1 00:00:00,160 --> 00:00:03,600 Speaker 1: Brian Bridge, Katera Lewis's out Asia business correspondent with US 2 00:00:03,600 --> 00:00:06,800 Speaker 1: Now Hi Peter Good evening, Ryan, Now, what is the 3 00:00:06,840 --> 00:00:09,760 Speaker 1: latest from China? This is the trade war one hundred 4 00:00:09,760 --> 00:00:12,440 Speaker 1: and forty five percent higher than what one hundred and 5 00:00:12,480 --> 00:00:14,840 Speaker 1: twenty five we thought, which was bad enough. What's the 6 00:00:14,920 --> 00:00:15,760 Speaker 1: latest from Beijing. 7 00:00:17,000 --> 00:00:20,200 Speaker 2: Well, we're waiting to see if they actually now retaliate 8 00:00:20,960 --> 00:00:23,960 Speaker 2: to that. But to be quite honest, it doesn't matter anymore. 9 00:00:24,040 --> 00:00:27,640 Speaker 2: When you have tariffs of one hundred and forty five percent, 10 00:00:27,760 --> 00:00:29,480 Speaker 2: it doesn't matter if you make them one hundred and 11 00:00:29,480 --> 00:00:34,680 Speaker 2: fifty two hundred, three hundred. In effect, trade between the 12 00:00:34,800 --> 00:00:37,239 Speaker 2: US and China has come to an end. It just 13 00:00:37,280 --> 00:00:41,519 Speaker 2: becomes impossible with those levels of tariffs for companies to 14 00:00:41,560 --> 00:00:44,400 Speaker 2: be able to export between the two countries and still 15 00:00:44,440 --> 00:00:47,279 Speaker 2: make money. So there's going to be a lot of 16 00:00:47,920 --> 00:00:52,240 Speaker 2: consequences from that. If the two sides, someone doesn't bleak 17 00:00:52,280 --> 00:00:56,360 Speaker 2: first and back down. In terms of China, it's going 18 00:00:56,440 --> 00:00:59,800 Speaker 2: to have a big impact on their economy. Could shave 19 00:01:00,440 --> 00:01:04,240 Speaker 2: maybe two to three percent off of GDP, so that 20 00:01:04,319 --> 00:01:08,760 Speaker 2: will slow Chinese growth from five percent maybe down to 21 00:01:08,840 --> 00:01:10,720 Speaker 2: as much as two percent. That will feel like a 22 00:01:10,760 --> 00:01:15,080 Speaker 2: recession in China. Obviously the economy is still growing, but 23 00:01:15,360 --> 00:01:19,520 Speaker 2: such a dramatic slow down that the people of China 24 00:01:19,560 --> 00:01:24,280 Speaker 2: will feel it. But they're being very very sanguine about this. 25 00:01:24,319 --> 00:01:27,440 Speaker 2: They're sort of very supportive of their governments. They think 26 00:01:27,560 --> 00:01:30,800 Speaker 2: Trump is crazy. They like the idea that the government 27 00:01:30,920 --> 00:01:33,760 Speaker 2: is standing up to him and not backing down, and 28 00:01:33,800 --> 00:01:36,000 Speaker 2: they feel like they're all sort of in it together. 29 00:01:36,800 --> 00:01:41,760 Speaker 2: And President chi Jinping is really presenting himself as the 30 00:01:41,880 --> 00:01:44,920 Speaker 2: grown up in the room. This is his opportunity to 31 00:01:45,000 --> 00:01:46,959 Speaker 2: really stand up and say, look, we are now the 32 00:01:47,040 --> 00:01:52,400 Speaker 2: defenders of globalization, of global trade, and we're all in 33 00:01:52,440 --> 00:01:55,559 Speaker 2: this together, and let's stand together on this. 34 00:01:56,080 --> 00:01:59,280 Speaker 1: Interesting that approach. They were trying to get other countries 35 00:01:59,280 --> 00:02:02,520 Speaker 1: on board, and I saw that they were rebuffed by 36 00:02:02,560 --> 00:02:05,200 Speaker 1: Australia during the election campaign there, but trying to get 37 00:02:05,240 --> 00:02:07,640 Speaker 1: other countries on board to form the sort of coalition 38 00:02:07,680 --> 00:02:11,399 Speaker 1: of free trade. Do you think that's been somewhat undermined 39 00:02:11,440 --> 00:02:14,000 Speaker 1: by the fact that Trump has lowered the rate for 40 00:02:14,080 --> 00:02:18,440 Speaker 1: everybody else and done a ninety day pause. Their incentive 41 00:02:18,520 --> 00:02:21,840 Speaker 1: to join China has now been reduced. 42 00:02:23,000 --> 00:02:27,840 Speaker 2: Exactly. I mean, if you take countries like Malaysia for example, 43 00:02:27,960 --> 00:02:31,760 Speaker 2: Malaysia is standing up as the representative of Southeast Asia 44 00:02:32,560 --> 00:02:35,360 Speaker 2: and wants to go to Washington and negotiate with Trump. 45 00:02:35,480 --> 00:02:40,079 Speaker 2: Now Southeast Asia is China's biggest market, but they clearly 46 00:02:40,840 --> 00:02:42,760 Speaker 2: want to go and try and do some sort of deal. 47 00:02:42,960 --> 00:02:47,679 Speaker 2: Vietnam has offered to remove all tariffs on US imports, 48 00:02:47,720 --> 00:02:51,359 Speaker 2: although strangely that was rebuffed by Peter Navarro who said 49 00:02:51,400 --> 00:02:54,760 Speaker 2: that wasn't going to be enough. But nevertheless, they do 50 00:02:54,840 --> 00:02:57,880 Speaker 2: want to they do want to negotiate. And also China 51 00:02:57,960 --> 00:03:01,040 Speaker 2: has rather reduced its influence with some of these countries 52 00:03:01,400 --> 00:03:05,680 Speaker 2: by its aggressive stance in the South China Sea. So Vietnam, 53 00:03:05,720 --> 00:03:09,280 Speaker 2: for example, has a lot of disputes on various islands 54 00:03:09,840 --> 00:03:14,200 Speaker 2: with China that has really disrupted that relationship and made 55 00:03:14,240 --> 00:03:18,600 Speaker 2: it more difficult for countries like Vietnam to align themselves 56 00:03:18,639 --> 00:03:22,520 Speaker 2: too closely with China. So even though there may be 57 00:03:23,280 --> 00:03:26,679 Speaker 2: some sort of reconciliation between the two, they clearly want 58 00:03:26,720 --> 00:03:29,760 Speaker 2: to be part of the US orbit as well, and 59 00:03:29,800 --> 00:03:31,840 Speaker 2: they want to try and do some sort of trade 60 00:03:31,840 --> 00:03:33,400 Speaker 2: deal with the US. 61 00:03:34,120 --> 00:03:36,640 Speaker 1: Now Shujin is going to hit to Southeast Asia. Is 62 00:03:36,680 --> 00:03:38,600 Speaker 1: this a response to the trade war or is this 63 00:03:38,880 --> 00:03:39,840 Speaker 1: a pre plan trip. 64 00:03:41,120 --> 00:03:44,800 Speaker 2: It is partly in response to the trade war. He's 65 00:03:44,840 --> 00:03:48,960 Speaker 2: going to Malaysia, Vietnam, and Cambodia, so you know, three 66 00:03:49,160 --> 00:03:51,640 Speaker 2: sort of key countries. Now, Cambodia is an easy visit 67 00:03:51,720 --> 00:03:55,720 Speaker 2: for him because Cambodia and China are very close, they 68 00:03:55,760 --> 00:03:59,040 Speaker 2: have good relations. Vietnam and Malaysia, as I've just said, 69 00:03:59,080 --> 00:04:02,560 Speaker 2: are going to be more difficult because of geopolitical reasons 70 00:04:03,280 --> 00:04:07,360 Speaker 2: and also for trade as well. But Jijipink wants to 71 00:04:07,400 --> 00:04:11,400 Speaker 2: present himself now as being the sort of the leader 72 00:04:11,440 --> 00:04:15,920 Speaker 2: of global free trade, as the supporter of globalization. If 73 00:04:15,960 --> 00:04:18,960 Speaker 2: America doesn't want to do it anymore, then he's saying 74 00:04:19,000 --> 00:04:22,120 Speaker 2: we'll do it, China will do it. They're trying to 75 00:04:22,400 --> 00:04:25,640 Speaker 2: find ways in effect of cutting sort of the US 76 00:04:25,680 --> 00:04:30,080 Speaker 2: out of the trade relationship, building up relationships elsewhere in 77 00:04:30,120 --> 00:04:33,960 Speaker 2: the global South, in Southeast Asia, in the Middle East, 78 00:04:34,520 --> 00:04:38,880 Speaker 2: and they're saying that, look, our exports are about fifteen 79 00:04:38,920 --> 00:04:42,200 Speaker 2: percent of GDP, but US exports are only about sixteen 80 00:04:42,240 --> 00:04:45,640 Speaker 2: percent of that sort of trading relationship, So we can 81 00:04:45,680 --> 00:04:49,440 Speaker 2: do without the US, we can build up relations elsewhere. 82 00:04:49,760 --> 00:04:52,600 Speaker 2: So that is very much part of the strategy of 83 00:04:52,680 --> 00:04:54,960 Speaker 2: China to try and mitigate the risks from this. 84 00:04:55,920 --> 00:04:58,120 Speaker 1: Just finally, the Asian Development Banks had something to say 85 00:04:58,120 --> 00:04:59,760 Speaker 1: about the terrorists and what they might do to some 86 00:04:59,800 --> 00:05:03,200 Speaker 1: of the smaller countries, and we talked about this last week. 87 00:05:03,240 --> 00:05:07,120 Speaker 1: I think, you know, little countries like Cambodia who are 88 00:05:07,160 --> 00:05:09,040 Speaker 1: never going to be able to buy as much from 89 00:05:09,080 --> 00:05:10,920 Speaker 1: the States as the States is selling to them. I mean, 90 00:05:10,920 --> 00:05:13,960 Speaker 1: it's just completely impractical. What's the Asian Development Bank saying. 91 00:05:14,760 --> 00:05:17,000 Speaker 2: Well, they're saying the same thing that this is really 92 00:05:17,040 --> 00:05:21,000 Speaker 2: going to have a very big impact on poorer countries 93 00:05:21,040 --> 00:05:24,880 Speaker 2: which have been hit very, very hard by these tarots. 94 00:05:24,920 --> 00:05:28,800 Speaker 2: I mean, we're talking about Cambodia, Vietnam with tariffs close 95 00:05:28,839 --> 00:05:33,840 Speaker 2: to fifty percent, mianmar small islands in the Pacific, Vanuatu 96 00:05:34,400 --> 00:05:38,120 Speaker 2: for example, all being hit with very high tarrets. And 97 00:05:38,160 --> 00:05:41,040 Speaker 2: the reason why is because of the strange way in 98 00:05:41,080 --> 00:05:46,680 Speaker 2: which Trump has calculated what he says are basically tariffs, 99 00:05:47,200 --> 00:05:51,840 Speaker 2: and it's done by basically dividing the trade deficit by 100 00:05:51,839 --> 00:05:54,320 Speaker 2: the total amount of trade. So if you're a country 101 00:05:54,720 --> 00:05:58,640 Speaker 2: like Madagascar, for example, then in effect just exports one 102 00:05:58,720 --> 00:06:03,680 Speaker 2: product to the US, you're going to have a fairly 103 00:06:03,760 --> 00:06:08,520 Speaker 2: large trade surplus compared to your overall trade, you get 104 00:06:08,560 --> 00:06:11,800 Speaker 2: whacked really hard. And there's nothing that these countries can 105 00:06:11,880 --> 00:06:16,680 Speaker 2: do to try and turn those trade surpluses into deficits. 106 00:06:16,720 --> 00:06:19,279 Speaker 2: As you say, they just can't afford to buy the 107 00:06:19,320 --> 00:06:23,320 Speaker 2: sort of expensive products of America cells. So this will 108 00:06:23,360 --> 00:06:26,440 Speaker 2: have a very big impact on the GDP of these 109 00:06:26,480 --> 00:06:31,160 Speaker 2: smaller countries. Luckily they've been removed for now, although they 110 00:06:31,200 --> 00:06:33,760 Speaker 2: still have ten percent tariffs on them, which for some 111 00:06:33,800 --> 00:06:37,280 Speaker 2: of these poor nations is still quite a lot. But 112 00:06:37,320 --> 00:06:39,920 Speaker 2: there really is very little they can do in any 113 00:06:39,960 --> 00:06:45,040 Speaker 2: negotiation with Trump to try and turn their trade surpluses 114 00:06:45,279 --> 00:06:48,120 Speaker 2: into either a balanced trade or a deficit. 115 00:06:48,440 --> 00:06:50,840 Speaker 1: Yeah, really tough position for them. Paid to appreciate your time, 116 00:06:50,839 --> 00:06:53,320 Speaker 1: as always, Peter Lewis, Asia Business Correspondent. We'll get to 117 00:06:53,360 --> 00:06:55,960 Speaker 1: Gavin Gray in the UK next seventeen to seven. 118 00:06:56,320 --> 00:06:58,520 Speaker 2: For more from Hither Duplessy Alan Drive. 119 00:06:58,680 --> 00:07:02,000 Speaker 1: Listen live to us Talk said Be from four pm weekdays, 120 00:07:02,200 --> 00:07:04,360 Speaker 1: or follow the podcast on iHeartRadio.