| I’m looking at India from outside the country this week and through a different pair of eyes — Pimco Vice Chairman John Studzinski’s. He sees Prime Minister Narendra Modi as “leader of the transactional movement” in a world where tactical alliances will prevail over ideological alignment.
We are in Singapore, meeting on the sidelines of the Milken Institute’s Asia Summit, where Japan’s resurgence and the private markets boom are drawing more attention than US President Donald Trump’s tariffs or the third government shutdown in his two terms. Mentions of India are also few, mostly alongside “IPO” and “exits.”
Studzinski is a veteran dealmaker, known for his storied client list at Morgan Stanley, HSBC and then Blackstone, restructuring AIG after the global financial crisis and his famous annual dinners at the World Economic Forum. Davos is where I first met him some two decades ago when Modi was still chief minister of Gujarat. We discussed competitive federalism before it became fashionable in India’s policy circles. So I turned to John for some end-of-the-year perspective on how to read Trump’s America, the US-China relationship and India’s place in a world being reset by trade and geopolitical disruptions. The interview has been condensed and lightly edited for clarity. How would you describe the world we live in? The trade disruptions, geopolitical uncertainty — have you seen anything like this before?
I’ve been on Wall Street now for 45 years and every time there’s a macroeconomic crisis or big M&A trend you always hear, “we're living in unprecedented times,” “we’ve not seen this before.” I think what's happening now is truly unprecedented because you have not just one or two things confronting each other, you’ve got four or five things all happening simultaneously.
Donald Trump’s been elected twice, so that has told the rest of the world this is not a one-off. So perhaps America is more conservative, perhaps America is more isolationist, perhaps America is more focused on itself than being sort of caretaker of the world. Juxtapose that with the other major world leader, President Xi in China, who continues the extraordinary legacy of the five-year plan that includes transforming infrastructure, digitization of the economy and aggressive AI development.  John Studzinski during the Bloomberg New Economy Forum in Singapore in 2023. Photographer: Lionel Ng/Bloomberg What’s interesting is you have one world leader who’s disengaging, alongside another world leader who sees this moment as an opportunity to strengthen China’s role in the Global South and with those who’ve historically been seen as adversaries, such as India and Mr. Modi. That’s the leadership front. Then look at technology, where the change is extraordinary because of AI. Two-thirds of the capital expenditures in the US economy are driven by digital and artificial intelligence. Many would say this is a great period in terms of innovation and productivity and you’ve got two men, Jensen Huang and Sam Altman, and their two companies Nvidia and OpenAI, not only driving the world of innovation, but a big portion of the US economy right now. Do these portend tougher times to come? I think we’re seeing a world where people see that they have to be more nimble. And I like to use the phrase “you’ve got to have more discipline in order to have flexibility.” Because if you have discipline with respect to flexibility, you’ll avoid stagflation. If you reverse it and have a lot of flexibility with no discipline, then you can watch economies of the global order start to drift. And I think it’s very important to make that contrast. So there’s this whole uncertainty around trade, tariffs and technology. Coupled with that, you’ve got this whole tension between the market for international talent alongside a complete rethink about the role of immigration. So, in the US, for political and other reasons, there’s a lot of talent that’s looking towards Canada, Europe, the UK and other parts of Europe. The other thing that Pimco is just starting to focus on, in terms of the labor reaction to the tariffs, is that you are seeing American companies decide on whether to pass on the tariff costs to consumers or absorb them in earnings. Companies are now saying they don’t really want to pass all this on. Maybe the place they have the most flexibility is in their labor budget. So, they are looking at their labor budgets in terms of technology, AI, and saying, maybe we can be a little more nimble in terms of labor. If we go back to the global financial crisis in 2008, you remember there were a lot of companies in the crisis that laid off between 5% to 15% of their headcount. But, within three to six months, those companies were effectively producing almost the same amount of profit because people productivity was enhanced. I think you’re going to see an enhancement of labor productivity as a reaction to the tariffs, coupled with the use of AI. India counts labor arbitrage as a strength. Where do you see India’s place in all of this? Do you see the Modi-Trump relationship return to even keel?
If you look around the world, India has had leadership in place. Prime Minister Modi has got a background having been transformational with Gujarat. He is a leader who I think is probably not going anywhere for the foreseeable future. The world has become much more transactional. And if Indira Gandhi was going to be the leader of the Non-Aligned Movement, I think Modi is probably the leader, from an Indian economy point of view, of the transactional movement. He wants India to engage in areas of technology with the US and he’s going to continue to diversify his source of oil and gas even from some places that are sanctioned. I don’t have a crystal ball on how the relationship will evolve. I think America acknowledges the fact that India is very important. I think President Trump is very pragmatic about the US and its relationship with key players around the world. And he will see Mr. Modi as a key player. Transactional is the mode for Modi and others right now. You’re not going to see this notion of alliances. We’re now living in a world where people might have geopolitical alliances, energy alliances, technology alliances, research alliances — but they’re not necessarily all going to be the same players for the same purpose, for the same reason. You can have different alliances to suit different objectives in this world. And it's a much more transactional world. How do you view the US-China relationship?
It’s like a complicated marriage — you know you can't live without them and you have trouble from time to time living with them. The great benefit that’s happened since Liberation Day is the Chinese now understand that they have not been singled out by Washington. They are being treated the way everyone else in the world is being treated in terms of trade and tariffs. I think from that standpoint, they see that as a way to move on and take the long view on a more positive relationship with the United States. And I really do believe that because they’ve told me that. They actually in their heart of hearts feel that President Trump respects China and he respects power. And he knows China’s accomplished something that has to be appreciated. If you were addressing a room full of business leaders what would you tell them to watch for in the next few years?
The lesson that they’ve learned in the last six months is try to become more self-sufficient, independent and nimble. Not putting too many of your eggs in too many other baskets. Be in a position to control your own destiny.
AI is the big question mark. We are all excited about AI, but it’s still, to use an American baseball analogy, in the first or second inning of a nine-inning baseball game. We don’t know really where it’s going to go. A lot of money is being spent on it. I think there’s great concerns about where will all the capital come from to fund the data centers as well as the power that could be required.
The other thing I would counsel people is, remember, technology is on a very steep curve of change and there can be a lot of changes that people aren’t anticipating. Things can be very successful one minute, and they can be eclipsed and sort of overtaken by something else. How tough is it to speak candidly in the age of thin-skinned governments? I think we’re living in a period where there’s so much social media, there’s so much media, that it’s putting more onus on individuals, and particularly corporate leaders, to spend one-on-one time to the extent they can with world leaders. And it’s putting a lot of pressure on world leaders to spend time together because they can’t rely on what they see in the media, because so much of the media, so much of social media, is distorted. The video of President Trump’s roundtable with tech CEOs was an unusual sight to emerge from the US. What does it say about the balance of power between politics and business? I don’t know enough about the dynamics of how these meetings are scheduled, so I don't think I can comment. I will say that most CEOs and most world leaders, when they have a one-to-one conversation, that allows them to be very candid. And as a very wise Chinese leader said to me about 30 years ago, you can always punch me in the face in private, but don’t ever do it in public, because you’ll get a very different reaction. So I think candor still has a place on a one-to-one level. President Trump has enormous respect for people who engage with him one-on-one. Would you say there are too many strongmen leaders in the world right now? Look, we live in a world right now where there are a lot of strong leaders. But also, I could turn that around and say countries get the leaders they deserve. There’s no question you’ve got a lot of big personalities in the world right now. But maybe that allows more checks and balances. Recent actions by the US — infringing on the central bank’s independence, investing in Intel, the golden share in the US Steel-Nippon Steel deal — these would be criticized if done by emerging market economies. The Supreme Court has upheld the independence of the central bank. So, look, I think these are all elements of change. It gets back to my earlier point. If you want to avoid stagflation, you’ve got to go back to a point where you’ve got discipline, but maintain flexibility to be nimble in this environment and have an open mind. I think we are where we are. The country and the economy are resilient. These geopolitical, tariff and regulatory changes President Trump is making, do they mark a permanent shift for the US? Will they survive his term?
As I said earlier, America elected Donald Trump twice. America also has a great respect for a number of things he’s trying to do. He’s focused on the economy. He’s focused on lowering interest rates, whether that’s in his regulatory purview or not. We do know at Pimco that he pays attention to the 10-year Treasury, and that’s good. | 
