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Speaker 1: Peter Lewis is here, our Asia Business correspondent, Peter.

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Speaker 2: Good evening, Good evening, Ryan.

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Speaker 1: So we have been hearing a lot from the White House,

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Speaker 1: have been hearing a lot from the Oval Office in

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Speaker 1: particular about what's going on with this trade war, but

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Speaker 1: not a lot from your side of the world. So

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Speaker 1: give it to us straight. How's China feeling. How are

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Speaker 1: they responding and retaliating to this trade war?

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Speaker 2: Well, I mean, in what's been really an incredible week

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Speaker 2: for tariffs, because they've been on and off and suspended

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Speaker 2: and then unsuspended. It's hard to keep track. But actually

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Speaker 2: the tariffs on China have been fairly consistent. There was

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Speaker 2: the ten percent tariffs that were imposed about a month ago.

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Speaker 2: They were the first tariffs that were actually that Trump

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Speaker 2: actually put into effect. China retaliated to that in a

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Speaker 2: fairly restrained way, and then we had a second round

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Speaker 2: of tariffs when those tariffs on Mexico and Canada were imposed.

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Speaker 2: At the same time, another lot of ten percent tariffs

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Speaker 2: were slapped on Chinese imports, so that takes them up

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Speaker 2: to twenty percent. It means the effective tariff rate that

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Speaker 2: China is paying if you take into account also, tariffs

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Speaker 2: that are still in place from the first Trump administration

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Speaker 2: is about thirty three percent. China firmly rejects all of this.

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Speaker 2: It says the issue of fentanole is just an excuse

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Speaker 2: to try hurt China's economy and trade relations. And the

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Speaker 2: Chinese embassy in Washington did react with very very strong language.

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Speaker 2: They said, if the US wants a trade war, a

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Speaker 2: tariff war, or any other kind of war, we're ready

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Speaker 2: to fight them to the end. So this is pretty

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Speaker 2: strong diplomatic language by any stretch, even by the wolf

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Speaker 2: warrior standards of some of the Chinese diplomats that we've

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Speaker 2: heard from recently. But they're not going to budge, going

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Speaker 2: to have you know, every time China slaps on tariffs,

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Speaker 2: they're going to US slaps on tariffs. They are going

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Speaker 2: to retaliate. The problem is, eventually they'll run out of

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Speaker 2: things to retaliate on because the US buys more things

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Speaker 2: from them than China does. So what China is doing

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Speaker 2: at the moment is it's really disengaging from the US altogether.

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Speaker 2: It's building up other markets in Southeast Asia, in emerging markets,

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Speaker 2: and really is doing far less trade with the US.

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Speaker 2: Even though it's trade surplus with the world is surging.

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Speaker 2: It was almost a trillion dollars last year. But their

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Speaker 2: strategy is really to make sure that they're just not

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Speaker 2: dependent at all on the US in any way. And

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Speaker 2: when they do retaliate, they do it in a fairly

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Speaker 2: surgical way. They put tariffs on a lot of agricultural products,

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Speaker 2: which tends to come from Republican Midwest States. Farmers there

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Speaker 2: are sort of up in arms about what's going on.

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Speaker 1: Yeah, they are quite cunning with it, aren't they. Now

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Speaker 1: they've also set a target that China hares around five percent.

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Speaker 1: This is for GDP for twenty five.

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Speaker 2: Yep, that's right. That came up this week's two Sessions,

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Speaker 2: which is the annual parliamentary meeting that China holds that

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Speaker 2: the growth target is exactly the same as it was

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Speaker 2: the last two years, around five percent. Last year, not

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Speaker 2: surprisingly they met it. In fact, they exceeded it slightly.

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Speaker 2: They made five point two percent GDP. So this target

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Speaker 2: they will meet again by hook ard by crook, because

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Speaker 2: unlike in other economies around the world, this is a

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Speaker 2: command economy. So when the Chinese government says GDP will

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Speaker 2: grow about five percent, that's what happens, whereas in other

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Speaker 2: economies around the West and in New Zealand and elsewhere,

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Speaker 2: GDP is a sort of an output from all the

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Speaker 2: economic data. You add up all thestment, all the trade,

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Speaker 2: or the personal consumption, and then you come up with GDP.

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Speaker 2: Or China does it the other way around. It says,

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Speaker 2: this is our GDP, and then it comes up with

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Speaker 2: all the investments and trade and personal consumption that's required

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Speaker 2: to meet that, so it will get there. The problem

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Speaker 2: is China's economy is suffering at the moment, particularly from

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Speaker 2: the fact that it depends too much on exports and

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Speaker 2: there's just not enough domestic consumption. And this is the

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Speaker 2: real issue that China has got to deal with. It's

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Speaker 2: got to boost domestic consumption. It appears at last the

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Speaker 2: Chinese leadership realizes that because at the two sessions this

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Speaker 2: week they made boosting domestic consumption the number one priority

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Speaker 2: for government, central government, local governments, and the economy Easier

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Speaker 2: said than done, though people just don't want to spend.

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Speaker 2: At the moment, they are saving about seventy five percent

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Speaker 2: of their income in China, and that's partly for structural reasons,

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Speaker 2: because you lose your job. There is no welfare. There

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Speaker 2: is not free healthcare either. As people found out during COVID,

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Speaker 2: the unemployment rate, particularly among young people, is very high.

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Speaker 2: So confidence is very low, and it's been battered further

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Speaker 2: by what's happened to the property market. So trying to

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Speaker 2: get the confidence up and getting people to spend in

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Speaker 2: China is not as easy as it seems. But that

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Speaker 2: is definitely the challenge and the problem that the Chinese

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Speaker 2: leadership has got to solve this year.

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Speaker 1: Well, yeah, I mentioned very hard to try and get

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Speaker 1: the economy going. When you're saving the seventy five percent

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Speaker 1: of your income, that's incredible stat We know Trump wants

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Speaker 1: Panama and he wants more American control in the Panama Canal.

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Speaker 1: And we heard this week about this deal. It was

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Speaker 1: a Hong Kong based company that's selling I think of

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Speaker 1: ninety percent stake to an American outfit. They've got the

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Speaker 1: control of these two key ports in this area through

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Speaker 1: till twenty forty seven. What was the reason that the

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Speaker 1: firm wanted to sell in the first place. Do we

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Speaker 1: know what deal was this?

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Speaker 2: Well, this is C. K. Hutchinson, this is Lee Kar

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Speaker 2: Shing's company. His main company in Hong Kong. They have

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Speaker 2: a number of subsidiaries, one of them of which is

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Speaker 2: its port's business.

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Speaker 1: And c K.

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Speaker 2: Hutchinson operates ports all around the world, not just in Panama,

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Speaker 2: where it does have two ports, one at the entrance

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Speaker 2: and one at the end of the Panama Canal. Now,

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Speaker 2: Trump says that because of that the Panama Canal is

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Speaker 2: controlled by the Chinese government. Well, C K. Hutchinson is

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Speaker 2: a publicly listed company here in Hong Kong, a very

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Speaker 2: large company as well, operates under Hong Kong laws. It's

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Speaker 2: hard to say that because of that, the Chinese controlled

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Speaker 2: the Panama Canal. But nevertheless, Lee Karshing, who is a

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Speaker 2: very very canny operator, is one of the world's richest men,

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Speaker 2: saw an opportunity here to basically sell the whole global

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Speaker 2: ports business to this consortium that's being run by black Rock,

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Speaker 2: a US asset management company. And that's exactly what it's doing.

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Speaker 2: It's selling ninety percent of its ports business. It's just

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Speaker 2: maintaining its ports business in Hong Kong and mainland China.

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Speaker 2: The consultium will have a ninety percent stake on that,

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Speaker 2: and in return, C K. Hutchinson will get about nineteen

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Speaker 2: billion dollars in cash, a huge amount of money. It's

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Speaker 2: a significant part of the company's market cap. Its share

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Speaker 2: price has absolutely surged in the last couple of days.

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Speaker 2: It's gone up close to fifty percent as a result

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Speaker 2: of this deal. But it just cements le Khar Shing's

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Speaker 2: reputation as once again being a very very canny operator

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Speaker 2: because he's got out of his ports business. Add a

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Speaker 2: huge premium to what it was estimated to be worth,

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Speaker 2: and is also avoided now a lot of political problems

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Speaker 2: in Panama and with the US government, so very can.

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Speaker 1: Deal indeed, But also you would have thought nullifies the

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Speaker 1: argument that that it somehow was under the control of

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Speaker 1: mainland China, right otherwise they would let them.

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Speaker 2: Sell absolutely, right, absolutely, I mean this notion that somehow

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Speaker 2: China controls the Panama crown and sets rates that ships

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Speaker 2: pay is just a nonsense. And you know, in the

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Speaker 2: fact what Panama does is the rates are the same

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Speaker 2: for every ship from every country. They're not based upon

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Speaker 2: where the ships come from. They're based upon the tonnage

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Speaker 2: and the size of the ship and what you're taking

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Speaker 2: through the canal. But they're certainly not set by the

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Speaker 2: Chinese governments. But President Trump is claiming a victory here

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Speaker 2: and is saying that, you know, his threats to basically

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Speaker 2: seize the Panama Canal have had some had some reward,

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Speaker 2: and now he's escalating his rhetoric about taking control of

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Speaker 2: Greenland annexing Canada as well, so you know there will

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Speaker 2: be no end to this.

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