August 16th, 2015
11:09 AM ET

Former U.S. Amb. to China Jon Huntsman: "...when you look at the immediate impact that it had on currencies - you get a sense as to why people are very frustrated with China."

Please credit any usage to “CNN’s FAREED ZAKARIA GPS”

The following transcript is of an interview by host Fareed Zakaria with former Gov. ‎Jon Huntsman (R-UT) (2005-2009), also former U.S. Ambassador to China (1992-1993), and 2012 GOP presidential candidate. They discussed the global market reaction to China's multiple currency devaluations ‎this week, Huntsman’s reactions to the first GOP presidential primary debate, and his reflections on the populist appeal of Donald Trump.

MANDATORY CREDIT for reference and usage: “CNN’s Fareed Zakaria GPS”

VIDEO HIGHLIGHTS

Former GOP hopeful Jon Huntsman on the new contenders.

Huntsman on Trump

TEXT HIGHLIGHTS

Former U.S. Amb. to China Jon Huntsman on why worldwide markets reacted strongly to China's currency devaluations: “China is no longer an average player in the global economy. They're the second largest economy in the world. And when you have the devaluation of 2 percent right off the bat automatically - you're going to have a higher cost burden on the exports from the United States to Asia, and to one of our largest export markets, to say nothing of the impact it's going to have on the region. So when you look at the immediate import that it had on currencies - you get a sense as to why people are very, very frustrated with China."

Huntsman on the challenges this presents China, in terms of net economics: "...the challenge for Xi Jinping is how do you navigate this basket of reforms which you know long-term are probably necessary for the country, but short-term, you've got a messaging problem. And that is, how do you convince the consumer class in China, which soon will be the largest consumer class the world has ever known, that they need to spend more and invest more in the future of the country at a time when all of the indicators would suggest that it's not a very smart thing to be doing right now.‎"

Huntsman's reaction to the first GOP presidential primary debate: “…for all of the negative commentary...the Republican bench is deep; it's well populated; and I think some of the candidates - actually believe in reform. And I think that kind of conversation is desperately needed in this country. And that's what's going to create the race to the top that the American people are waiting for.”

Huntsman on the populist appeal of Donald Trump: “People want a big, loud, brash protest vote right now. That's a good chunk of the Republican Party. And he is that person. And he embodies exactly the anger and the disgust that so many have about politics. He'll either take that to the early primaries and perform well or he'll crash and burn. And with it, you'll see some implications in terms of how the Republican Party, therefore, is able to hold together as a single party without fracturing over time...”

FULL INTERVIEW TRANSCRIPT

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FAREED ZAKARIA, CNN GPS HOST:  On Tuesday, China announced that it had devalued its currency by 2 percent. Immediately, and quite violently, markets around the world reacted.

They weren't pleased. Why? Well, let me try to explain.

Business just got easier for Chinese companies, because their products were suddenly 2 percent cheaper overseas and cheaper still later in the week. And business just got a lot harder for big Western companies. An Apple iPhone just got 2 percent pricier for a Chinese consumer and pricier still by Friday.

Donald Trump, for one, is furious.

But many reasonable people are worried, as well. The devaluation stokes fears about the state of the world's second largest economy and the government's ability to manage it. To understand it all, let me bring in the former U.S. ambassador to China, Jon Huntsman. He, of course, also ran for the Republican nomination for president in 2012.

Welcome, Jon.

JON HUNTSMAN, FORMER AMBASSADOR TO CHINA: Thank you, Fareed. It's a pleasure to be with you.

ZAKARIA: Jon, tell me first, why do you think markets around the world reacted as strongly as they did to this devaluation?

HUNTSMAN: Well, China is no longer an average player in the global economy. They're the second largest economy in the world. And when you have the devaluation of 2 percent right off the bat automatically, as you mentioned, you're going to have a higher cost burden on the exports from the United States to Asia, and to one of our largest export markets, to say nothing of the impact it's going to have on the region.

So when you look at the immediate import that it had on currencies, for example, in Malaysia, Indonesia, and Vietnam - it's creating a firestorm within the region - you get a sense as to why people are very, very frustrated with China.

ZAKARIA: Net-net economically, Jon, this is bad, right? Because it means the Chinese economy is slowing. China has been one of the motors of the global economy. It means that China is moving away from some of the reform models it has had and is moving more toward state control and mercantilism.

Is this going to have an impact, do you think, you know, on global growth, on - for example, you already see prices of commodities and oil have gone down, presumably all partly because China's demand has slowed down.

HUNTSMAN: Well, they're hit by very low commodity prices right now, by exceedingly high inventories, by a population of 1.4 billion people who need to begin investing more into their economy and spending more and consuming more.

And it's very difficult to get your population to invest more in your future when you've just lost 25 percent of the value of the Shanghai or the Shenzhen stock exchanges and people who have, moreover, very little belief in the long-term strength and well-being of your economy.

So the challenge for Xi Jinping is how do you navigate this basket of reforms which you know long-term are probably necessary for the country, but short-term, you've got a messaging problem. And that is, how do you convince the consumer class in China, which soon will be the largest consumer class the world has ever known, that they need to spend more and invest more in the future of the country at a time when all of the indicators would suggest that it's not a very smart thing to be doing right now.

ZAKARIA: Jon, I have to ask you, you must be watching this Republican primary with interest and amusement. You've been through this before.

What was your reaction to the debate? Who did you think did well?

HUNTSMAN: Well, amusement, to be sure, Fareed. It - there is a bit of entertainment value here.

I have to say that, for all of the negative commentary that the Republican bench is deep; it's well populated; and I think some of the candidates actually believe in big, bold ideas - actually believe in reform. And I think that kind of conversation is desperately needed in this country. And that's what's going to create the race to the top that the American people are waiting for.

ZAKARIA: And, Jon, what do you make of the phenomenon of Donald Trump?

HUNTSMAN: Well, this is where we are. And I have to tell you that, having been involved in the last election cycle, I mean personally invested in it as a candidate, people are angry. They're very angry at the political class. They've been angry for two or three election cycles.

And I think what Trump represents is the ultimate loud, brash, big protest vote. It doesn't matter that he doesn't have specific policy proposals. It doesn't matter that he's not as glib and presentable, maybe, as some of the professional politicians.

People want a big, loud, brash protest vote right now. That's a good chunk of the Republican Party. And he is that person. And he embodies exactly the anger and the disgust that so many have about politics.

He'll either take that to the early primaries and perform well or he'll crash and burn. And with it, you'll see some implications in terms of how the Republican Party, therefore, is able to hold together as a single party without fracturing over time, which I think could be a result of all of this, depending upon how things go.

ZAKARIA: Gosh, sobering words. Intelligent and reasoned, as always.

Jon Huntsman, thank you.

HUNTSMAN: Thank you, Fareed. A pleasure being with you.

 

END INTERVIEW


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