutritional benefits of seaweeds and the efficacy of their purported bioactive components.”

Transcript:
Seaweed: the next big thing in sustainable agriculture? w/ Scott Spillias, Uni of Queensland – EP188

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:06

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Thanks for tuning into the show. In this episode, I’m talking about a bit of a quirky topic with Tim Hughes. My colleague at Adapt E1conomics, Tim helps me out with business development. We’re talking about seaweed. So a little bit quirky. Yeah, but there’s a reason for it. And I might just have a brief chat with Tim about that. Tim, good to be chatting with you. Yeah. Good to be here, Gene. So Tim, we had a conversation with Scott Sebelius at University of Queensland, he’s been doing a PhD on seaweed. And there is a logic to looking at seaweed because there’s this conversation going on about what future food sources are. That’s where a couple of different reasons. So you thought this would be a good topic, didn’t you to cover?

Tim Hughes  01:36

Yeah, I think it’s really relevant because there’s clearly a huge increase in the demand for meat, certainly in places like China, where the the amount of meat per capita has has gone up remarkably, over the last 20 years. And but around the world in general, and this has been well documented the pitfalls and the dangers for the environment, in that mass production of meat. So there’s a lot of plant based foods or, you know, meat alternatives, for instance, that are coming through, which, you know, there’s a lot of good research to show that that can help the situation. Remarkably, and also be good for us. Like, you know, I don’t think there’s any nutritional advice out there that says to eat less fruit and veg, maybe a bit less fruit but on the whole It’s like eating plants is good for us.

Gene Tunny  02:28

Well, according to Kelly Starrett, oh, we’ve got to eat 800 grams of fruit and vegetables each day, isn’t that right? That’s right. Yeah. optimal health. Now that’s, that’s a challenge.

Tim Hughes  02:38

It’s a really good is excellent book built to move has just been out recently. And I think he borrowed that from someone else. I can’t remember who originally came up with that. But it’s, it’s worth sharing. Because yeah, it’s a very simple premise of having 800 grams a day of plant food. And so the premise being is like, because it’s very easy to just go for the stuff you like, if you’re like kiwi fruit, for instance, if you have 800 grams of kiwi fruit, well, you’re gonna get sick of it. So the idea with just 800 grams and not putting any stipulation on what it is, is that people will generally mix it up a little bit, just to get that variety. But if you want a direction with it, the direction would be to get a good array of colours, primarily vegetables, and some fruit and 800 grams a day is a good target

Gene Tunny  03:30

Right, okay. So I thought this would be okay, this is a bit of a quirky topic, but I think it is relevant. And it’s, it’s something that we should look at on this show or consider on this show. Because, well, food security is incredibly important. And this is another way we could help improve food security, I mean seaweeds and other possible source of macronutrients as they call it. So it’s got some protein in it has an ad. And then there’s some mean carbohydrates, I suppose.

Tim Hughes  04:01

Yeah, I’m not too sure if the nutritional constitution of the different seaweeds but I know, they always score highly on the nutritional scores as in, they’re not high in fat, they have no fairly high vitamin content. But it’s what you can do with it. And this is where one of the questions that comes into I guess that there’s only so much seaweed, I guess that in its raw state or cooked state that people would eat, but it’s the opportunity of using it and processing it to create other foods. That is where a lot of the opportunities are. But it’s also where a lot of the questions are as to well depending on those processes. And you know how healthy the final product would be, because any process generally degrades the food quality or the nutritional quality at some point. Our friend Paul Taylor, who we listen to quite a bit he’s he’s got a really cool way of looking at food which is low a chai, which is low human interference and So if it’s an ingredient and not full of ingredients, and it’s generally good to eat. And so when we look at something like seaweed or kelp or whatever, it’s great. But then we do have to really consider the processes that then it might have to go through before it ends up on the plate as whatever it is. Because there’s, yeah, it’s probably reasonable to expect we’re only going to eat so much kelp or seaweed.

Gene Tunny  05:21

Well, well, yeah. So this is what I want to talk about. And think about, because this has been pushed by certain bodies and such as well, UN and other international organisations. They’re arguing we need to, to eat more plant based food, more plants, essentially. And seaweed is one of those potential foods. And so I thought, well, this is interesting. But and, and the reason that these bodies and I’m not saying whether this is good or bad at this stage, the reason that these international organisations are doing that is because they’re concerned about the contribution of, of agriculture currently for the food that it produces the contribution of that to climate change. They’re concerned that well, this is a major source of greenhouse gas emissions, I think it accounts for on one estimate. Well, looks like it’s a bit, there’s a wide range. In the IPCC report on chapter five on food security, about 21 to 37%, of total greenhouse gas emissions are attributable to the food system. That’s a fairly wide range, I guess that shows how much uncertainty there is about all of this stuff, right. I mean, you know, it could be a fifth or it could be over a third, we, we just don’t know, but I guess it’s hard, because you’ve got to think about the impacts on the land and what it means for vegetation, and also transporting the food to all of the, the emissions involved in that. So

Tim Hughes  06:52

Yeah, and the other thing is like, I mean, I think it’s great, personally, because I think any exploration of securing different plant based foods for human or animal consumption is a good thing. And it needs to be, you know, researched thoroughly and taken seriously. But it is interesting that, you know, this could be done on a scale, because it now this is going to have to take a certain amount of space in the ocean. And so that’s going to be obviously a consideration as to where and how, but it’s certainly not beyond the realms of you know, it’s certainly not a barrier, we have a lot of ocean to use.

Gene Tunny  07:32

And this is what Scott’s research is on. So we’ll talk about, we talked, we talked about that with Scott. Yeah. So that was, that was really interesting. So I might just read from this UN report. But what the UN writes are theirs on their website, I’ll put a link in the show notes, alternative proteins, such as plant based meat and dairy substitutes, insect based proteins and cell based cultivated meat, provide promising prospects and are attracting growing demand financial investment and technological innovation. So there’s all of this research going on and r&d into these alternative food sources. Now, we don’t want a situation of course, where the UN or even our own governments tell us you must eat. It’s so you must eat cricket. So you must eat seaweed. We don’t want that at all, where we that we believe in, in freedom and liberty on the show for sure. So we don’t want that. My take on this would be to the extent there is a concern with the existing food system and contributions to greenhouse gases, and we need to do something about that, then the way to do it is get the policy settings, right. If we can get an international agreement on a carbon price, for example, that’s one way that you could do it. If you’re worried about land clearing for agriculture, then you could you could have things like biodiversity offsets, or that sort of thing whereby they have to try and improve the condition of the land somewhere else, or, or try and protect species somewhere else. Yeah, there are these sort of mitigating or offsetting actions that could be taken that we could require farmers to undertake so I think, so I wouldn’t want to have anybody telling us you’ve got to eat this, this seaweed or you have to eat crickets. But it’s about getting the policy settings right and and assuming that there will be action on greenhouse gases and we will be decarbonizing and we there will be changes over the next few decades, then look, it’s fair enough that there are people like Scott researching seaweed.

Tim Hughes  09:39

Yeah. And I think that the market is really strong in determining these outcomes. Like a lot of people want to eat clean, they want to eat healthily. And there is concern about you know, the amount of meat being eaten so, and it’s not to say that meat shouldn’t be eaten. That’s a choice for the individual. But the amount of meat that has been eaten And it’s certainly of question to the environment and also to your own health. I mean, there’s only, you know, there’s only so much meat that we should eat, I guess. And it shouldn’t be a choice. But I think a lot of people are really interested and willing to try these new plant based foods, you know, plant based meats, but especially if the company can show that they’re doing the best they can towards sustainability, ethical farming methods, etc. People care about that. And I think that market will drive the popularity of a lot of this research and a lot of the companies who might come into the market, because there’s a hunger if you like for, for these solutions, you know, a lot of people want to want to see these foods on the shelves.

Gene Tunny  10:47

We are seeing them on the shelves. Now, Coles and Woollies aren’t really the plant based. Yeah, and it’s good, you know, based meat. And

Tim Hughes  10:55

it’s not cheap, you know, which is one of those things that I guess with scale, the price can come down from that, because it’s hard to pay more for a lot of these, these foods, but if they can be really shown to be highly nutritious, and tick all those boxes of sustainability, etc. I think there’s the market will drive the success of those companies.

Gene Tunny  11:19

Yeah. And on seaweed, there was a study I found, while I was preparing for this, that I think there’s some evidence that seaweed can help reduce some health conditions like if you eat enough of it, and apparently it’s in one in five Japanese meals. So sushi, for example, it’s in sushi, isn’t it? So I won’t have the wrap. Yeah. But apparently, it’s in one in five Japanese meal. So they eat much more of it than we do. And I think that’s what Scott’s looking at. Well, what if Western countries started eating? Or seaweed was making the same contribution as it does in say, Japan? Or perhaps China? Or Yeah.

Tim Hughes  11:57

And to be fair, like him, I’m coming from a very, you know, from a Western background, I guess, like, we don’t eat seaweed in our house as a general thing. And undoubtedly, there are loads of ways to eat natural seafood and a really great way that happens in different countries around the world. That’s part of their staple diet. And so in many ways, it’s just being open to try new things. And yeah, and generally, the closer it is to its natural state, you know, the state that it was when it was harvested, it’s going to be better for you. So there are certainly options there that can be, you know, good healthy options for us to use straightaway.

Gene Tunny  12:32

Yes. Look, I mean, this isn’t a health podcast. So I can’t comment on that. I mean, I think that’s probably true. I mean, the more process something is, the more likely it is to be bad for you. And, and this is why that study, if I remember correctly, I’ll put a link in the show notes is saying that, where you have a diet that has a lot more seaweed in it, the people are less likely to have conditions like diabetes, for instance,

Tim Hughes  13:00

I mean, I am coming from my background in the health industry. With this, I do bring some, some background into it. And it’s, you know, it is that thing of like, yeah, if you can eat these foods, or going back to Paul Taylor, you know, low human interference, then it’s generally going to be good for you if you have something like seaweed before it gets processed.

Gene Tunny  13:22

So Paul Taylor’s got the Mind, Body, Mind Body, Brain Project, Mind Body Brain Project podcast, which is really good. We both enjoy listening to it. Yeah, he’s great. Not actually friends with Paul to

Tim Hughes  13:37

say that, because we talk about him often, as we do with several other podcasts that we listen to. So yes, friends, and

Gene Tunny  13:45

we would love to have him on the show. So if you’re listening for and you want to come on the show, and you know, we’d love to have you on to chat.

Tim Hughes  13:51

But it’s back to the good science. That’s so yeah, sure. It’s not advice, but check out. Paul Taylor, and Andrew Huberman is also really good with nutritional based information. Yeah.

Gene Tunny  14:03

Yeah. So I just wanted to in this intro, I just wanted to give some reasoning for why we’re talking about seaweed just seems like a bit of a quirky thing to have on an economics podcast, but there is a some logic to it. And it’s all part of this thinking about what’s the impact on the environment of the food we eat. And the economist, the international newspaper comes out of London, that that had a recent article that I found really interesting, a different way to measure the climate impact of food. I’ll put a link in the show notes, but it’s probably paywalled. And what they did, did I tell you about this they they estimated the impact of food in terms of bananas, so they compared food, different types of food with bananas. Indexing greenhouse gas emissions to a single food gives a sense of how different foodstuffs rank. Unfortunately for carnivores, beef is bad for the environment, no matter how you slice it. Producing one kilogramme of Minsk causes as many emissions as 100 kilogrammes of bananas, call it a banana score of 109. Adjust for nutritional value and Beast, banana score, it’s a hard one to say, boost banana score falls to 50 for one calorie of beef mince causes 54 times as much carbon emissions as one calorie of banana by protein at scores seven. Okay, so it’s that’s a really cool way of looking at I like that. Well, there’s some great charts in the in that article. So it’s worth it’s worth looking at the economist is renowned for coming up with these quirky ways of looking at the issues. So they had the Big Mac Index, I think, I don’t know if they still do it, I’ll have to check. I haven’t read a physical edition of The Economist in years, I get to digitally and just look at the the articles that that are of interest. But they had this thing called the Big Mac Index, which compared the cost of living in different countries based on what a big man Oh, okay. Yeah. Okay, now trying to use that as an indicator of whether exchange rates are overvalued or undervalued. I think that’s what they’re doing, if I remember correctly. Yeah, so they’re good at quirky things like that.

Tim Hughes  16:13

I mean, as for this subject, being relevant to economics, I think it’s really, it’s really relevant, because, you know, the direction that’s going in it is to try and do these new plants on scale, which can absolutely make a difference, you know, to people’s health and to the back pocket,

Gene Tunny  16:32

potentially. So that’s why it’s one of the things I wanted to, that’s one of the things I think we need more information on is just what will this cost? And in terms of calories, I mean, meat is, although it’s it’s, it can be expensive, but it can be a good way of getting your well the protein, it’s a good way of getting protein in whereas how much seaweed would you have to eat to get an equivalent amount of protein? And that’s where I think the problem is that what’s the cost of that? Will we actually want to do it? Well, will our tastes adapt? I think that’s one of the problems with these. Thinking that we could move to an insect based diet or, or a plant or a plant based diet more broadly, I think there are going to be barriers to doing that.

Tim Hughes  17:23

I think it’s only ever going to make up a part of the daily intake, you know, as any food would. Yeah. But certainly protein is one of the hardest ones to fit in like going back to Kelly’s Tara and his book. He talks about 1.6 to two grammes of protein per kilo of body weight. I think I’m sorry, that was Paul Taylor. And but it’s actually it’s comparable with what Kelly Starr is has in his book. Yeah, it’s funny because he is all about grammes of protein, two pounds of body weight, so it sort of flips over the measurements, but it’s quite a lot, you know, I come to get that amount of protein in from food is is tricky. So that’s where supplements can come in. And sometimes that, you know, that’s where the protein supplements are really useful to be able to boost your protein intake. Because it can be Yeah, it’s harder to do with purely food. Do you mean protein powder? Yeah, protein powder was a supplement is a good way to to boost that, okay. And that’s largely from milk, but you can get it from plants and also pea protein. And you know, there’s, there’s proteins from all over the place. Yeah, that will suit pretty much everyone, you get vegan proteins that have been processed in a way that’s vegan friendly. So it is it can be done. But clearly, there’s a process with it.

Gene Tunny  18:42

One other thing I should mention, and my colleague, Steven Thornton has mentioned this to me in the past, and I can’t remember if I’ve spoken with Steven on this show about about it or not. I have to look through the archives. This is pushed to have lab grown meat. Have you heard about this? Yes, the hub, which I think would be great, because one of the problems with the plant based meat is that it doesn’t have the texture or you just know it’s not meat. Whereas this new the lab grown meat, it’s it’s actually me, but you don’t have to raise you don’t need the actual cattle for the you grow it in a lab. And that’s more arguably more humane or, you know, it’s it’s more ethical to do that.

Tim Hughes  19:29

Yeah, there were a couple of I’m going from memory here and the, from when I looked at it, and that was released a year or two ago. I remember reading about there were two main sources, there was a protein that had been isolated, which could be synthesised to be like meat. And so that was like, fairly straightforward. They were growing that in the lab but the other one involved taking cells from a cow foetus for instance, and then growing it from that. So different ethical sort of origins. And also, you know, I think people might be a little bit uncertain about, you know, people still have ethical considerations when they want to have these foods. And so yeah, there was, it was early days in the lab grown meat, and I’m not too sure where it’s progressed to now. But that’s where the plant based meats come in pretty well, because ethically, there’s nothing really that some too funky that’s happened in the origins, because we all care at the end of the day. I mean, I’m sure most of us care about, you know, for instance, if we are going to eat meat that we would like that animal to have had as good a life as possible before it’s been, yeah, mercilessly slaughtered. You know, but because I mean, there are instances, for instance of beef production where the animals never see the light of day. Peter Singer was talking about that recently. Yeah, he mentioned that. And so ethically, yeah, it’s not great. And

Gene Tunny  20:52

doing poultry production.

Tim Hughes  20:54

There’s poultry, I think it was mentioned about cows as well, based on such scale, where it’s just this, they don’t have any outdoor time or space, I’d have to

Gene Tunny  21:04

look into that. I mean, that was not like we do it in Australia. I mean, we have this was overseas, they spend a few months or however long it is in a feedlot. And then before they go

Tim Hughes  21:13

to the abattoir, but in an ABC article,

Gene Tunny  21:16

I’m not sure whether be efficient. I mean, that it anyway, I mean, I’ll have to look into that. I wasn’t aware of that. I know that I think that’s an issue with the chickens, some chickens that

Tim Hughes  21:27

kind of that kind of those farming practices. No. So it is that thing, ethics has a big part behind the meat. Anyway, for sure.

Gene Tunny  21:36

Just on the chickens, the chalks, that’s a really, they’re really, they’re a lot better for the environment than than beef. So if we can switch to eating a lot more chicken, and I like chicken. So I think that’s, that’s fine, that would improve things that would be good for the environment. And so maybe that’s what we do, we see a lot more poultry. But I think the way to do it, I mean, because people aren’t going to follow any directive from the UN, the UN says, oh, you should eat more seaweed or whatever. Not that they’re explicitly saying that, but they’re hinting at that sort of direction, that we should have more plant based food, rather than the government saying you should do this. If we get those policy settings, right, then people will be incentivized, or they will naturally move to food that is better for the environment, if we are properly pricing, the impact on the planet, the co2 emissions, then, as I’ve talked about, on this show, before, we’re going to make sure everyone else is doing it. Because there’s no point Australia wearing a hair shirt, or Australia, or another major agricultural producer, there’s no point us undertaking these measures if if other countries aren’t doing the same thing. So that’d be the one caveat I have on that.

Tim Hughes  22:55

And I think with that, because it’s a similar scenario to coal, for instance, isn’t it? And I think when technology takes you beyond the point, so for instance, when in the instance of coal, when it’s cheaper to produce renewable energy than it is to dig coal out of the ground, then that’s when people will follow suit. And I guess the same would happen with food, you know, food can be produced economically on a scale, that’s healthy, that’s of no great harm to the planet, people will go towards that when it becomes affordable and available enough.

Gene Tunny  23:28

Yeah, yeah, exactly. And maybe that’s what we need to see, to see happen. Yeah, I mean, it may be that there’s this flywheel effect are there are these economies of scale that they discover as they start doing this in, in life on a larger scale with seaweed, I mean, it looks like Scott and people like that are looking into opportunities to where seaweed could be grown. And then there could be a demand for it to industry starts expanding seaweed production, and then their costs go down. And that reduces the price of seaweed over time. And that could help that leads to additional demand.

Tim Hughes  24:06

So I guess, with government, if they were to champion or back those kinds of projects, and that’s where maybe, you know, their biggest input could be, you know, in making those circumstances in those conditions as available and smooth as possible. And that could also attract, you know, new investment into regions. So there’s no reason why not, you know, so governments can be influential in that regard.

Gene Tunny  24:30

Yeah, well, apparently Australia’s got quite a lot of favourable locations for seaweed growing, which is one of the things we learned from Scots. It’s

Tim Hughes  24:37

got a big coastline. Got a lot of a lot of coast.

Gene Tunny  24:41

Exactly. Okay. So not such a quirky issue, after all, but again, I just want to reinforce we’re not saying you must eat seaweed. We’d never say that. We’re saying that this is it’s one of these alternative food sources that is becoming well there’s a lot more interest in it now because have concerns over environmental impacts of our existing food production system? And also concerns about health. And there are people well, particularly rich role of the Rich Roll podcast. He’s a big believer in the plant based diet. Yeah, I’d find it challenging. But I wonder about the nutritional benefits of it, I can’t see how you can have a balanced diet without me. But then again, I’m not a nutritionist, and this is not a health show. And so that could be a discussion. Well, that’s a discussion for one of those shows, or we’re gonna have that discussion. Outside of the podcast in.

Tim Hughes  25:39

I think it’s relevant. It’s okay, like people shouldn’t be changing their habits on what we say. But I think it’s part of the discussion. And as part of that discussion, it’s, yeah, 100% people can generally do much better by eating more plants, you know, like, ritual is a good example of that,

Gene Tunny  25:57

relative to where we are at the moment that if we’re consuming too much, too many too much meat or too much junk in our diet, then certainly swapping that with plant based food or plants or seaweed, for example, or that probably is a good news. Well,

Tim Hughes  26:15

that’s just one of the premises behind the 800 grammes of plants a day is that if you eat that much, then you’re less likely to eat, or have the appetite to have other highly processed junk food around that. So naturally cuts down the amount of processed food that you would have. So it’s fairly, you know, it makes good sense

Gene Tunny  26:35

to him. Very good. Well, we should get on to the conversation with Scott. Let’s do it. We’ll play that. And, Tim, thanks for the conversation again. Thanks, Jim. Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  26:51

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Gene Tunny  27:20

Now back to the show. God smelliest Welcome to the programme.

Scott Spillias  27:27

It’s nice to be here. Thanks for having me. Of course. Yes.

Gene Tunny  27:29

It’s good to have you on. Tim, came across an article mentioning your work your research work on seaweed recently and thought it would be great to have you on the show for a chat. So Tim, what was it about that article that that interested you? And made you want to chat with Scott?

Tim Hughes  27:49

Yeah, it was really interesting. You know, we’ve talked before about new sources of food for humans or animals or, you know, as a fuel source and seaweed that I’d heard of before, but not spoken about in the scale that you had been researching Scott with your team? So yeah, maybe you’d like to tell us a little bit about what you’ve been doing? Sure,

Scott Spillias  28:12

yeah. Well, I’m doing a whole bunch of work on seaweed farming and trying to understand kind of what the, I guess Sustainable Development implications of farming seaweed on a large scale would be for the planet, you know, how we can use seaweed to address some of the global challenges that we hear, talk about things like climate change, and food security and energy security, things like that. So PhD that I’m just completing now is covers a wide range of topics. But yeah, the article that was published recently, what we wanted to know is we wanted to kind of see what it would look like from a global perspective, if we were to farm seaweed, almost on a similar scale that we use the land to produce things like food, feed and fuel. And so what we basically did was we came up with a few different scenarios of seaweed use, aiming at looking at those kinds of those things food, feed and fuel. And we use a big economic model called glow biome, which is the global biosphere management model, which is located at a Yassa, which is a research institution and in Vienna. And we basically, what that globe globe icon does is it looks into the future looking at population growth and consumption in different regions. And it basically predicts where you would need to grow certain amounts of food or feedstock to match to meet that consumption into the future. And so we made the scenarios we looked at where seaweed could possibly be produced in the ocean, how much can be produced, and then said, Okay, well, what if we were to, instead of relying completely on the land to provide for the growing global consumption, what if we instead use seaweed for some of that supply? And then we looked at how that would affect potentially potentially land use, climate impacts things like that.

Gene Tunny  30:04

Right? That’s fascinating is go Casca. I’d love to ask a couple of questions. One, how do you farm? Seaweed? What does that involve? Because you’ve got seaweed growing in the, in the ocean, but how do you, you’re doing it in a specific area? And do you have a handoff? What’s it involve? And second, what does the research say about where we could grow it here in Australia?

Scott Spillias  30:29

Yeah, certainly see where you can grow seaweed and a whole bunch of different ways. And to be honest, that actually kind of depends on what kind of see where you’re growing. See where it is? A pretty general term, almost as general is just saying, Wait, can we grow plants? So how do we grow plants, you know, there’s 1000s, of different species of seaweeds, and they all have their kind of unique characteristics, both in terms of what we can use them for, but also in terms of what you would need to do in order to cultivate them. And in some, in some cases, seaweed can actually be quite complicated to cultivate, they have pretty complex life histories. But in some ways, they can also be a bit simpler than like terrestrial crops. For instance, you know, on land, if you want to farm corn, you often have to put in a lot of things like fertilisers and pesticides, water, seaweed, if you’re growing in the ocean, you don’t, you shouldn’t have to input any of those things. So basically, all you need to do is put the soil things out there on the line, and hopefully just grow in places where there’s enough nutrients, you don’t need that water, anything like that. So, of course, the kind of complicated thing. And like I mentioned, there’s two main ways. Seaweed is often grown these days, oftentimes, people so in places like Indonesia, or in Africa, people grow seaweed tend to tend to grow seaweeds, and kind of intertidal areas where you can walk out, stick some sticks in the sand or the mud in the bottom of the ocean, but some strings, some lines between them and grow the seaweed on that. That can have some implications for whatever habitat was there before. But there’s a lot of research these days going into floating farms. And this is something that’s already practised in places like China and Japan and Korea, where you actually have kind of floating lines or rafts that are attached to the bottom, and you’re growing seaweed on lines at the surface like that. And that, you know, you can imagine takes a bit more infrastructure. And certainly, if you want to have a platform that’s going to last for a while it can, it can require quite a bit of investment in materials from that perspective. So yeah, so your second question. Yeah, go ahead.

Tim Hughes  32:38

Because that I’m just intrigued by the, it seems like there’s a few different size or scales, that this can be done, obviously. So I think I saw in your article or the article that I noticed your work, the sort of smaller farmers doing what you were saying, like with the estuaries, you know, putting lines out in a in a small way for their own sort of little income, which is great. But I’m intrigued by what the bigger operations would look like. And if that means then that, you know, it’s the shipping free area that you know, I imagined, any shipping going through that would would cause a lot of damage. Is that the case? Like is that is that one of the big challenges is selling off those areas?

Scott Spillias  33:18

Yeah, I’m not 100%. Sure. I think though, there are definitely a governance issue. And that’s something where that was, that’s something that we had, we could definitely learn a lot. So here in Australia, where seaweed farming is almost non existent at the moment, growing but not like, very small. We can definitely learn a lot from places like China and Korea and Japan where they have been doing this for a long time. Yes, you’d probably want to separate those areas in the ocean from things like marine traffic. It’s, it’s kind of an interesting question, to what extent we can integrate seaweed farming with other marine uses, though, and certainly in places like Europe, there’s a lot of work going into understanding how we can integrate seaweed farms with things like offshore renewable energy, recognising the fact that, you know, if we’re gonna be putting more things like wind turbines in the ocean, which is a certainly a growing industry, then if you already have that infrastructure there, why don’t we just string some lines between the wind turbines basically, and grow some seaweed on them. And so I think, for me, that’s pretty exciting. And that’s definitely something that we need to figure out. Because if we’re going to be investing in this industry on a large scale, and figuring out how it’s going to not compete with other marine uses is going to be a big challenge. And I think an integrated way is going to be the best use of marine space.

Tim Hughes  34:39

And what sort of size of those farms in China the the bigger commercial spaces, what sort of area are we talking?

Scott Spillias  34:46

I mean, off the top of my head, but couldn’t give you an exact figure, but they’re very big. So some bays are completely full of seaweed farms and in many cases, it’s not just seaweed farms, but it’s also I like bivalve farms, and sometimes fish farms. But yeah, certainly you can. You can go on Google Earth and look at some satellite images and zoom in on some coastal areas of China, and they are just absolutely full of seaweed farming. Right. Right.

Gene Tunny  35:16

Wow. And what about in Australia? Where could we grow seaweed? Scott? Yeah. So

Scott Spillias  35:22

when Australia those in our analysis, we find that Australia has a very large amount of potential certainly compared to other regions. Some of that might be a bit biassed just by the species that we actually incorporate into our analysis. And also could also be biassed by the fact that we rely on historical observance of observations of seaweeds. And so there’s a lot more kind of science and recording of those kinds of things happening in places like Australia and Europe and the US. But that being said, yeah, there are lots of places and I think we could probably, you know, there’s heaps of different endemic species of seaweed here in Australia. And like I was saying before, there’s a huge variety of seaweed species with a huge variety of uses. And I suspect that for almost anywhere, any coastal area in Australia, you could find a seaweed that would probably grow there. Whether or not it’s the right seaweed that you want to grow for your given market or anything like that may not necessarily be the case. But there’s a lot of seaweed species here and a lot of a lot of coastline. And not just coastline, but a lot of space in our exclusive economic zone. If we can kind of crack that nut of building offshore farms. So yeah, lots of potential. At the moment. There’s a lot of research happening in Tasmania, where I’m based now into growing seaweed, South Australia. There’s a lot in Queensland, it’s starting to pick up there’s a few in New South Wales, but it’s definitely starting to pop up all over the country,

Gene Tunny  36:50

Ron, and once the seaweed that’s been produced in China, so what’s that been used for? What is it being used for food and how and how is it processed? How is it prepared? And I mean, what does it taste like? I mean, if you can tell us something about that. I mean, that’d be great. Yeah.

Scott Spillias  37:08

I haven’t been to China myself yet. But yeah, pretty sure most of the seaweed that’s being grown in East Asia, a lot of its being used for food. So things like noise. So when you buy, you know, your sushi or whatever, that’s probably some of that’s coming from China. Probably some of it’s coming from Korea and Japan. But yeah, I think globally, food is still one of the main uses of seaweed biomass. If you look at places like Indonesia, where the seaweed industry has grown dramatically in the last couple decades, a lot of that seaweed is actually being used. A lot of the biomass is being used for the hydrocolloid industry. So not necessarily for food, per se, but it’s being processed, and kind of thickeners. So like Carageenan are being extracted from it, and used and sold on for incorporation into other processed things. What does it taste like? Yeah, I mean, yeah, like I was saying, there’s lots of, there’s lots of different seaweed species, and they’re all pretty different. And so they’re all processed in different ways and can be used for different things. And I think, for me, that’s what’s really exciting about all this is that, you know, when we think about seaweed, we think about seaweed, as this one thing that really, it’s this huge, diverse group of things. And I think it’s this diversity that we haven’t really, fully come to understand, we have a pretty good understanding of the diversity of terrestrial crops, and things that we can use terrestrial crops for. And I suspect that seaweeds could be just as diverse and certainly if we put in the time and investment to develop, and domesticate different seaweed species, then we might find that they can be incredibly useful for a wide variety of things.

Tim Hughes  38:49

I was gonna ask as well, Scott. So you mentioned there’s a diverse range of seaweed? Do they have a similar sort of macronutrient build up? Or are they all very, very different, but primarily with proteins and say, omega threes, you know, some of these quite expensive, macronutrients to, to grow or to farm on terra firma? What does the macronutrient look like? In seaweed generally?

Scott Spillias  39:17

Yep. Yeah, that’s a great question. Yeah. I’ve only looked specifically at that we use 34 species in this recent study. And we looked at the nutrient profile of those. And we found there to be a huge amount of diversity in those 34 species. And so I suspect, if you were to look at even more than the ones that we looked at, you’d find just as much diversity and it’s also one of those things where, even within a single species, there’s probably going to be a huge amount of diversity just based on the conditions that it’s grown in. The nutrients it has available to it, how much sunlight it gets, things like that. Yeah.

Tim Hughes  39:55

For instance, with in going to windy this algae farm So, that have been done commercially. And omega three is one of the main sort of

Gene Tunny  40:07

that’s the aspirations, right? Yeah. trialling it at the woods group is trialling at the moment there, which

Tim Hughes  40:14

is great. And I’d be able to get that from a plant essentially, or allegations. So the potential for farming for these, you know, harder to produce macronutrients protein, definitely a big one would be a huge benefit, obviously, the the impacts of farming for beef and chickens, etc. That’s one of the issues that the seaweed potentially can help with. And I saw that there was a 2.6 billion tonnes of co2 removed, or that has the potential to remove 2.6 billion tonnes of carbon dioxide from the atmosphere per year. Is that right?

Scott Spillias  40:53

Sort of so in our analysis, that number is coming from we looked at what would be the mitigation potential compared to a baseline of feeding every ruminants on Earth with this diet that incorporated asparagopsis, which is the red seaweed that recent research has shown if you include it in the diets of ruminants, it reduces the amount of methane they emit. Right? Okay, we should definitely treat this number with a lot of caution and understand that, that is a would be a logistically, very difficult thing to do. And, you know, just remembering that, it’s, first of all, it’s gonna be very difficult to grow that amount of seaweed, even though it’s a relatively small amount, especially compared to the other scenarios we looked at. We definitely difficult to grow that amount of seaweed, but then also, just bringing that seaweed to livestock can be difficult, remembering that a lot of livestock doesn’t spend most of its time within feedlots where it can be easy to administer kind of special diets. That also number also comes from this fact that we project that to 2050 and compare it to a baseline scenario. And so in the baseline scenario, we’re expecting that ruminant production will increase drastically over today. And so if there are changes in kind of the amounts of, you know, the rate at which we’re consuming livestock or anything like that, that might change.

Tim Hughes  42:18

Yeah, yeah. Yeah. Cool. Thank you.

Gene Tunny  42:20

So yeah, it’d be good Scott, just to get a sense of what you modelled and the other shifts the changing pattern of consumption. So are we changing? So humans? Are we changing what we eat? Are we substituting are we bringing in some seaweed? And then we’re, we’re taking out some, some beef or poultry, we’re replacing that. And then, I mean, I understand the what’s happening with the cattle. But you know, what’s happening with humans in terms of our diet? What are you modelling?

Scott Spillias  42:55

Yeah, thanks for asking. Yeah, we, it’s a pretty simple shock that we incorporate into our model, we basically assume that every person on earth will consume seaweed out of it, right, or about 10% in their diets. So that’s a huge increase over what most of us certainly in the western world are, are consuming. People in kind of East Asia, probably eat seaweed at the highest rates, and even the probably the maximum would be somewhere around 2%. And so, you know, that obviously represents a huge increase. And we, we justify that in our in the research by making the case that I’m certain we could all incorporate more seaweed into our diets. And that could be kind of raw seaweed kind of in the same way that you would eat it in sushi, right? You’re actually eating seaweed itself. But it could also be if seaweed is used as a feedstock in some sort of industrial process in the same way that we use corn or soy, where we grow those things, and we break them down into their constituent nutrients. And then we incorporate that into a variety of foods. So just like, you know, you go to the grocery store, and you buy, you know, some packaged food, now thinking that it’s full of corn, but actually, it’s like 90%, corn, you know what I mean? And so, if seaweed were to be incorporated in that way, then we suspect that we could get up to higher rates of inclusion in our diet, so wouldn’t necessarily need some sort of cultural shift. But it would require kind of the economics to align. And also those, those processes to be developed to make that possible. Yeah.

Gene Tunny  44:31

And what did you find about the economic Scott? I mean, how in terms of cost per calorie, how does seaweed compare with other with other foods? Are you modelling an improvement in a reduction in that cost over time? How have you modelled that plays?

Scott Spillias  44:49

Yeah, great question. Yeah, we actually, we declined to do that. So it’s a it’s a very simple, a very simple modelling exercise. So we didn’t want Don’t make any assumptions about that just because we didn’t want to make any hard assumptions about we had to make an assumption, of course, because because there is going to be such a diversity in terms of where the seaweed is grown, what kind of seaweed you’re growing, the quality of it, all those things. So we make the very simplistic assumption that in our model, at least, we make the very simplistic assumption that see, we will reach some kind of price parity with the things that it’s it’s replacing. Of course, that’s not going to be true. But that at least gives us a very general baseline from which to start to understand kind of some of these impacts.

Gene Tunny  45:36

Right. So at the moment, would it be more expensive? Is that?

Scott Spillias  45:39

Probably yeah, at the moment, it would probably be more expensive. And I think, certainly in places like Australia, yeah. But we suspect that as as we develop this industry, and it becomes more sophisticated than that price may come down. And it also just depend on to what extent governments around the world want to support these industries. And if they get subsidies, or in the same way that we subsidise farmers all over the world, in different places.

Tim Hughes  46:05

You mentioned corn before, Scott. So are we talking that this may be possible to replace some high fructose corn syrup? Is that one of the possibilities for seaweed?

Scott Spillias  46:17

I can’t speak exactly to that, because that’s not my area of research. But I suspect it could. And there are certainly lots of people who are researching with different things we can do with seaweeds. And we’re finding that they’re very versatile in terms of what we can use them for. We can turn see we did a whole bunch of different fuels, we can create ethanol from seaweeds the same way we can. Corn. So yeah, it wouldn’t surprise me if we can also create high fructose seaweed syrup.

Tim Hughes  46:45

And I just want to seem like a silly question, because we’re talking about seaweed here. But are there any freshwater varieties that may be viable options? Or is this all purely saltwater plants? No, yeah, that’s

Scott Spillias  46:56

a great point that there’s definitely there’s heaps of freshwater allergies. And again, that’s not my focus of research. So I don’t know. But yes, there’s lots of freshwater algae that could almost certainly be explored for these kinds of different applications. Yep. Cool.

Gene Tunny  47:12

And do you know if anyone is making ethanol out of from seaweed? Scott, are there any? Any?

Scott Spillias  47:21

I couldn’t say if there is a lot of commercial, commercially viable operations, but that it’s a very active area of research. Not just ethanol, but also like Bio Oil. And people are looking at making aviation fuel from seaweeds. Yeah. So yeah, there’s been there’s a lot of exploration happening.

Gene Tunny  47:42

Right. And so it’s got potential, because there’s just so yeah, there are so many places we can grow it, I suppose, aren’t there, if you think about it.

Scott Spillias  47:51

Yeah, and some spirits species are just very fast growing. And so you can get really high yields. And because there are so few inputs, depending, you know, if you’re in the right place, then you could get really high productivity, really high biomass.

Tim Hughes  48:07

Can I ask Scott as well. So Australia, certainly has had a history of introduced species wreaking havoc on the local landscape, introduce plants have just run riot and animals etc. are there any risks with seaweed, but the same kind of issues are being introduced to areas where there may not have normally been, you know, the impact on you mentioned before that the onScale? Clearly the be an impact of some sort. But as far as displacing natives, plants and native marine life?

Scott Spillias  48:40

Yeah, absolutely. That’s a very real and serious concern that we should take very seriously. There have been heaps of seaweed introductions all over the world that have led to exactly that. Even just this, this asparagopsis that is becoming very interesting and popular and exciting because of its anti myth, antigenic properties. A species of that has been introduced in the Mediterranean where it’s highly invasive. So I think any successful implementation of seaweed farming will be done using locally endemic species, and will not include spaces that are being shipped in doing that could be could run a huge risk when there are also examples of introduced seaweeds being cultivated safely. However, you know, you just run a huge risk in doing that to introducing things into the marine environment that could cause lots of problems.

Tim Hughes  49:38

And is there any governance internationally at this stage with with cultivating seaweed

Scott Spillias  49:43

in terms of like preventing those kinds of things? Yeah. The governance around this is pretty weak at the moment. I can’t I don’t know a whole lot about the international space. But you know, in Australia, I’ve spoken to a bunch of folks in the industry here and in government and it’s Generally recognise that there’s a lot of work that needs to be done in terms of getting the government governance in place. So that, you know, we’re making sure that we’re not running the risk of causing environmental damage, but also just making sure that we’re making it accessible for people to get started in this industry. I’ve also heard from people who are really interested in growing seaweed in whatever place they are, and they’re finding that there’s just so much red tape associated with it. And even just in Australia, state to state there’s a lot of there’s different regulations, you know, I don’t think necessarily that we should make any kind of fast track kind of thing for putting seaweed farms into the environment. Because I think we do need to be very cautious about where we’re putting them. And I think there are going to be places that are going to be much better than others. And there is damage that can be done from farming seaweeds in the marine environment. But I think we do need to make it possible for people to get involved. And I think there’s a lot of potential for good to come from them. So hopefully, we can start to introduce or just get our heads wrapped around how we can allow people to get into the market.

Gene Tunny  51:08

So Scott, the takeaway from your study, is it that, and this is from a UK, the UQ media release. So basically, it says expanding global seaweed farming could go a long way to addressing the planet’s food security, biodiversity loss, and climate change challenges. So I understand the food security, because there’s another potential food source, climate change challenges. Well, that’s from the seaweed being used as feed for cattle. What’s the How does it prevent biodiversity loss,

Scott Spillias  51:46

basically just comes from the assumption that if we’re, if we’re farming more in the ocean, then we hopefully won’t need to farm as much on land. And so we already know that land use change is one of the main drivers of biodiversity loss on lands when you change, of course. So if we can relieve some of that pressure, then hopefully we can maintain some of those last remnants of pristine habitat for land. ecologies, that’s that’s also a strong assumption that we shouldn’t. We should also question, you know, if we’re growing lots of seaweed in the ocean, there’s no guarantee that we’ll be growing less things on land. But we’re hoping that that’s what does happen. But we also need to be careful about, you know, growing seaweed in the ocean, we’ll also have biodiversity impacts. This is a hotly debated topic at the moment in the space and the extent to which seaweed farms will provision habitat for marine organisms. I think most people accept that seaweed farms will be their own unique habitat, which may harbour some things, certainly things that grow on seaweeds, but those aren’t necessarily going to be valued by people who are growing or farming the seaweeds. You know, if you have fouling, you have little things growing on your seaweed that could decrease its quality as a as a product. But then there’s also the hope that, you know, if you have lots of seaweed growing in the in the marine environment, it could be habitat for fish, which could improve fisheries. But we haven’t really come to a firm conclusion on the extent to which that happens. And also, it’s just going to depend on where you put these seaweed farms, you know, if you’re putting a seaweed farm in a highly productive area, that’s a place that’s already highly productive, it’s probably going to make it a little less productive, because it’s seaweed farmers are going to be a simpler kind of ecosystem in the same way that, you know, a tree plantation on land is a simpler ecosystem than an old growth forest. But if you’re putting a seaweed farm in a place where there’s not a lot going on already, then it could, it could provide some biodiversity benefits. So there’s definitely a lot more research that needs to be done in that space.

Gene Tunny  53:54

Right. And one final question for me is, is seaweed more climate resilient? That I know there’s a concern that with climate change that will affect the yields of some crops? Is, is this a reason that we might want to switch to seaweed? Yeah, that’s such

Scott Spillias  54:11

a good question. That’s something I’m really interested in. And I don’t have a good answer for that, either. i My suspicion is that might be the case. At this point, it’s just speculation. And that’s something I’d really like to look into further. You know, when I think about some of the main threats from climate change for our food systems, you know, thinking about droughts or thinking about floods, both of which have major implications for growing crops, neither of those things are going to have much impact in the marine environment. If you have a food system that’s diverse, that incorporates terrestrial production and marine production, my feeling is that that’s going to be a more resilient food system all around. So because if your crops on land are suffering, maybe you have your crops in the ocean that are doing okay, now, there threats like marine heat waves can impact seaweeds negatively their diseases, seaweed diseases that are exacerbated by rising temperatures. But but same so if we have a marine heatwave in the ocean that’s affecting our marine crop that maybe there’s a, we have a chance that our terrestrial crops are doing okay. So my feeling is that having more diverse food systems will provide climate resilience. That’s not to say necessarily that seaweeds are more resilient than terrestrial crops. But I think the combination of both is the key here.

Tim Hughes  55:30

I see on that note, Scott, I know, historically, they’ve been kelp forests disappearing from a lot of places where they’ve been for many, many years. Is there an opportunity with this research to replace or replenish those kelp forests?

Scott Spillias  55:45

Yeah, there’s a lot of research going into that right now. Here in Tasmania, that’s very, very active, hopefully, I guess is the short answer. Yeah, we know that. Warm water is not good for many kelp species. And that’s why we’ve lost a lot of kelp. But we also lost a lot of kelp to other kind of human pressures. But yeah, we’re there’s a lot of research into that space, since hopefully, we can keep kelp kelp forests into the future.

Tim Hughes  56:09

Yeah. It’s it’s great research. And it was one of the things he had going back to your original remote, trim it to the article is, it’s so good to see. Yeah, well, we might be able to get a more diverse range of food and is potentially a very healthy food as well, like, you know, it’s a natural, it’s a natural plant. Really interested to see what happens next. So where can people go to find out more about this guy?

Scott Spillias  56:36

So yeah, I would just say keep an eye out for the news. There’s a lot of really exciting work being done in this space by not just me, but many other collaborators, University of Tasmania is doing a lot of really interesting work. That’s the thought I guess all I would say on that. Well, we’d

Tim Hughes  56:49

love to have a chat in the future as well as things develop, because it is a really interesting space. And yeah, it’s, you know, we wish you well with it, because I think it’s a really a great area to be researching. And hopefully, it’ll come to some kind of commercial fruition at some point not too far away. Yeah,

Gene Tunny  57:07

I was just, I was wondering, just finally, another thing occurred to me with the harvesting of Scott, how do you do that? Is that by hand? Is it manual?

Scott Spillias  57:17

It’s done in a few different ways. I think, these days, a lot of it is being done by hands too. Yeah, I think there’s probably a lot of room for improvement or automation in that in that in that area. Just off the top of my head. I’m just thinking about where how it’s done in different places. And yeah, for the most part by hand.

Gene Tunny  57:37

Yeah. Yeah. It’s just interesting. I might look into that, too, because of how that affects the economics of it. It’s fascinating and yeah, okay. Well along. Yeah, that’s great. Scott. Yeah, really appreciate your time. Tim, did you have any other question? No, that

Tim Hughes  57:51

was it. I really appreciate your time with this. Scott. I know you’ve had this conversation a few times. You’re very prolific with your, with your media requests. So thank you for granting us are one and yeah, really looking forward to hearing more?

Scott Spillias  58:06

Oh, it was absolutely. My pleasure. Thank you guys. So much really interesting. questions and conversation.

Tim Hughes  58:11

Cool. Good. Thank you.

Gene Tunny  58:12

Okay, thanks. That’s good. All right. Hey, thanks for listening to this episode of economics explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com, or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.

59:03

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Credits

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. 

Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

Dr Jonathan D. T. Ward discusses his new book “The Decisive Decade: American Grand Strategy for Triumph Over China” with show host Gene Tunny. Dr Ward argues the US should adopt “a two-pronged strategy of economic containment toward China alongside the revitalization and evolution of American industrial and technological power.” Dr. Ward is an internationally recognized expert on Chinese global strategy and U.S.-China competition. He earned his PhD in China-India relations at Oxford and his undergraduate degree at Columbia, where he studied the Russian and Chinese languages. Dr Ward is the founder of the Washington DC-based Atlas Organization, which provides strategic advice on US-China competition to businesses and government agencies. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. 

You can listen to the episode via the embedded player below or via podcasting apps including Google Podcasts, Apple Podcasts, Spotify, and Stitcher.

What’s covered in EP182

• How Dr Ward’s new book The Decisive Decade picks up where his previous book China’s Vision of Victory left off [2:02]
• What’s the actual concern with China at the moment? [5:20]
• What does economic containment mean? [9:40]
• Dr Ward proposes to restructure the world economy in favour of the democracies and against China [14:18]
• Is China such a threat that we should sacrifice our economic gains from trading with China? [19:25]
• China’s economic development has allowed it invest large amounts in its military [23:18]
• Western companies and forced labour supply chains in China [26:51]
• Dr. Ward’s final observations on China [33:24]

Links relevant to the conversation

Dr Jonathan D T Ward’s bio is available from the Atlas Organization’s website:

https://atlasorganization.com/

Jonathan’s book The Decisive Decade: America’s Grand Strategy for Triumph Over China: 

https://amzn.to/3TQyGoi

This may be the Ben Franklin quote Dr Ward had in mind: “Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety”:

https://www.npr.org/2015/03/02/390245038/ben-franklins-famous-liberty-safety-quote-lost-its-context-in-21st-century

Related previous podcast episodes:

China, Taiwan & the Indo-Pacific w/ Dr Greta Nabbs-Keller – EP146 – Economics Explored

How to Defeat the Dictators w/ Charles Dunst, Asia Group – EP180 – Economics Explored 

Transcript:
Why we’re in the Decisive Decade with China & what the West should do w/ Dr Jonathan D T Ward – EP182

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:06

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Hello, thanks for tuning into the show. This is episode 182. On US China tensions. Dr. Jonathan DT Ward joins me this episode to discuss his new book, The decisive decade American grand strategy for triumph over China. Dr. Ward is an internationally recognised expert on Chinese global strategy and US China competition. He earned his PhD in China India relations at Oxford and his undergraduate degree at Columbia, where he studied the Russian and Chinese languages. Dr. Ward is the founder of The Washington DC based Atlas organisation, which provides strategic advice on US China competition to businesses and government agencies. Dr. Ward argues the US should adopt a two pronged strategy of economic containment toward China alongside the revitalization evolution of American industrial and technological power. So the book is a good one to cover on this podcast for sure. Okay, let’s get into the episode. Dr. Jonathan Ward, welcome to the programme. Good to be here. Thank you for having me. Excellent. Jonathan. Today, we’re going to be chatting about your new book, The decisive decade. I’d like to ask first, why is this particular decade decisive?

Jonathan Ward  02:02

Sure. So first of all, Jean, this book picks up where my first book, China’s vision of victory left off. And the first one explained the global grand strategy of the Chinese Communist Party, you know, the military ambitions, the sort of economic ambitions, the history of the party’s view of the world its view of itself as ascending and completing what they call the Great rejuvenation of China of the Chinese nation, which seeks to return them to a place of preeminence in the world, and basically, their vision of the world order and where it’s going. And so the decisive decade picks up, where that left off, which is to explain that, you know, if we wish to stop that vision of victory, if we wish to prevent it, to maintain the rules based order to sort of ensure that the security of the free world coheres. And that the world isn’t simply, the rules aren’t rewritten by the People’s Republic of China, we’re going to have to take actions of our own, and then we have to engage in Grand strategies of our own. And this is written primarily as an American grand strategy, but also one that is very focused on the alliance system, the free world, the democratic world, the democracies, you know, all of that. So how to create a counterpoint a real, whole spectrum counterpoint to Chinese global grand strategy. So the decisive decade is, you know, the title refers to what I talked about in China’s vision of victory, which is essentially this isn’t a contest for the very long term. 2049 is what the communist party thinks of as the symbolic date, but 100 years after the founding of the People’s Republic of China, they will have completed the great rejuvenation of the Chinese nation, they will have completed military modernization the Belton Road, made in China 2025, all of these things track that long term, somewhat symbolic timeframe. But to me, for our side of this game, what matters is the contest for 2030, the fact that this game, I think, will largely be won or lost in the 2020s. And I even saw in a recent article in ABC, Australia, somebody’s talking about, you know, if there were to have to be a military conflict between China and the United States or the Allied Pacific powers that comes in the 2030s, it would be likely that we would lose whereas now, you know, there would be a stalemate? No, this is a peacetime strategy that I’ve written, I should make that clear. It’s a strategy for how to win the long contest without a conflict, how to win it chiefly, through rebuilding our economic advantages, and our military power and returning to peace through strength through deterrence, which we can already see that that entire construct is breaking down in Europe. And the question that’s on the minds of every, you know, major capital in the Allied world is will that also break down in the Pacific? Are we going to see China act in the Pacific alongside its partners, and Moscow in a kind of replay of the early Cold War relationship where they, you know, frankly, expressed to each other that they would divide up, divide and conquer Stalin told now he would focus on Europe and China should focus on Asia and the next thing we got is the Korean War. So we’re in times that requires serious responses ice still believe we can do this through economic power and integrated deterrence. And that’s what my strategy proposes.

Gene Tunny  05:07

Right? Yeah. So you talk about a two prong strategy of economic containment toward China alongside the revitalization? Sorry, the revitalization and evolution of American industrial power. Yep. So you’re keen to ask you about those in a moment. I just want to stick with this issue of what’s the what is the actual concern at the moment, we’ve just had, like all the level of concern, our former prime minister, Paul Keating, here in Australia, the other day made some rather extraordinary statements at the National Press Club and critical of the current government, which is on his side, and also the government while he was in that political party and the government before him, the current government. And I mean, he, he asked, why would China want to threaten Australia? What would be the point they get the iron ore, the coal, the weak? What would be the point of China wanting to occupy Sydney and Melbourne? militarily? What is the real threat? I mean, China wants Taiwan, they’ve they’ve been explicit about that. Do you think they have imperial ambitions? Beyond that? What explicitly are they after? Sure. So

Jonathan Ward  06:18

let’s think about that. I mean, for him to say that this results in the occupation of Sydney or Melbourne, I think, is taking it to a strongman extreme. I think the point here is Australia already has seen what coercion looks like, from the People’s Republic of China. And you saw that very early on, when they you know, shut off trade to Australia, because they were concerned about comments about the COVID origins. And, you know, Australia’s I think ability to act as an independent actor. And this is the subject of, I think, a very robust discussion. And, you know, frankly, a lot of the great research on this comes out of Australia. So, Australia, in many ways, this led aspects of the charge here in terms of calling the the threat of the Communist Party for what it is, but you think about banning Huawei, and the 14 points declaration that the Communist Party of China issued to Australia basically establishes the terms of what it would look like to have a healthy and productively relationship. And I think that was met with revulsion across Australia, the idea that they could be, you know, sort of dictated to by the Communist Party of China. In the meantime, China’s going through with HR McMaster, the former US national security adviser called the largest peacetime buildup, the largest military buildup in modern history. So the naval buildup they’ve undertaken the missile buildup, you know, the Air Force, sort of activity, I mean, they now have the largest and peer forces in the Indo Pacific, the largest Navy in the world, largest ground forces in Asia and Xi Jinping on a very regular basis way before but for, you know, I don’t know, Paul Keating myself, but certainly before his comments, I mean, Xi Jinping himself is speaking on almost a quarterly basis about preparing to fight and win wars now against whom, you know, Air Force manuals from the Chinese military talk about the ability to after seizing Taiwan, the ability to produce famine in Japan, you know, these ambitions, they have, I think, are part of, you know, a concept of dominating Asia. And that does include Australia, and I think for the United States and Australia, when our relationship, economic, military and values based goes back so far, and it’s so deep, when you think about something like the Second World War, where one of the most important pieces of our joint military strategy was to keep America in the Pacific through the California to Australia, you know, oceanic highway and the Japanese were trying to cut that off through the Pacific Islands. So, you know, the military geography of the Pacific is something we’re all familiar with. It’s something that China has studied in depth. I mean, their ambitions towards the island chains, I think are very well understood. And this is why, you know, according my understanding Australian Defence is very, very focused on the challenge from China. And in the meantime, I even, you know, without anticipating being on your podcast, and thank you for welcoming me, one of the first pages of my book includes just as a matter, of course, you know, threats that China has made to different allies, and that includes the threats that they made of quotes, possible nuclear attacks in the future on Australia. I mean, you know, they’ve threatened us with that, too. So it’s, it’s par for the course. But still, I think, I think they’ve made very clear how they feel about their position in the world. And it’s one of my friends in Australian Defence once said to me, when I asked What does China really want from Australia, and she said, it wants to be it wants Australia to be a neutral farm in mind. So if I don’t think that’s the future that that we’re all looking for, is to be sort of fun, you know, dependencies in a economic empire headed by the Chinese Communist Party. On the other hand, that’s certainly what they would like.

Gene Tunny  09:42

Yeah, I’ll have to look up that quote. That’s a that’s an interesting one, a neutral farm and mine. Okay.

Jonathan Ward  09:48

That one’s in China’s vision of victory.

Gene Tunny  09:50

Gotcha. I’ll have a look. That’s your previous book, isn’t it? That’s excellent. Okay. Can I ask? What do you mean by economic containment? And what does that look like?

Jonathan Ward  10:01

Sure. So the way that I see this, I mean the way to win this contest and to to avoid the hot war and to not have it just keep on culminating in a rising China that’s continuing in the military buildup and has its various territorial ambitions. And that’s all just a matter of fact, I mean, their claims against all of their neighbours, the wars, they fought in the 20th century against many of their neighbours, not least of which was the Korean War, which involve both the United States and Australia, in which they saw as central to the what they called the new China, just the rise of China back then, you know, we’re seeing, I think, a replay of some of those ambitions as they threaten papers today. But the bottom line, I think that this is largely, you know, it really comes down to the gap that we once had, as the free world between ourselves and the major dictatorships, and not least of which was the People’s Republic of China, and through economic engagement, and the strategy that we sought to do was to bring them into the world to trade with them to invest in them to establish business ties People to People ties. And that wasn’t the end of it, we did not necessarily expect that that would empower the Chinese Communist Party, we thought that it would lead to liberalisation in a political softening of the of the CCP, perhaps a reduced role and its influence. And really the opposite happened. I mean, China transformed from a largely agrarian society in the 1980s, to an industrial technological superpower, which now has totally changed the military balance in Asia, has created world leading companies has dominated strategic industries like money, intellectual property theft concerns are the subject of an enormous amount of study at this point. And that all culminates for them in economic ambitions of becoming really the centre of the world economy. And, and in doing that, they seek to then bring in a military strategy where they defend their, what they call the ceaseless expansion of their Overseas Interests. So in a way, it’s an old school sort of Imperial strategy, we recognise it very clearly as such, if this were the 19th century, but it’s kind of lost in the language of development and trade in the 21st century. So, you know, bottom line, I mean, they they see themselves as rising to a preeminent position. And then the world economy is doing that through mastery of certain strategic industries. And frankly, they can only get there if we help them. So a lot of the point here is economic containment really is about ceasing to empower to enable and to enrich the Chinese Communist Party in the People’s Republic of China for as long as it has these tendencies and ambitions and, you know, sort of dangers. And I think it’s a very simple thing where, you know, economic containment, as I’ve described it in three parts, it has to do with market access, it has to do with technology transfer, it has to do with access to capital. And as long as we’re providing access to capital access to technology, and then access to our markets, we’re enabling their growth, whereas you start to produce that. And the ascendancy slows down a great deal. And either way, we should remember that decoupling, which is a popular word is a two way street. I mean, Xi Jinping has made very clear through programmes like made in China 2025, that they seek to establish indigenisation of key strategic industries. So it’s not that our companies are over there in order to capture unlimited market share, and they’re essentially over there to transfer technology. That’s been the deal that Western businesses run with the People’s Republic of China for 30 years now. But it’s culminated and Chinese dominance of certain industries and then on the other hand, you know, they really do need access to global capital markets. And that’s where we have a far greater advantage, and they need to be able to sell to the OECD markets. And if you look at their trade composition, I mean, a great deal of it is, you know, let’s say a lot of value added since microelectronics, for example. So some of the industries that we already know, we have to secure I mean, I do not think it creates leverage over an adversary state that is, you know, creating a force structure that’s designed for combat with with us, you know, with America with Australia with Japan, that our supply chains are there, I mean, that doesn’t create leverage over them that creates leverage over us so so we know that we have to pull back certain strategic industries into the meantime, Xi Jinping, dual circulation strategy, means that he would like, in this is how the party is orienting. He would like the world’s supply chains to become more dependent on China at the same time for China to become less dependent on, you know, external supply chains. So so, you know, they’re looking to do this one way. And, and, you know, decoupling is something they’ve initiated in many industries. And then, you know, we’re gonna have to do that too, in certain ways. So so there is a natural restructuring. And the question, in certain ways is who, you know, what is going to be the outcome, ultimately, of that restructuring? And we have to do it in such a way where I think we’re working together, and we’re going to restructure the world economy in the favour of the democracies and not in favour of the People’s Republic of China.

Gene Tunny  14:44

Okay, and how do you propose doing that? What policy measures do you have in mind you have in mind tariffs, do you are you talking about banning certain types of investment into China certain types of trade? What exactly are you proposing?

Jonathan Ward  15:00

Sure, so I think you know, you need to go industry by industry and sector, you know, sort of company by company and look at all the key inputs that really matter. And I think that’s where this goes into a level of detail that will have to be, it’ll be the subject of policymaking in the decade ahead. I mean, what precisely do we want to allow? And what do we not want to allow? I mean, you can imagine, for example, it’s not necessarily strategic for, for McDonald’s to be operational in the People’s Republic of China. I mean, they’re taking their own risks by being there. And let’s not forget, every single company just learned a very big lesson in Russia. I mean, the amount of the corporate Exodus after Russia invaded Ukraine should be the real lesson for companies that are investing in China and building trading relationships, what actually happens, if they do decide to use force, that’s a separate problem. So the business sector, I think, has this issue on their own plates in a different way. But then for the policy world, you know, we’ve already seen much greater action in terms of export controls, you know, the foreign direct product rule is very important to limiting the transfer of technology that could be applied much more widely. Outbound Cepheus, a committee on foreign investment in the US provides a template for looking at strategic industries. And the concern has largely been over inbound investment from China into industries that we consider important, but also outbound because any multinational is going to have to ultimately, you know, allocate capital in order to remain competitive in a China market where their intellectual property has probably already been stolen. And perhaps commercialised. So, you know, the capital, you know, allocations continuing look at something like Tesla, for example, their giga factory in Shanghai is not owned, it is rented on a 50 year basis with a CapEx minimum and a revenue minimum every year. That’s the kind of deal that’s going on in order to syphon capital from multinationals alongside technology transfer today. So, you know, that kind of capital allocation, I think, is bad. I mean, we’re still mainlining hundreds of billions of dollars of capital, just as the United States. The other thing is, you look at large pools of capital, such as pension funds, you know, large index creators and allocators such as BlackRock and State Street have, you know, MSCI China index season, and there are companies in the US that are tied to civil military fusion, to the human rights abuses, and certainly to the Chinese Communist Party, because at this point, the party is basically reversing course, on Deng Xiaoping’s original opening up the private sector, and they’re putting party members on boards and controlling these companies. And all of these companies operate in the interest of their larger strategic programmes. So when we allocate capital, we are helping to finance military modernization, the Belt and Road and a surveillance state that I think is the subject of an enormous amount of documentation. And, frankly, you know, concern if not, we’re across the free world. So I think you start to do that. I mean, you start to cut back from, you know, and civil military fusion, perhaps I should explain, I mean, it’s the party’s initiative to transfer innovation happening in civilian industrial sectors into the military to make sure that the military can, in their words, close the gap with the United States and other Western militaries. So they are taking the economy that we helped them build, and converting it into maximum military power to be directed against us. That’s the thing that you want to break down. So why should we invest in that? Why should we transfer technology to that, and on the subject of exports, I mean, I think it’s really about export diversification. For example, Australia’s trade relationship is largely about selling coal and iron ore and, you know, commodities to China. And then I think Australia is one of the very few countries in the OECD that runs a surplus with China. But what’s important is pretty much true across the OECD, it’s a lot of micro electronics, and, you know, those sorts of sorts of value added goods. So, you know, looking for new supply chains, so that we do not have to, you know, have our exports come in from China. And that’s something we work that out, and we start to cut down their export, you know, based and that changes the structure of their economy. And it takes a lot of the growth out of the equation. And in the meantime, you know, it’s possible to reinvest in our own societies and our own industrial bases. I mean, we can do manufacturing, too, we just haven’t, because of the exigencies of, you know, basically, competitive advantage and competitive advantage, I think, is a fine concept. You know, theoretically but in a political economy, where you’re dealing with an adversary state that, in its own words, is preparing to fight and win wars, including with you and your allies. Perhaps it’s, it makes sense to see what else you can do.

Gene Tunny  19:25

Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  19:30

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Gene Tunny  20:00

Now back to the show. Yeah, it sounds like you do need a lot of policy intervention to bring this about. And you’re talking about power of measures industrial policy to promote this reshoring or whatever you want to call it. Yeah, I mean, as an economist it, it looks like you’re talking about losing a lot of the potential gains from trade. And I mean, my I’m not sure yet. I mean, I’ll have to read your first book. I do know China is a is a threat. And there is a lot of espionage going on. At the same time, I recognise that a lot of countries engage in espionage. Is China such a threat that we should sacrifice those economic gains? I mean, you’ve made a judgement that they are such a threat that we can forego some of those economic gains? I mean, how do you think about this in in terms of, do you think about it in terms of a cost benefit analysis? Or are the national security concerns primary for you? How do you think about this? How do you weigh everything up?

Jonathan Ward  21:08

Well, I think it’s a little bit of all of that. I mean, on one hand, it’s not my judgement alone, I think this has become pretty commonplace across most allied capitals, the idea that the trading relationship with China or economic engagement is certainly not produce the political outcomes that people saw. And let’s not forget, that was one of the primary reasons for doing it, you can see that for Batum, across the entire discussion in the 90s, ahead of the WTO session, this was not just let’s trade with a dangerous state and hope for the best let’s trade with this state that is an authoritarian state, because we believe it will produce liberalisation, that did not change. So then you have to ask yourself, what are the consequences of that? I mean, the consequences of that is like, sure, I mean, people are making money in Australia, they’re making money in the United States. And it’s why people keep doing it. On the other hand, we’re also on a constant basis, enriching and improving an adversary state that’s declared its intention. So I think, you know, having a full appreciation for what that looks like, through their own eyes, I mean, how the Communist Party of China seeks to, you know, take this well beyond espionage. And that espionage is for a purpose. At the end of the day, they’re reconstructing industries that contribute to national power, and they’re building a military that’s designed for war with the Asia Pacific. So So you know, I think that’s very clearly understood in most capitals at this point. And it’s, it’s, you know, not really a matter of debate, in that sense as to the intentions. It’s just a matter of, you know, they’ve, they’ve told us that we can watch it all happen in front of us. On the other hand, I mean, sure, if you’re, if you’re in the business community, or the trade community, I mean, just looking at, you know, Australian Department of Foreign Affairs and Trade. I mean, one of the first lines on doing business with China, is trade and investment with China is central to Australia’s first to Australia’s future prosperity. So I think this is the contradiction that just lies at the heart of the entire Western world approach to China for the past 40 years was that they used to call it engage, but hedge and the idea was that we would engage economically, but we would hedge militarily, we would build defences against this. And the problem with that is the more you engage economically, the less possible it is to hedge because they’re, they’re reinvesting it into defence. I mean, that’s what they’ve done. They felt, you know, the largest military in the, in the Pacific. And, you know, if they were totally friendly about it, maybe we’d be talking differently, but by the way, they’re not they’ve issued pretty graphic threats to all of our countries at this point. So, you know, so So I think the question is really do the economic gains, you know, in fact, bring security or prosperity. And, to paraphrase Ben Franklin, I mean, those who would trade security for prosperity will probably have neither, in the end. So you know, that’s where I’d be concerned. And I think the real economic activities here, and keep in mind this, it’s going to be industry by industry, at the end of the day, selling raw commodities into China’s industrial base is one form of business, but selling, you know, let’s say equipment that helps them undertake a military buildup or build the surveillance state or any of that, you know, this stuff can be, you know, looked at from the point of view of China’s companies. I mean, you know, the 97 SASAC corporations that make up the bulk of the state owned enterprises, certainly the big ones to the largest ones on the Fortune Global 500. I mean, those are deeply aligned with the state. I mean, they’re owned by the state, and they’re used for strategic programmes. I mean, you take for instance, the islands in the South China Sea, you know, we can debate whether or not that’s a threat, but you know, frankly, I think it’s, it’s generally seen to be one and that was built by China communications construction Corporation. For example, I remember I was at Oxford Business School alongside my PhD and, you know, with with the MBA students, we were doing a leveraged buyout model of an aerospace composite parts company from from from Austria, and it turned out that it was owned by a VIC which is China’s military, aerospace, corporate. Should everyone’s looking at the financials. And I was the only one that said, hey, look, these guys just landed, you know, you know, military aircraft on the islands in the South China Sea this month. Does anyone care about that? That’s the problem with separating pure economics from from political economy or from history is, and as a historian where you have to look at all of this, I think we also have to look at the consequences of blind economic engagement. And that’s the debate we’re all going to be having. I mean, in fairness to Australia, I think your economic rules with relationship with China is relatively clear cut. Whereas, you know, I mean, for us, I mean, our biggest issue is our fortune 1000 is still very deep in the China market, but they’re taking on risks. And I think that’s actually a separate problem, the risks that businesses are taking, and this is something I’ve advised businesses in the US for the past five and a half years on this stuff to help them appreciate the level of risk they’re actually taking on. Because, you know, if you look at the, let’s say, the case studies from what happened after Russia invaded Ukraine, I mean, you know, where does this really go for you, if you’re not de risking, you’re trying to stretch if you’re becoming too dependent? If there’s actually, you know, any kind of conflict, all of that will be lost, as it was in prior periods. We’ve been through this before in history. We’re just going through it again, as they’re blind.

Gene Tunny  26:17

Yeah. I love that. Benjamin Franklin, quote, I think I’ve heard it before, I’m going to have to revisit it and put it in the show notes. I thought that was that was really good. And yeah, highly relevant to the conversation. Just finally, Jonathan, I know, you will have to wrap up soon. You talk about corporates, you write in your book, that American corporate exposure and involvement in China is creating risks and perils to the United States and to global stability. Can you give some specific examples, please? So we know what you’re, you’re driving out there, please?

Jonathan Ward  26:51

Sure. So, you know, one example comes from the Australian strategic policy institute, which I think was one of the first global think tanks to to break ground on the role of Western corporates in, you know, in the forced labour supply chains. And keep in mind this this, you know, the shinjang genocide is something that I believe all of our governments, you know, agree is a genocide. So, so our companies are there, I mean, whether it’s Volkswagen from, from, from Germany, or, you know, Nike in the United States, or Ralph Lauren, or polo, I mean, there’s a pretty big list from SP, and that’s important. So, you know, the participation of our own companies and human rights abuses is something that’s increasingly well documented. But then one of the aspects of this that I highlight that I think is less well appreciated is the role of our companies in civil military fusion, and also in strategic programmes such as the Belt and Road. I mean, I use the example of Caterpillar, which was brought before Congress in the United States at least once because they were marketing themselves as helping China build the Belt and Road and we all kind of understand at this point, the strategic nature of the Belton road and what it seeks to do for, you know, China’s sort of economic hegemony in the region. And to have our multinationals or OEMs, out there building something like that, or to have, for instance, Google, doing artificial intelligence partnerships at Ching Hua University. And then the dean of Ching Hua goes and issues a statement, which talks about how Ching Hua will be a centre for artificial intelligence, human machine combat cooperation for the Central Military Commission of the People’s Republic of China, I mean, again, we are participating in a nation state that is organising itself for, for more in for, you know, human rights atrocities. And all of that is, I think, clearly understood. And, you know, the best example, really, historically was in the 1930s. Many American companies certainly were entangled in the reconstruction of Germany, and you know, with places like Ford and Standard Oil, and IBM most notoriously was, ultimately became, you know, its machines for use in the Holocaust. And Thomas Watson went to Berlin, and I believe 1937, and to speak at the International Chamber of Commerce. And he was given a medal by Adolf Hitler, and the title of his speech was peace through trade. So, you know, we’ve been down this road business. And again, to me, business is not the bad guy here. If business changes course, I mean, arguably, we won the second world war, because all of those great companies ultimately came to the right side of history. And we’re going to need to do that, again. What we didn’t get into today is how the global economic contest is one. This is not simply about containment of China. This is also about hitting the accelerator when we’re about to go through an event in economic history called the Fourth Industrial Revolution. And if the free world can hit that, and accelerate, we’re going to create a gap between ourselves in the authoritarian states, the likes of which we haven’t seen in many years now. And certainly, we gave that gap away. In the post cold war, but if we’re able to do that, if we’re able to accelerate Well, at the same time, ensuring that they do not get onto that track, through engagement with us, we’re going to create, I think, a new economic divergence that will lead to much greater outcomes and resolve some of the geopolitical, you know, dangers on the road ahead. And our companies are gonna have to go out and win a battle for global markets that they barely understand yet, they’re going to be competing against the Chinese state, with enormous quantities of capital in with stolen intellectual property. So you know, that that’s something that, you know, ties right into the strategic competition, I mean, the role of our companies is going to be central to winning or to lose, and if they don’t change course, and in the meantime, they’re taking on risks that I think are increasingly clear, as, for instance, the global focus on Taiwan comes into sharper relief.

Gene Tunny  30:53

Right? Yeah, sorry, I didn’t get around the fourth industrial revolution. But would you have a second just to go? Or just a few minutes to go over what you think those are? The main ways to create that gap? Ah, I mean, he was talking about, essentially, you know, cutting China off from that knowledge from that innovation?

Jonathan Ward  31:12

Well, look, I think if we start to, you know, to restrict engagement along the lines of market access technology and capital, then you’re going to start to see the difference between the democratic systems and, you know, China’s authoritarian, you know, totalitarian system. So we, I think we want to be in a systems competition with them, we don’t want to be in a competition where we’re the r&d base that they produce at scale. I mean, that’s one where we lose on a long enough timeframe. But the the industries themselves have been pretty clearly identified. And I’ll just give you an example. Because I think something that’s worth noting is that, you know, made in China 2025, identified some important industries, and then the chips and science sector in the United States identified another set of industries, that’s almost the same. So you can see that some of the critical industries have already been identified, but from the chips and science Act, to artificial intelligence, machine learning and autonomy, semiconductors, and advanced computer hardware and software, Quantum Information Science and Technology, robotics, automation, advanced manufacturing, advanced communications, technology, and immersive technology, biotechnology, genomic synthetic biology, data storage, advanced energy, advanced materials that go on, but bottom line, it’s going to be these industries of the 2020s and 2030s. It’s also going to be this sort of, you know, Internet of Things and digitization of physical infrastructure. So for instance, I remember being in China, you know, before the pandemic, and, you know, looking at an r&d lab somewhere and you know, Alibaba, smart homes and Huawei smart homes, we’re not going to be using that you’re not going to use them in Australia, and we’re not going to use them in the US. So there’s going to be a natural bifurcation that happens. But then the question is, how do we turn that into productivity and power that has a lot to do with markets, because at the end of the day, the US in a free world and you know, Australia, and everybody we’re, you know, 50 to 60% of global GDP when you add up the free democracies, and we’re 75% of global wealth, which may be even more important. So we have these tremendous advantages. And we’re going to have to restructure the world economy so that it isn’t simply the Communist Party of China does not achieve its vision of victory. And we can do that. There will be costs, but there will also be opportunities, particularly in reintegrating amongst one another.

Gene Tunny  33:24

Okay. Dr. Jonathan Ward, any final observations before we wrap up?

Jonathan Ward  33:29

I think we should leave it there. But thank you for having me. And, you know, great to be with an Australian audience and a huge fan of the country and have many friends.

Gene Tunny  33:38

Excellent. Dr. Johnson would. It’s been great, thank you. Okay, I hope you found that informative and enjoyable. I found it valuable chatting with Jonathan given he has a very different perspective from me on China. While I think we need to proceed cautiously and restrict any technology transfer that could threaten national security, for sure. I’m unsure economic containment is the best approach to China at this stage. As an economist, I have a strong bias towards free trade. That said, I know that China needs to be watched closely. And you may recall, I previously talked with experts about the prospects of an invasion of Taiwan and about the enterprise China model. And I’ll put links to those episodes in the show notes. I acknowledge it’s possible there is a significant threat from China. And I’m very grateful to Jonathan for appearing on the show to talk about his new book. Please consider purchasing a copy of his book find the link in the show notes. Jonathan’s book has received some impressive testimonials, including from former US national security adviser, retired Lieutenant General HR McMaster. Incidentally, McMaster also gave a testimonial for Charles Dunst book, defeating the dictators and you may recall I chatted with Charles about his book in Episode 180. So please check out that episode if you haven’t done so yet. As I’ve noted previously, I think it’s important to cover geopolitics on this show because geopolitical developments can end up having huge economic impacts. As I’m sure you will appreciate, given the impacts that the war in Ukraine has had on fuel prices, among other things. Please let me know what you think about my conversation with Dr. Ward. Do you agree with him that we should adopt an economic containment strategy against China? As always, feel free to email me at contact@economicsexplored.com Thanks for listening. Righto, thanks for listening to this episode of economics explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact at economicsexplored.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.

36:26

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Credits

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