March 12, 2025 • 20 mins
Former Australian Prime Minister Malcolm Turnbull this week sparked a fight with Donald Trump when he suggested, in an interview with Bloomberg TV, that the US President’s recent actions could make China a more attractive partner for some countries.
This week, host Chris Bourke asks Bloomberg News’s John Liu about the view from Beijing on the early days of Trump’s second term and how it could affect Australia’s relationship with the two super powers.
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Episode Transcript
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Speaker 1 (00:02):
They should be the anti Trump. I mean, they don't
have to be against him, they just have to be
the opposite of him in terms of style and the
way of dealing with people.
Speaker 2 (00:12):
Ex Prime Minister Malcolm Turnbull kicked off a spat with
Donald Trump this week when he suggested in an interview
with Bloomberg that the US President's behavior is playing right
into Chinese President Shishingping's hands. But what does China make
of all this chaos and how will their responses to
it impact Australia. Hello, I'm Chris Burke, and welcome to
(00:34):
the Bloomberg Australia Podcast. As you just heard, Malcolm Turnbull
had some fighting words for Donald Trump this week when
he spoke to Heidi straud Watson how Sydney studio. Trump
did not take them lying down, taking to his Truth
social platform shortly afterwards to call Turnbull a weak and
ineffective leader who never understood what was going on with China. Today,
(00:57):
to discuss all this and more, I am delighted to
have a special guest who definitely knows what's going on
in China, John lu, who helms Bloomberg's China coverage out
of Beijing. John welcome to the podcast.
Speaker 3 (01:10):
It's great to be here with you, Chris.
Speaker 2 (01:12):
So, just to recap, Turnbull's main point in his interview
with Bloomberg TV was that we were seeing a more
undiluted version of Trump in this second term, and that
would serve as an advantage to Shi Jinping when it
comes to international relations over the next few years. John,
did Turnbulls comments get much attention in China?
Speaker 3 (01:34):
Well, we're in a bit of a weird time in
China at the moment. We have the National People's Congress
happening here in Beijing. It's the annual session of parliament,
and so all of the decision makers in government are
at those meetings or in discussions about economic targets and
planning for the coming year, and so they're away from
(01:54):
their dusks, and so it's relatively hard to tell how
much attention if it were noticed, but I think certainly
there has been a lot of attention being paid in
Beijing to the impact that President Trump's actions have a
relative to American allies in Asia, especially Australia, Taiwan, Japan,
(02:14):
and South Korea.
Speaker 2 (02:16):
Okay, so let's have a listen to what Urnbull actually
said about Trump and g.
Speaker 1 (02:23):
I think China will take advantage, massive advantage of Trump.
What my prediction will be that presidency will aim to
be the exact opposite of Trump. Where Trump is chaotic,
he will be consistent. Where Trump is rude and abusive,
he'll be respectful. Where Trump is erratic, he will be consistent.
And what that will do is build trust with countries.
(02:46):
And there will be many countries who will looking at
China on the one hand and Trump on the other
will find China a more attractive partner.
Speaker 2 (02:54):
John, do you reckon this is what she might actually
be thinking, that the way Trump is alienating his allies
as actually opening up opportunities for China.
Speaker 3 (03:05):
I would say in public, No, in public, I don't
think she or any Chinese government official is going to
so directly state or agree with mister Turnbull. But in private,
I think they totally do. I think in private, even
before Donald Trump won the election at the end of
(03:25):
last year, when we spoke to government officials here in Beijing,
they saw his potential election as both turbulent and volatile
with the threat of tariffs, but also offering this opportunity
that he would through his actions alienate American allies and
in turn give China this opportunity to increase its trading relationships,
(03:46):
its diplomatic ties, and its general standing in the world.
Speaker 2 (03:50):
That's interesting. So would you say that they were prepared
for Trump two point zero, as we're calling this term.
Speaker 3 (04:00):
They were definitely preparing having gone through the first Trump administration.
I think Beijing has a much better idea of what
to expect, has a much better idea of what President
Trump would ultimately like to achieve, and also had a
more i would say, prepared playbook for how to handle
(04:22):
his actions. And I think you're seeing that in terms
of the response, it's much more measured, it's less provocative.
We had this wolf warrior diplomacy in the first term
that has been rolled way back, and I think this
is China trying to take a more constructive role, trying
to trying to seem more constructive on the international stage.
Speaker 2 (04:44):
And believe it or not, it's actually only been fifty
days since Trump started his second term. I don't know
about you, but it feels much longer than that, especially
when I'm working on the global markets stories every morning. Look,
can you give us an idea of what Beijing? Beijing
is thinking about Trump so far, and do you also
(05:06):
have any insights on what kind of feeling there is
among the wider population.
Speaker 3 (05:11):
So I think official them is watching what is happening
with the same shock and surprise that you and I have.
The as you mentioned fifty days, it's really amazing. I
think what was probably unexpected, certainly to me, but I
expect also with Chinese officials is how efficient the second
(05:32):
administration has been, how quickly he's moved from one issue
to the next, that I think would have been unexpected.
The difference. I think when Chinese officials see a blow
up with President Zelenski in the Oval Office, they are
just as shocked as we are, but they see when
they see that, they see an opportunity. They see a
(05:53):
chance for China to improve its standing in the world,
whereas I think many allies around American allies around the
world will have seen that sort of raised concerns for them,
left them wondering if they could depend on the United
States as much as they used to. And so that
is I think where the difference is. And in terms
of the general public, the one story I would tell
you is that Zelenski blow up in the White House
(06:15):
the US embassy actually here in Beijing actually posted President
Trump's social commentary in regards to that meeting, and the
commentary from Chinese social media users was, I would say,
largely supportive of the Ukrainian president, largely critical of Trump,
(06:35):
and so I would say there is not a well
of support for President Trump here in China. And actually
there is sort of a long running joke that goes
all the way back to the first administration that loosely translated,
the point of that joke was to say that though
President Trump is run for election in the US on
this idea of making America great again, his policies might
(06:57):
actually indeed make China greade again.
Speaker 2 (07:00):
Wow. Though MCGA doesn't have quite the same ring as
as MAGA, But that's really interesting. As far as those
comments you were talking about, I was also looking at
the comments on the YouTube interview from Bloomberg's Sorry Bloomberg's
interview with Turnbull this morning, and in a similar vein
a lot of those comments, I think the vast majority
(07:23):
of those comments were supportive of Turnbull and very much
kind of yeah, you go get them. Interesting. So, in
that interview, of course, Turnbull also mentioned the Chinese warships
that have been conducting Live firex's exercises off the coast
of Australia in recent weeks.
Speaker 1 (07:42):
China is perfectly entitled to sail their naval vessels. We
know wherever they like there are in international waters. They're
entitled to have a live far drill. It would have
been much more polite to give more notice, and Australian
government has protested about that. But I think what's the
purpose of it. Well, it's a show of strength. I mean,
(08:04):
China is a giant economy. Its economy has grown, It's
military has grown in line with the size of its economy,
and it has a blue water.
Speaker 2 (08:14):
Navy that's been getting a lot of media attention here too.
Why is it important that China conducts this show of
strength in our regions, as Turnbull referred to it.
Speaker 3 (08:26):
I think what we can say for sure is that
the Chinese military has been modernizing, has been growing stronger,
and as that has happened, we have seen greater manifestations
of that greater strength in terms of action, and the
ship's sailing to Australia around Australia doing the live fire drills.
(08:47):
That that is an example of greater Chinese military ability
and a greater willingness on China's part to show it
to the rest of the world. I think what's hard
to know is how magnificet the timing was. Was this
something that the Chinese military and the Chinese Communist Party
purposefully timed to that Zelenski blow up in the White
(09:12):
House or just the general situation with Europe to emphasize
these concerns and suspicions that have been raised about how
dependable US security partnerships are. I think that's really difficult
to know. But I think moving forward, China has made
very clear it's going to spend more on this military,
(09:32):
It's going to modernize, and I think we should expect
that there will be more live fire drills in the future.
Speaker 2 (09:38):
And we're also just hearing this week that Trump might
go to China next month. What have you heard about
that and what can we expect from a meeting between
the two leaders.
Speaker 3 (09:50):
So I think definitely there is a desire in both
Washington and Beijing to arrange a meeting between the presidents.
I think where it gets tricky is how do we
get from today to that meeting? And the trickiness lies
in the fact that I think in Washington, based on
everything that I've heard from our colleagues in the US,
(10:11):
the White House essentially just wants to as quickly as
possible get Trump on the phone with She. But in Beijing,
it's very clear that that is not what the officialdom
in Beijing wants. They want to work out every single
detail that is going to be discussed and what China
is going to offer and what the United States is
going to give before they get President She on the
(10:32):
phone with Trump. They want to avoid one hundred percent
the risk of some embarrassment for President She as a
result of that call. They would not want something like
what happened with the Zelensky, some sort of blow up
to happen that would be devastating.
Speaker 2 (10:50):
When we come back, how does China plan to navigate
to President Trump's latest trade war? Welcome back to the
Bloomberg Australia Podcast. You're here with me, Chris Burke and
our China chief John lou Australia. Australia has a fairly
(11:10):
uneasy relationship with China, John, So obviously we're navigating our
major economic partnership with Beijing on the one hand, and
on the other we have this major security agreement with
the US, which China clearly doesn't like. But another point
that Turnbull made in this interview was around that economic
(11:33):
partnership and one of the biggest risks to Australia is
a slowdown in the Chinese economy. And you know, obviously
he's not the only one who's been saying that China
is our biggest trading partner. It loves our iron ore
which helped fuel its property boom. So we've been seeing
the trade war intensifire between China and the US, with
(11:54):
Trump lifting tariffs to twenty percent and China last week
announcing retaliatory have its the tariffs on goods, including agricultural exports.
So how do you think what's your take on how
Beijing is so far approaching this latest trade war.
Speaker 3 (12:11):
So if you go around Beijing and you talk to officials,
there is a broad thinking that everything that Trump is
doing is a step towards some grand bargain with China
he would like to strike. And so all of the
tariffs that have been announced, that have been put in place,
they are essentially a bargaining position. And so what you
(12:31):
see in terms of the response from Beijing is a
more reserved response, a more measured response, and they're doing
that to make sure that the door can stay open
to negotiations. And so I think the real question for
Beijing now is how high do the tariffs need to get.
How much response does Beijing need to undertake before those
(12:55):
negotiations start. And so that I think is important to
the Chinese economy because the Chinese economy right now is
that this really awkward turning point where the property market
has struggled, consumption has been weak, and the one really
good thing about the economy has been exports. And now
you have Trump and the tariffs, and that could really
(13:16):
undermine exports. If the tariffs go high enough, you could
really see a big impact on Chinese growth this year.
And so the government is trying to balance, you know,
how much it retaliates versus how much it can take
in terms of tariffs and the impact on its trade.
Speaker 2 (13:36):
How patient can they afford to be though, I mean,
as you say, these tariffs could get even higher down
the line, They're taking a very measured approach, which I imagine
is is supported by investors both locally and globally. But
what say Trump ramps up tariffs down the line. Do
(13:57):
you think this approach could change.
Speaker 3 (14:01):
I think the approach will certainly change because the Chinese
manufacturing has a very significant price advantage, and so maybe
at ten percent, maybe at twenty percent, the prices that
Chinese goods, how much cheaper they are, they can overcome
potentially that margin in terms of a tariff. But if
they go higher and higher and higher, I think they
(14:23):
will Chinese goods will become less and less competitive. But
at the same time, I think it would be naive
to think that putting up tariffs as high as sixty
seventy eighty percent on Chinese goods would not have a
reciprocal negative impact on the American economy. And so there
is like a back and forth where everybody is getting
hurt in this trade war, and so I think China
(14:45):
will hold out as long as possible. I think China
will hold out longer than what we've seen with the
Canadians and the Mexicans and potentially even the Europeans. But
at some point they will have to come to the table,
not only because it's good for China, but ultimately because
it's good for the United States as well.
Speaker 2 (15:03):
So we have we have an election that's that's going
to be well announced any day now, that has to
be held by mid May. This is all going to
be obviously a big talking point Trump and China and Tariff's.
Our economy has just posted the biggest growth in two years,
although it's it's still kind of on a on a
(15:26):
fairly fragile, fragile footing with consumer spending and inflation still
hanging around. But look, I'd be interested to know what
do you think that a more restrained Chinese trading partner
means for us, for Australia, which is which is often
touted as the world's most China dependent economy.
Speaker 3 (15:48):
So I think the Chinese economy is going through restructuring,
and we've seen that at the National People's Congress this
year where they made increasing consume domestic consumer demas and
the number one priority for the government in twenty twenty five.
And so I think if the Chinese government were to
have its way, if it were to be successful, the
(16:11):
amount of economic growth that comes from investment, from real estate,
from exports would all proportionally go down, and the amount
of growth from consumers domestic demand would go significantly higher.
And I think that would mean a different kind of
demand for Australian goods. So maybe less steel, but more
(16:35):
agricultural goods, more manufacture good more Australian wine. I think
that is how the change in the mix of exports
for Australia I think would be impacted. But again, this
is a big question about how successful will China be
in making this restructuring and making this turn the property
(16:56):
market we've talked about that's really in the dul drums.
Consumer has been saving more and spending less because property
prices are down, because the stock market is down, because
Trump is threatening the economy of tariffs. People are pessimistic,
and so how successful China can be in turning things
it's a big question mark at the moment.
Speaker 2 (17:17):
So as you as you say, it's very much a
wait and see moment. And is all this chaos and
noise just a way of Trump getting his deals done?
And is this all going to Are we all going
to look back on this in a few months and
just wonder what on earth was going on? I don't know.
(17:38):
What do you think, John, how do you see the
world in four years time?
Speaker 3 (17:43):
I look at it in terms of the first Trump administration,
where there was a lot of bickering and back and
forth between the Trump and administration and Chijing Ping's government,
and ultimately what happened was a trade deal that was
just more buying of agricultural goods and energy from the
(18:04):
United States or slightly lower tariffs on Chinese goods. And
so for all the talk of a great deal that
Trump was going to do in the first term, it
never really materialized. So I think I think the likely
outcome of all of these tariffs and all of this
bombbast in the second term will again be a deal
(18:25):
that is not quite as impressive as Trump had wished
to have done during his second term. So probably something
where China buys more goods from the United States, it
has maybe some promise about the currency, and then the
US lowers some of its terriffs. But we still end
(18:45):
up in a place where American tariffs on Chinese goods
were higher than they were at the start of Trump's
second term. We still live in a world where trade
is much sedated because of all these terrors. We live
in a world where there's more questioning amongst American allies
of how much they can depend on the United States.
(19:07):
And we live in a world where Chinese influence has increased,
both in terms of its military projection and in terms
of its soft power when it comes to things like
AI and video games and cartoon movies.
Speaker 2 (19:21):
All of these things, John, thank you so much for
your valuable insights. We may have to get you back
on in a few months to discuss what the situation
is looking like. Then, thank you for listening to the
Bloomberg Australia podcast I'm Chris Burke. This episode was recorded
on the traditional lands of the Wurundjuri people of the
Kouland nation. That was produced by Paul Allen and edited
(19:44):
by Rebecca Jones and Ainsley Chandler. Don't forget to follow
and review the show wherever you get your podcasts, and
sign up to Bloomberg's free daily newsletter, Australia Briefing. Go
to Bloomberg dot com to subscribe.
They should be the anti Trump. I mean, they don't
have to be against him, they just have to be
the opposite of him in terms of style and the
way of dealing with people.
Speaker 2 (00:12):
Ex Prime Minister Malcolm Turnbull kicked off a spat with
Donald Trump this week when he suggested in an interview
with Bloomberg that the US President's behavior is playing right
into Chinese President Shishingping's hands. But what does China make
of all this chaos and how will their responses to
it impact Australia. Hello, I'm Chris Burke, and welcome to
(00:34):
the Bloomberg Australia Podcast. As you just heard, Malcolm Turnbull
had some fighting words for Donald Trump this week when
he spoke to Heidi straud Watson how Sydney studio. Trump
did not take them lying down, taking to his Truth
social platform shortly afterwards to call Turnbull a weak and
ineffective leader who never understood what was going on with China. Today,
(00:57):
to discuss all this and more, I am delighted to
have a special guest who definitely knows what's going on
in China, John lu, who helms Bloomberg's China coverage out
of Beijing. John welcome to the podcast.
Speaker 3 (01:10):
It's great to be here with you, Chris.
Speaker 2 (01:12):
So, just to recap, Turnbull's main point in his interview
with Bloomberg TV was that we were seeing a more
undiluted version of Trump in this second term, and that
would serve as an advantage to Shi Jinping when it
comes to international relations over the next few years. John,
did Turnbulls comments get much attention in China?
Speaker 3 (01:34):
Well, we're in a bit of a weird time in
China at the moment. We have the National People's Congress
happening here in Beijing. It's the annual session of parliament,
and so all of the decision makers in government are
at those meetings or in discussions about economic targets and
planning for the coming year, and so they're away from
(01:54):
their dusks, and so it's relatively hard to tell how
much attention if it were noticed, but I think certainly
there has been a lot of attention being paid in
Beijing to the impact that President Trump's actions have a
relative to American allies in Asia, especially Australia, Taiwan, Japan,
(02:14):
and South Korea.
Speaker 2 (02:16):
Okay, so let's have a listen to what Urnbull actually
said about Trump and g.
Speaker 1 (02:23):
I think China will take advantage, massive advantage of Trump.
What my prediction will be that presidency will aim to
be the exact opposite of Trump. Where Trump is chaotic,
he will be consistent. Where Trump is rude and abusive,
he'll be respectful. Where Trump is erratic, he will be consistent.
And what that will do is build trust with countries.
(02:46):
And there will be many countries who will looking at
China on the one hand and Trump on the other
will find China a more attractive partner.
Speaker 2 (02:54):
John, do you reckon this is what she might actually
be thinking, that the way Trump is alienating his allies
as actually opening up opportunities for China.
Speaker 3 (03:05):
I would say in public, No, in public, I don't
think she or any Chinese government official is going to
so directly state or agree with mister Turnbull. But in private,
I think they totally do. I think in private, even
before Donald Trump won the election at the end of
(03:25):
last year, when we spoke to government officials here in Beijing,
they saw his potential election as both turbulent and volatile
with the threat of tariffs, but also offering this opportunity
that he would through his actions alienate American allies and
in turn give China this opportunity to increase its trading relationships,
(03:46):
its diplomatic ties, and its general standing in the world.
Speaker 2 (03:50):
That's interesting. So would you say that they were prepared
for Trump two point zero, as we're calling this term.
Speaker 3 (04:00):
They were definitely preparing having gone through the first Trump administration.
I think Beijing has a much better idea of what
to expect, has a much better idea of what President
Trump would ultimately like to achieve, and also had a
more i would say, prepared playbook for how to handle
(04:22):
his actions. And I think you're seeing that in terms
of the response, it's much more measured, it's less provocative.
We had this wolf warrior diplomacy in the first term
that has been rolled way back, and I think this
is China trying to take a more constructive role, trying
to trying to seem more constructive on the international stage.
Speaker 2 (04:44):
And believe it or not, it's actually only been fifty
days since Trump started his second term. I don't know
about you, but it feels much longer than that, especially
when I'm working on the global markets stories every morning. Look,
can you give us an idea of what Beijing? Beijing
is thinking about Trump so far, and do you also
(05:06):
have any insights on what kind of feeling there is
among the wider population.
Speaker 3 (05:11):
So I think official them is watching what is happening
with the same shock and surprise that you and I have.
The as you mentioned fifty days, it's really amazing. I
think what was probably unexpected, certainly to me, but I
expect also with Chinese officials is how efficient the second
(05:32):
administration has been, how quickly he's moved from one issue
to the next, that I think would have been unexpected.
The difference. I think when Chinese officials see a blow
up with President Zelenski in the Oval Office, they are
just as shocked as we are, but they see when
they see that, they see an opportunity. They see a
(05:53):
chance for China to improve its standing in the world,
whereas I think many allies around American allies around the
world will have seen that sort of raised concerns for them,
left them wondering if they could depend on the United
States as much as they used to. And so that
is I think where the difference is. And in terms
of the general public, the one story I would tell
you is that Zelenski blow up in the White House
(06:15):
the US embassy actually here in Beijing actually posted President
Trump's social commentary in regards to that meeting, and the
commentary from Chinese social media users was, I would say,
largely supportive of the Ukrainian president, largely critical of Trump,
(06:35):
and so I would say there is not a well
of support for President Trump here in China. And actually
there is sort of a long running joke that goes
all the way back to the first administration that loosely translated,
the point of that joke was to say that though
President Trump is run for election in the US on
this idea of making America great again, his policies might
(06:57):
actually indeed make China greade again.
Speaker 2 (07:00):
Wow. Though MCGA doesn't have quite the same ring as
as MAGA, But that's really interesting. As far as those
comments you were talking about, I was also looking at
the comments on the YouTube interview from Bloomberg's Sorry Bloomberg's
interview with Turnbull this morning, and in a similar vein
a lot of those comments, I think the vast majority
(07:23):
of those comments were supportive of Turnbull and very much
kind of yeah, you go get them. Interesting. So, in
that interview, of course, Turnbull also mentioned the Chinese warships
that have been conducting Live firex's exercises off the coast
of Australia in recent weeks.
Speaker 1 (07:42):
China is perfectly entitled to sail their naval vessels. We
know wherever they like there are in international waters. They're
entitled to have a live far drill. It would have
been much more polite to give more notice, and Australian
government has protested about that. But I think what's the
purpose of it. Well, it's a show of strength. I mean,
(08:04):
China is a giant economy. Its economy has grown, It's
military has grown in line with the size of its economy,
and it has a blue water.
Speaker 2 (08:14):
Navy that's been getting a lot of media attention here too.
Why is it important that China conducts this show of
strength in our regions, as Turnbull referred to it.
Speaker 3 (08:26):
I think what we can say for sure is that
the Chinese military has been modernizing, has been growing stronger,
and as that has happened, we have seen greater manifestations
of that greater strength in terms of action, and the
ship's sailing to Australia around Australia doing the live fire drills.
(08:47):
That that is an example of greater Chinese military ability
and a greater willingness on China's part to show it
to the rest of the world. I think what's hard
to know is how magnificet the timing was. Was this
something that the Chinese military and the Chinese Communist Party
purposefully timed to that Zelenski blow up in the White
(09:12):
House or just the general situation with Europe to emphasize
these concerns and suspicions that have been raised about how
dependable US security partnerships are. I think that's really difficult
to know. But I think moving forward, China has made
very clear it's going to spend more on this military,
(09:32):
It's going to modernize, and I think we should expect
that there will be more live fire drills in the future.
Speaker 2 (09:38):
And we're also just hearing this week that Trump might
go to China next month. What have you heard about
that and what can we expect from a meeting between
the two leaders.
Speaker 3 (09:50):
So I think definitely there is a desire in both
Washington and Beijing to arrange a meeting between the presidents.
I think where it gets tricky is how do we
get from today to that meeting? And the trickiness lies
in the fact that I think in Washington, based on
everything that I've heard from our colleagues in the US,
(10:11):
the White House essentially just wants to as quickly as
possible get Trump on the phone with She. But in Beijing,
it's very clear that that is not what the officialdom
in Beijing wants. They want to work out every single
detail that is going to be discussed and what China
is going to offer and what the United States is
going to give before they get President She on the
(10:32):
phone with Trump. They want to avoid one hundred percent
the risk of some embarrassment for President She as a
result of that call. They would not want something like
what happened with the Zelensky, some sort of blow up
to happen that would be devastating.
Speaker 2 (10:50):
When we come back, how does China plan to navigate
to President Trump's latest trade war? Welcome back to the
Bloomberg Australia Podcast. You're here with me, Chris Burke and
our China chief John lou Australia. Australia has a fairly
(11:10):
uneasy relationship with China, John, So obviously we're navigating our
major economic partnership with Beijing on the one hand, and
on the other we have this major security agreement with
the US, which China clearly doesn't like. But another point
that Turnbull made in this interview was around that economic
(11:33):
partnership and one of the biggest risks to Australia is
a slowdown in the Chinese economy. And you know, obviously
he's not the only one who's been saying that China
is our biggest trading partner. It loves our iron ore
which helped fuel its property boom. So we've been seeing
the trade war intensifire between China and the US, with
(11:54):
Trump lifting tariffs to twenty percent and China last week
announcing retaliatory have its the tariffs on goods, including agricultural exports.
So how do you think what's your take on how
Beijing is so far approaching this latest trade war.
Speaker 3 (12:11):
So if you go around Beijing and you talk to officials,
there is a broad thinking that everything that Trump is
doing is a step towards some grand bargain with China
he would like to strike. And so all of the
tariffs that have been announced, that have been put in place,
they are essentially a bargaining position. And so what you
(12:31):
see in terms of the response from Beijing is a
more reserved response, a more measured response, and they're doing
that to make sure that the door can stay open
to negotiations. And so I think the real question for
Beijing now is how high do the tariffs need to get.
How much response does Beijing need to undertake before those
(12:55):
negotiations start. And so that I think is important to
the Chinese economy because the Chinese economy right now is
that this really awkward turning point where the property market
has struggled, consumption has been weak, and the one really
good thing about the economy has been exports. And now
you have Trump and the tariffs, and that could really
(13:16):
undermine exports. If the tariffs go high enough, you could
really see a big impact on Chinese growth this year.
And so the government is trying to balance, you know,
how much it retaliates versus how much it can take
in terms of tariffs and the impact on its trade.
Speaker 2 (13:36):
How patient can they afford to be though, I mean,
as you say, these tariffs could get even higher down
the line, They're taking a very measured approach, which I imagine
is is supported by investors both locally and globally. But
what say Trump ramps up tariffs down the line. Do
(13:57):
you think this approach could change.
Speaker 3 (14:01):
I think the approach will certainly change because the Chinese
manufacturing has a very significant price advantage, and so maybe
at ten percent, maybe at twenty percent, the prices that
Chinese goods, how much cheaper they are, they can overcome
potentially that margin in terms of a tariff. But if
they go higher and higher and higher, I think they
(14:23):
will Chinese goods will become less and less competitive. But
at the same time, I think it would be naive
to think that putting up tariffs as high as sixty
seventy eighty percent on Chinese goods would not have a
reciprocal negative impact on the American economy. And so there
is like a back and forth where everybody is getting
hurt in this trade war, and so I think China
(14:45):
will hold out as long as possible. I think China
will hold out longer than what we've seen with the
Canadians and the Mexicans and potentially even the Europeans. But
at some point they will have to come to the table,
not only because it's good for China, but ultimately because
it's good for the United States as well.
Speaker 2 (15:03):
So we have we have an election that's that's going
to be well announced any day now, that has to
be held by mid May. This is all going to
be obviously a big talking point Trump and China and Tariff's.
Our economy has just posted the biggest growth in two years,
although it's it's still kind of on a on a
(15:26):
fairly fragile, fragile footing with consumer spending and inflation still
hanging around. But look, I'd be interested to know what
do you think that a more restrained Chinese trading partner
means for us, for Australia, which is which is often
touted as the world's most China dependent economy.
Speaker 3 (15:48):
So I think the Chinese economy is going through restructuring,
and we've seen that at the National People's Congress this
year where they made increasing consume domestic consumer demas and
the number one priority for the government in twenty twenty five.
And so I think if the Chinese government were to
have its way, if it were to be successful, the
(16:11):
amount of economic growth that comes from investment, from real estate,
from exports would all proportionally go down, and the amount
of growth from consumers domestic demand would go significantly higher.
And I think that would mean a different kind of
demand for Australian goods. So maybe less steel, but more
(16:35):
agricultural goods, more manufacture good more Australian wine. I think
that is how the change in the mix of exports
for Australia I think would be impacted. But again, this
is a big question about how successful will China be
in making this restructuring and making this turn the property
(16:56):
market we've talked about that's really in the dul drums.
Consumer has been saving more and spending less because property
prices are down, because the stock market is down, because
Trump is threatening the economy of tariffs. People are pessimistic,
and so how successful China can be in turning things
it's a big question mark at the moment.
Speaker 2 (17:17):
So as you as you say, it's very much a
wait and see moment. And is all this chaos and
noise just a way of Trump getting his deals done?
And is this all going to Are we all going
to look back on this in a few months and
just wonder what on earth was going on? I don't know.
(17:38):
What do you think, John, how do you see the
world in four years time?
Speaker 3 (17:43):
I look at it in terms of the first Trump administration,
where there was a lot of bickering and back and
forth between the Trump and administration and Chijing Ping's government,
and ultimately what happened was a trade deal that was
just more buying of agricultural goods and energy from the
(18:04):
United States or slightly lower tariffs on Chinese goods. And
so for all the talk of a great deal that
Trump was going to do in the first term, it
never really materialized. So I think I think the likely
outcome of all of these tariffs and all of this
bombbast in the second term will again be a deal
(18:25):
that is not quite as impressive as Trump had wished
to have done during his second term. So probably something
where China buys more goods from the United States, it
has maybe some promise about the currency, and then the
US lowers some of its terriffs. But we still end
(18:45):
up in a place where American tariffs on Chinese goods
were higher than they were at the start of Trump's
second term. We still live in a world where trade
is much sedated because of all these terrors. We live
in a world where there's more questioning amongst American allies
of how much they can depend on the United States.
(19:07):
And we live in a world where Chinese influence has increased,
both in terms of its military projection and in terms
of its soft power when it comes to things like
AI and video games and cartoon movies.
Speaker 2 (19:21):
All of these things, John, thank you so much for
your valuable insights. We may have to get you back
on in a few months to discuss what the situation
is looking like. Then, thank you for listening to the
Bloomberg Australia podcast I'm Chris Burke. This episode was recorded
on the traditional lands of the Wurundjuri people of the
Kouland nation. That was produced by Paul Allen and edited
(19:44):
by Rebecca Jones and Ainsley Chandler. Don't forget to follow
and review the show wherever you get your podcasts, and
sign up to Bloomberg's free daily newsletter, Australia Briefing. Go
to Bloomberg dot com to subscribe.
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