March 7, 2025 • 9 mins
How is China feeling amid the trade war coming out of the United States?
Tariffs have been on and off under Trump's direction, but when it comes to China they have been consistent.
Asia Business Correspondent Peter Lewis talks to Ryan Bridge about what's been happening in China in the aftermath.
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Episode Transcript
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Speaker 1 (00:00):
Peter Lewis is here, our Asia Business correspondent, Peter.
Speaker 2 (00:02):
Good evening, Good evening, Ryan.
Speaker 1 (00:05):
So we have been hearing a lot from the White House,
have been hearing a lot from the Oval Office in
particular about what's going on with this trade war, but
not a lot from your side of the world. So
give it to us straight. How's China feeling. How are
they responding and retaliating to this trade war?
Speaker 2 (00:21):
Well, I mean, in what's been really an incredible week
for tariffs, because they've been on and off and suspended
and then unsuspended. It's hard to keep track. But actually
the tariffs on China have been fairly consistent. There was
the ten percent tariffs that were imposed about a month ago.
They were the first tariffs that were actually that Trump
(00:42):
actually put into effect. China retaliated to that in a
fairly restrained way, and then we had a second round
of tariffs when those tariffs on Mexico and Canada were imposed.
At the same time, another lot of ten percent tariffs
were slapped on Chinese imports, so that takes them up
(01:03):
to twenty percent. It means the effective tariff rate that
China is paying if you take into account also, tariffs
that are still in place from the first Trump administration
is about thirty three percent. China firmly rejects all of this.
It says the issue of fentanole is just an excuse
(01:24):
to try hurt China's economy and trade relations. And the
Chinese embassy in Washington did react with very very strong language.
They said, if the US wants a trade war, a
tariff war, or any other kind of war, we're ready
(01:44):
to fight them to the end. So this is pretty
strong diplomatic language by any stretch, even by the wolf
warrior standards of some of the Chinese diplomats that we've
heard from recently. But they're not going to budge, going
to have you know, every time China slaps on tariffs,
they're going to US slaps on tariffs. They are going
(02:06):
to retaliate. The problem is, eventually they'll run out of
things to retaliate on because the US buys more things
from them than China does. So what China is doing
at the moment is it's really disengaging from the US altogether.
It's building up other markets in Southeast Asia, in emerging markets,
(02:28):
and really is doing far less trade with the US.
Even though it's trade surplus with the world is surging.
It was almost a trillion dollars last year. But their
strategy is really to make sure that they're just not
dependent at all on the US in any way. And
when they do retaliate, they do it in a fairly
(02:49):
surgical way. They put tariffs on a lot of agricultural products,
which tends to come from Republican Midwest States. Farmers there
are sort of up in arms about what's going on.
Speaker 1 (03:04):
Yeah, they are quite cunning with it, aren't they. Now
they've also set a target that China hares around five percent.
This is for GDP for twenty five.
Speaker 2 (03:13):
Yep, that's right. That came up this week's two Sessions,
which is the annual parliamentary meeting that China holds that
the growth target is exactly the same as it was
the last two years, around five percent. Last year, not
surprisingly they met it. In fact, they exceeded it slightly.
They made five point two percent GDP. So this target
(03:36):
they will meet again by hook ard by crook, because
unlike in other economies around the world, this is a
command economy. So when the Chinese government says GDP will
grow about five percent, that's what happens, whereas in other
economies around the West and in New Zealand and elsewhere,
GDP is a sort of an output from all the
(03:58):
economic data. You add up all thestment, all the trade,
or the personal consumption, and then you come up with GDP.
Or China does it the other way around. It says,
this is our GDP, and then it comes up with
all the investments and trade and personal consumption that's required
to meet that, so it will get there. The problem
is China's economy is suffering at the moment, particularly from
(04:22):
the fact that it depends too much on exports and
there's just not enough domestic consumption. And this is the
real issue that China has got to deal with. It's
got to boost domestic consumption. It appears at last the
Chinese leadership realizes that because at the two sessions this
week they made boosting domestic consumption the number one priority
(04:44):
for government, central government, local governments, and the economy Easier
said than done, though people just don't want to spend.
At the moment, they are saving about seventy five percent
of their income in China, and that's partly for structural reasons,
because you lose your job. There is no welfare. There
is not free healthcare either. As people found out during COVID,
(05:09):
the unemployment rate, particularly among young people, is very high.
So confidence is very low, and it's been battered further
by what's happened to the property market. So trying to
get the confidence up and getting people to spend in
China is not as easy as it seems. But that
is definitely the challenge and the problem that the Chinese
(05:29):
leadership has got to solve this year.
Speaker 1 (05:31):
Well, yeah, I mentioned very hard to try and get
the economy going. When you're saving the seventy five percent
of your income, that's incredible stat We know Trump wants
Panama and he wants more American control in the Panama Canal.
And we heard this week about this deal. It was
a Hong Kong based company that's selling I think of
ninety percent stake to an American outfit. They've got the
(05:52):
control of these two key ports in this area through
till twenty forty seven. What was the reason that the
firm wanted to sell in the first place. Do we
know what deal was this?
Speaker 2 (06:05):
Well, this is C. K. Hutchinson, this is Lee Kar
Shing's company. His main company in Hong Kong. They have
a number of subsidiaries, one of them of which is
its port's business.
Speaker 1 (06:16):
And c K.
Speaker 2 (06:17):
Hutchinson operates ports all around the world, not just in Panama,
where it does have two ports, one at the entrance
and one at the end of the Panama Canal. Now,
Trump says that because of that the Panama Canal is
controlled by the Chinese government. Well, C K. Hutchinson is
(06:37):
a publicly listed company here in Hong Kong, a very
large company as well, operates under Hong Kong laws. It's
hard to say that because of that, the Chinese controlled
the Panama Canal. But nevertheless, Lee Karshing, who is a
very very canny operator, is one of the world's richest men,
saw an opportunity here to basically sell the whole global
(07:00):
ports business to this consortium that's being run by black Rock,
a US asset management company. And that's exactly what it's doing.
It's selling ninety percent of its ports business. It's just
maintaining its ports business in Hong Kong and mainland China.
The consultium will have a ninety percent stake on that,
and in return, C K. Hutchinson will get about nineteen
(07:24):
billion dollars in cash, a huge amount of money. It's
a significant part of the company's market cap. Its share
price has absolutely surged in the last couple of days.
It's gone up close to fifty percent as a result
of this deal. But it just cements le Khar Shing's
reputation as once again being a very very canny operator
(07:46):
because he's got out of his ports business. Add a
huge premium to what it was estimated to be worth,
and is also avoided now a lot of political problems
in Panama and with the US government, so very can.
Speaker 1 (08:00):
Deal indeed, But also you would have thought nullifies the
argument that that it somehow was under the control of
mainland China, right otherwise they would let them.
Speaker 2 (08:10):
Sell absolutely, right, absolutely, I mean this notion that somehow
China controls the Panama crown and sets rates that ships
pay is just a nonsense. And you know, in the
fact what Panama does is the rates are the same
for every ship from every country. They're not based upon
(08:33):
where the ships come from. They're based upon the tonnage
and the size of the ship and what you're taking
through the canal. But they're certainly not set by the
Chinese governments. But President Trump is claiming a victory here
and is saying that, you know, his threats to basically
seize the Panama Canal have had some had some reward,
(08:53):
and now he's escalating his rhetoric about taking control of
Greenland annexing Canada as well, so you know there will
be no end to this.
Speaker 1 (09:02):
For more from Hither Duplessy, Allen Drive, listen live to
news talks it'd be from four pm weekdays, or follow
the podcast on iHeartRadio
Peter Lewis is here, our Asia Business correspondent, Peter.
Speaker 2 (00:02):
Good evening, Good evening, Ryan.
Speaker 1 (00:05):
So we have been hearing a lot from the White House,
have been hearing a lot from the Oval Office in
particular about what's going on with this trade war, but
not a lot from your side of the world. So
give it to us straight. How's China feeling. How are
they responding and retaliating to this trade war?
Speaker 2 (00:21):
Well, I mean, in what's been really an incredible week
for tariffs, because they've been on and off and suspended
and then unsuspended. It's hard to keep track. But actually
the tariffs on China have been fairly consistent. There was
the ten percent tariffs that were imposed about a month ago.
They were the first tariffs that were actually that Trump
(00:42):
actually put into effect. China retaliated to that in a
fairly restrained way, and then we had a second round
of tariffs when those tariffs on Mexico and Canada were imposed.
At the same time, another lot of ten percent tariffs
were slapped on Chinese imports, so that takes them up
(01:03):
to twenty percent. It means the effective tariff rate that
China is paying if you take into account also, tariffs
that are still in place from the first Trump administration
is about thirty three percent. China firmly rejects all of this.
It says the issue of fentanole is just an excuse
(01:24):
to try hurt China's economy and trade relations. And the
Chinese embassy in Washington did react with very very strong language.
They said, if the US wants a trade war, a
tariff war, or any other kind of war, we're ready
(01:44):
to fight them to the end. So this is pretty
strong diplomatic language by any stretch, even by the wolf
warrior standards of some of the Chinese diplomats that we've
heard from recently. But they're not going to budge, going
to have you know, every time China slaps on tariffs,
they're going to US slaps on tariffs. They are going
(02:06):
to retaliate. The problem is, eventually they'll run out of
things to retaliate on because the US buys more things
from them than China does. So what China is doing
at the moment is it's really disengaging from the US altogether.
It's building up other markets in Southeast Asia, in emerging markets,
(02:28):
and really is doing far less trade with the US.
Even though it's trade surplus with the world is surging.
It was almost a trillion dollars last year. But their
strategy is really to make sure that they're just not
dependent at all on the US in any way. And
when they do retaliate, they do it in a fairly
(02:49):
surgical way. They put tariffs on a lot of agricultural products,
which tends to come from Republican Midwest States. Farmers there
are sort of up in arms about what's going on.
Speaker 1 (03:04):
Yeah, they are quite cunning with it, aren't they. Now
they've also set a target that China hares around five percent.
This is for GDP for twenty five.
Speaker 2 (03:13):
Yep, that's right. That came up this week's two Sessions,
which is the annual parliamentary meeting that China holds that
the growth target is exactly the same as it was
the last two years, around five percent. Last year, not
surprisingly they met it. In fact, they exceeded it slightly.
They made five point two percent GDP. So this target
(03:36):
they will meet again by hook ard by crook, because
unlike in other economies around the world, this is a
command economy. So when the Chinese government says GDP will
grow about five percent, that's what happens, whereas in other
economies around the West and in New Zealand and elsewhere,
GDP is a sort of an output from all the
(03:58):
economic data. You add up all thestment, all the trade,
or the personal consumption, and then you come up with GDP.
Or China does it the other way around. It says,
this is our GDP, and then it comes up with
all the investments and trade and personal consumption that's required
to meet that, so it will get there. The problem
is China's economy is suffering at the moment, particularly from
(04:22):
the fact that it depends too much on exports and
there's just not enough domestic consumption. And this is the
real issue that China has got to deal with. It's
got to boost domestic consumption. It appears at last the
Chinese leadership realizes that because at the two sessions this
week they made boosting domestic consumption the number one priority
(04:44):
for government, central government, local governments, and the economy Easier
said than done, though people just don't want to spend.
At the moment, they are saving about seventy five percent
of their income in China, and that's partly for structural reasons,
because you lose your job. There is no welfare. There
is not free healthcare either. As people found out during COVID,
(05:09):
the unemployment rate, particularly among young people, is very high.
So confidence is very low, and it's been battered further
by what's happened to the property market. So trying to
get the confidence up and getting people to spend in
China is not as easy as it seems. But that
is definitely the challenge and the problem that the Chinese
(05:29):
leadership has got to solve this year.
Speaker 1 (05:31):
Well, yeah, I mentioned very hard to try and get
the economy going. When you're saving the seventy five percent
of your income, that's incredible stat We know Trump wants
Panama and he wants more American control in the Panama Canal.
And we heard this week about this deal. It was
a Hong Kong based company that's selling I think of
ninety percent stake to an American outfit. They've got the
(05:52):
control of these two key ports in this area through
till twenty forty seven. What was the reason that the
firm wanted to sell in the first place. Do we
know what deal was this?
Speaker 2 (06:05):
Well, this is C. K. Hutchinson, this is Lee Kar
Shing's company. His main company in Hong Kong. They have
a number of subsidiaries, one of them of which is
its port's business.
Speaker 1 (06:16):
And c K.
Speaker 2 (06:17):
Hutchinson operates ports all around the world, not just in Panama,
where it does have two ports, one at the entrance
and one at the end of the Panama Canal. Now,
Trump says that because of that the Panama Canal is
controlled by the Chinese government. Well, C K. Hutchinson is
(06:37):
a publicly listed company here in Hong Kong, a very
large company as well, operates under Hong Kong laws. It's
hard to say that because of that, the Chinese controlled
the Panama Canal. But nevertheless, Lee Karshing, who is a
very very canny operator, is one of the world's richest men,
saw an opportunity here to basically sell the whole global
(07:00):
ports business to this consortium that's being run by black Rock,
a US asset management company. And that's exactly what it's doing.
It's selling ninety percent of its ports business. It's just
maintaining its ports business in Hong Kong and mainland China.
The consultium will have a ninety percent stake on that,
and in return, C K. Hutchinson will get about nineteen
(07:24):
billion dollars in cash, a huge amount of money. It's
a significant part of the company's market cap. Its share
price has absolutely surged in the last couple of days.
It's gone up close to fifty percent as a result
of this deal. But it just cements le Khar Shing's
reputation as once again being a very very canny operator
(07:46):
because he's got out of his ports business. Add a
huge premium to what it was estimated to be worth,
and is also avoided now a lot of political problems
in Panama and with the US government, so very can.
Speaker 1 (08:00):
Deal indeed, But also you would have thought nullifies the
argument that that it somehow was under the control of
mainland China, right otherwise they would let them.
Speaker 2 (08:10):
Sell absolutely, right, absolutely, I mean this notion that somehow
China controls the Panama crown and sets rates that ships
pay is just a nonsense. And you know, in the
fact what Panama does is the rates are the same
for every ship from every country. They're not based upon
(08:33):
where the ships come from. They're based upon the tonnage
and the size of the ship and what you're taking
through the canal. But they're certainly not set by the
Chinese governments. But President Trump is claiming a victory here
and is saying that, you know, his threats to basically
seize the Panama Canal have had some had some reward,
(08:53):
and now he's escalating his rhetoric about taking control of
Greenland annexing Canada as well, so you know there will
be no end to this.
Speaker 1 (09:02):
For more from Hither Duplessy, Allen Drive, listen live to
news talks it'd be from four pm weekdays, or follow
the podcast on iHeartRadio
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