China’s Dragon Boat holiday and its consumer confidence
53:15 Share

Hello and welcome to World Today, I am Ding Han in Beijing. Coming up, China sees 119 million trips during the country's Dragon Boat holiday. Boosted by a trade-in program, China saw strong growth in terms of retail sales for consumer products in the first five months of this year.

Dozens of people were killed near AIDS distribution sites in the Gaza Strip. And Mexico's President, Claudia Sheinbaum, hails complete success in the country's first ever judicial elections. To listen to this episode again or to catch up on our previous episodes, you can download our podcast by searching World Today.

First up, it's estimated that China saw 119 million passenger trips during the three-day Dragon Boat Festival, a year-on-year increase of 5.7%.

Official sources indicate that total railway trips in the country reached 47.1 million, a 2.3% increase from the number from the previous year. Road travel recorded 600 million trips nationwide, up by 3.1% year-on-year. Water transport and civil aviation respectively handled 2.9 million and 5.6 million trips.

The Dragon Boat Festival in China took place from May 31 to June 2. So joining us now from Chongqing is Professor Yao Shujie, Chang Kong Professor of Economics with Chongqing University.

Thank you very much for joining us today, Professor Yao. Passenger trips during this year's Dragon Boat Festival holiday are closely watched by economists as a barometer of Chinese consumer confidence, for example. So with that in mind, what do you read from these latest numbers?

I think the latest number is encouraging to some extent because for both travelers, the number of travelers and the amount of spending,

they are on the rise. I think this is encouraging in the way that the holiday is relatively short, so we don't expect a very high jump. But the positive growth number means that consumer confidence is rather resilient and stable.

It's good for the tourism industries. But we would also expect a higher number than the actual statistics. This means that consumer spending or consumer travel are still a little bit conservative.

uh not to the full power of people's you know expectation it is a mix it's a mixed statistics but on the main i i think is cautiously encouraging for me cautiously optimistic so can you put your fingers on some of the key factors that prompted chinese people to travel during this holiday

Yeah, because it is also coincided with the 61st, the children's holiday. So parents, grandparents, they would like to take their young kids for a few days outside their home. They can go as far as nearby provinces and some people even going abroad.

So this is one of the things to take a break for the entire family. And the second factor, I think it means that people's income is also quite stable, although we have some negative news here and there. But on demand, I think people are still willing to spend and they still have the capability to spend.

And certainly it is also a Chinese traditional culture. This boating competition festival on the river, it is quite a nice gathering. It's also the so-called non-material heritage for the Chinese traditions to get out and also to enjoy the traditional demonstrations or show of the Dragon Ball competition.

According to my WeChat friend Circles, I see quite a lot of, including myself, I also go out to watch the bowl competitions in Tongliang, which is about 60 kilometers away from the urban center, which is very interesting. It's probably one of the few times that I see such a competition. I think it is a very nice personal experience.

So the holiday also boosted spending on entertainment in China. According to data from online ticketing platform Maoyan, total box office revenue reached 460 million yuan or nearly 64 million US dollars, surpassing last year's number of 384 million yuan. Why do you think people have spent more on cinemas than they did during last year's holiday?

Yes, there are two principal explanations for this. I think, you know, because only three days holiday, some families, they fear that if they go too far, it may be congested by the trouble congestion. So they don't want to have that kind of experience, giving for such a short holiday.

unless they are going, like myself, just to a short distance of something like 100, 200 kilometers. Otherwise, I think people would think they may take their kids to the cinema or they can go to the cinema by themselves, which is another way of enjoying the holiday.

And the increase in the box office is nearly one-third. Actually, it's about 30% increase. With my ROC calculation, I think it's fairly good. It's actually much better than the domestic tourism or international tourism. So that means that the Chinese economy could be driven by multi factors, not only tourism, but also, you know, entertainment, cultural entertainment, you know, box office.

I think for the producers and for the governments, they should be able to understand how the consumer preferences would be focusing on.

And this time, I think it's not only the tourism that we just mentioned, but also some sort of on-the-spot or the same-city entertainment, which is the box offices, which turned out to be surprisingly good for these three days holiday. Apart from domestic travel, cross-border trips also rose by 2.7% to 5.9 million.

In one direction, a total of 231,000 foreign nationals entered China visa-free during the holiday thanks to China's expanding visa-free policies for citizens from more countries. So what do you make of the significance of the warming of the cross-border trips to China? Yeah, the cross-border trip...

2.7% increase is quite significant for three days holiday. There are some consumers who are financially quite able to spend some money on tourism and also entertainment. The inbound tourism increase is particularly interesting.

It's not necessarily due to the Chinese dragon boat vegetable because foreigners may not have such a vegetable. And this means that foreigners are interested in seeing the Chinese culture.

And the government proactively opened the border to many countries, including the very wealthy countries in Western Europe and the rest of the world. And they are attracted by Chinese free policy, visit free for quite a few days. This is enough for foreigners to spend a short holiday in China

And people are very interested in China in many ways. Not only the conflict between China and the United States has been catching eyes everywhere in the news corner, but also people will be very interested to see how China is doing.

and the construction in China, the living standards improvement in China actually have surprised many foreign tourists. They go back and tell their friends that this country is a very interesting place to see. So I think China is proactively

open the border, give this visa-free treatment to many countries, I think it is a very good policy mechanism. In a bigger picture sense, Professor Yao, what do you think are some of the major issues that are curtailing consumption in China? Are we talking about, for example, the problems with the property sector, or are we talking about

the kind of uncertainties from the China-US trade conflict? Yeah, I mean, consumer spending is probably a very useful barometer for the economic confidence in general and also the consumer behavior in response to uncertainty and risk. I mean, the China-US trade war certainly has seen some negative impulses

to the economy system. Particularly, it will certainly affect the operation of many enterprises and also employment. So this certainly is a factor.

The housing market is undergoing a fairly tough legal adjustment. So people hesitate to buy houses at the moment. And because the housing market is depressed, it does cause lots of other problems because the upstream and the downstream industries are negatively affected.

But I think as time goes by, the Chinese economy is showing some resilience. You know, employment level is still very high. Unemployment is still under control.

And the government has many financial and fiscal policies to stabilize the housing market, to stabilize domestic production. And another factor is that some newly emerging industries are doing very well, particularly the new energy vehicles, the new energy batteries. They are taking the opportunity.

to boost the country's economy and to stabilize the macroeconomic environment and international trade. So on the main, China is facing some adjustment issue, I think. It's not necessarily a longer-term problem. It's a periodic adjustment issue. And if this adjustment is smooth and can be transmitted,

into upgrading the industrial structure, then consumer confidence will come back and consumer consumption will gradually become more and more important to prepare the country's long-term economic development.

So I guess one adjustment against the backdrop of the trade war is that we are actually seeing some local Chinese governments or major businesses in China voicing support to help those tariff-hit Chinese exporters redirect their goods to the domestic market for sale in China domestically.

So I guess there is some work to do in terms of recalibrating the engines for domestic demand. Yes, of course. I mean, this is a very complicated issue also.

First of all, you got to identify who are going to be hit hardest. And secondly, you have to calculate how much support, whether it is a fiscal financial support or taxation support, or whether some sort of industrial transformation, technological support.

I think there are government policies which are allowing out to identify and help those enterprises which are affected by the trade war.

And also, for the country as a whole, you have to look at the domestic market and international market, the balance between the two, and also to look at the different destinations of China's exporting markets. You know, the US certainly is not the most difficult place to go.

But there are some other places which can, to some extent, be diversified too, and also sustain China's export resilience and also export stability. So a complicated set of policy issues and strategies have to be adopted to counter the act.

This kind of trade protectionism. Thank you very much for joining us today. Professor Yao Shujie, Chang Kong Professor of Economics with Chongqing University. You're listening to World Today. Stay tuned. You're listening to World Today. I'm Ding Han in Beijing. China's consumer goods trading program has generated 1.1 trillion yuan or about 152 billion US dollars in sales in this year's first five months.

According to data from China's Ministry of Commerce, digital products, household appliances and vehicles made up the bulk of the transactions over this period. The trading program is part of China's broader efforts to spur domestic demand. In the meantime, retail sales of consumer goods in China rose by 4.7% in the first four months, accelerating from the 4.6% growth in the first quarter.

For more on this, my colleague Zhao Yang spoke with Dr. Yan Liang, professor of economics with Willamette University. So Yan, China's consumer goods trading program has generated over 1 trillion yuan in sales in the first five months. So how has the trading program spurred domestic consumption? And what other policies has China rolled out to support it?

Well, I think the trading program has been very successful. It was implemented by the end of last year and continue on for this year. And as you just mentioned, it generated 1.1 trillion yuan in terms of sales in the first five months.

So as we know that this program was very successful last year and included most of automobiles and some of the household appliances. And this year, the eligible categories has expanded and it now includes many of the electronics products like smartwatch, smartphones and tablets and so on and so forth. So this really helped to spur consumption, especially when consumers are on the

on the margin, deciding whether or not to purchase these products, with these trading programs, it really gives them extra sort of boost to go ahead and purchase it, to make the purchases. I know there are some economists basically argue that these programs would only help to sort of front load the purchases, right? That they would just bring their future purchases to the present. And so it's not going to be very helpful. But I think on the one hand,

with these savings that consumers get on the purchases, they're able to spend the savings on other things. And so that would be still a benefit for the consumers. And also with the current consumption instead of the future unknown consumption, the actual increasing consumption is going to help to boost the business confidence and allow them to expand and hire more workers and generate more jobs. And that would create a positive cycle of more consumption down the road. So I think these trading programs are helpful.

In addition to these direct stimulus on consumption, the government has already rolled out a whole list of policies on the fiscal front, increased pension payouts, increased public investments to grow the economy, reduce taxes for housing transactions, and all of these help. And the monetary policy as well, stabilize the housing market, equity market,

lower market rates. And on top of that, there are employment first strategies, protecting private enterprises. All of these could help to boost income and jobs and therefore stimulate more consumption. And if you take a look at Chinese retail markets, China is probably one of the largest markets in many areas, like vehicles, like smartphones, as you mentioned.

And in the first four months of this year, the retail sales expanded by 4.7% year on year. So how do you look at this growth and which sectors are leading the growth? Right. So definitely, you know, China is a very large consumer market with 400 million middle class consumers.

And this market is also growing. The Chinese consumption is growing at about 9% annually in the past two decades before the COVID in 2019. And so the market is expanding and definitely this trading program has helped to provide some extra

boost for consumption. And so when you look at the sectors that are doing very well for household appliances and audio video equipment, it has gone up by about 25% from January to April this year compared to the same period last year. There's also the furniture, telecommunication equipment, and

others and all of these really are benefited from this trading program. And besides that, I think we're also seeing a lot of service consumption in the services that are really booming like tourism, like dining out and all of these I think showcase that there's a very strong impetus for the Chinese consumption market to continue to grow in a sustainable way.

And the Financial Times recently published an article titled "Don't underestimate the Chinese consumers". So what is your general understanding of the Chinese consumption market?

You know, this paper I think really helped to debunk some of this Western narrative that somehow the Chinese market, the consumption market is collapsing or it's really not catching up with its growth. The matter of fact is, as I mentioned, the Chinese consumption grew at about 9% in the past two decades, which is about three times the world average and way outpaced some other countries in the world.

And so, yes, there were some temporary setback because of COVID, because of housing market adjustments. But still, the long-term trend for Chinese consumption market is it is going to continue to grow. Right now, I think the consumers, the Chinese households still have about $22.2 trillion worth of household deposits.

in the banks. And so I think, you know, how to continue to strengthen the consumer's confidence, how to continue to create well-paid jobs and create income growth would allow these consumers to reduce their so-called precautionary savings and start to spend more on discretionary items. So again, the boosting the

the equity market, the housing market, stabilize these markets will be helpful, continue to create jobs and create income will be super helpful and also provide more supplemental income for the low income families,

provide more social safety net, such as pension, health care, and so on. All of these would help to bolster consumer confidence and increase the consumption demand. And consumption is a means to grow the economy as a way to validate the investment growth. So how do you compare the U.S. consumption model with the Chinese one?

Right. Well, I think what China is trying to promote is consumption, right, to allow families to enjoy more varieties of goods and services and to be able to enjoy higher standard of living. And the consumption growth should be healthy and sustainable, supported by income growth, by wealth improvements and also by strengthened confidence. Whereas in the U.S., I think, you know, consumption accounts for over 70 percent.

percent of the GDP and there's a tendency of overconsumption or the so-called consumerism where the household consumption a lot of times is basically using the credit cards. We know that, you know, the U.S. consumers, they have a large amount of consumer debt.

and because their income has been stagnating, their wage growth is not catching up with price increase. And so they have to resort to a lot of consumer credit. And so that is not a healthy consumption pattern. There's also this sort of a work consumption vicious cycle where consumers have to work long hours to make money in order to spend beyond their means. So I think what China is trying to promote is sustainable and healthy consumption habits

as opposed to consumerism, excessive consumption based on credit growth. And according to McKinsey, consumption confidence in China has stabilized. And also a poll by Deutsche Bank recently found that 52% of Chinese consumers are willing to increase their discretionary spending. So where is the consumer confidence coming from, do you think?

Yeah, I think that's a great question. So yes, the McKinsey report shows that three fourths of the respondents

say that they have optimistic outlook on the economy. And also over 63% of these respondents said that they are confident in their personal and household financial status. So again, I think for one, there is a natural progression of the improvement in confidence because now COVID has been a thing of the past. So the scarring effect started to fade.

And on the other hand, I think the economy is growing at a healthy pace. As we know, this first quarter, the real GDP growth rate was 5.4 percent, despite some of these external uncertainties. And also with a whole list of government policies that consistently signal that the government is trying to promote the economy and also provide more safety net to

the Chinese people, I think all of this helped to boost consumer confidence, especially in the rural areas and also especially in some of the demographic Gen Zs and others, that they've seen a much stronger rebound in their consumer confidence. And so they're willing to spend more, especially in some of the healthy stuff like education, health products, travel, dining hall,

finding out pets, also personal home care products and so on and so forth. So these are likely to see growth according to the McKinsey report.

Yan Liang, professor of economics with Willamette University, talking with my colleague Zhao Yang. Coming up, dozens of people were killed near eight distribution sites in southern Gaza. We'll take a look. You're listening to World Today. To listen to this episode again or to catch up on our previous episodes, download our podcast by searching World Today. I'm Dinghan in Beijing. We'll be back after a short break. ♪

You're back with World Today, I'm Ding Hen in Beijing. Dozens of people have been killed by Israeli forces as they were waiting to collect humanitarian aid at distribution centers in Salzen Gada Strip, according to Gaza's Hamas-run Ministry of Health. The Israeli military says it fired a shot after identifying several suspects and that it is examining reports of casualties.

The incident is the latest episode to ensnare the Israeli-backed initiative to establish aid distribution centers run by U.S. security contractors. Israel's officials claim that the new system will prevent Hamas from seizing the aid, including food, medicine, etc. But aid agencies have criticized Israel for wielding the aid issue as part of the country's military strategy for the Gaza Strip.

Huge crowds of Gazians have headed for the new aid site since the program started last week. So joining us now on the line is Dr. Wang Jing, associate professor with Northwest University in Xi'an, China. Thank you very much for joining us.

Thanks for having me. So, Professor Wong, do you think it is fair to say that we are seeing some chaos or chaotic scenes with regard to this Israeli-backed initiative to build aid distribution sites in Gaza?

I think of course we're actually witnessing the very chaotic scenes in the Galaxy, particularly with regard to the distribution, humanitarian distribution systems.

Because on the one hand, we know that the new so-called Israeli or United States dominated distribution system is a new one. It actually aims to replace the older one that controlled by and managed by United Nations, I mean, United Nations government.

the Palestinian refugee system that has already been operated for more than half a century. So that's why we are witnessing the kind of transitional period. So of course there was something chaotic happened. And on the other hand, we have to admit that Israel, the goods collected by Israel or by United States

are not enough to meet the demands of the daily necessities of the Gaza Strip. And also the goods transferred from Israeli territories into the Gaza Strip, humanitarian goods and assistance to the Gaza Strip collected and distributed by Israel, particularly the Israeli military forces systems, are not enough to meet the demands of the local people. So that's why actually we're witnessing the chaotic

scenarios and maybe more disasters and tragedies will emerge in the future, unfortunately. The United States, not United States, but the United Nations rather, and other major humanitarian relief groups, they have accused the Israeli side of wielding the aid issue as part of the country's military strategy.

And some critics within Israel have also warned that this particular effort we are talking about here could be the first step towards establishing official Israeli rule over the Gaza Strip. Do you think these arguments have a point?

Of course, I think these arguments have points. Israel hopes to replace their dominated relief system, hope to replace United Nations controlled or managed system, should be considered as a very important channel for Israel to

manage or to get the very dominating role inside the Gata Strip because traditionally there were two major we could call it the very management system in the Gata Strip. On the one hand we're talking about what we mean is worse, the Hamas

led the management system in the Gada Strip. Of course, Hamas has already been the dominated role ever since 2007. So it has already been operating there for nearly two decades. And on the other hand, we have mentioned that the United Nations related

relief systems. So this relief system, although Israel accused that, okay, they are synthesized with Hamas, and some of the members of the United Nations system, they are the members of Hamas, but actually they are very well organized and well efficiency operated. So that's why now Israel wanted to have a new one to replace the old one, and this could be in turn be transferred into Israel's own

political, strategic or military influence for the Hamas and for the local organizations and particularly for the local civilians. And that would be dangerous to everybody.

Now, for more than two months before the embarking of this program, the Israeli authorities actually imposed a near total blockade on Gaza, stopping shipments of food, fuel and medicine from entering that very region. Do you think this is a legitimate way to pressure Hamas over the stalled ceasefire talks?

I think if we're looking at the effect, of course, to some extent, the weight of the blockade, the decrease of the allowance of foreign aid into the Gaddafi Strip could be understood as a very new pressure towards Hamas, towards the local people, to separate the local people's support and the Hamas network presence.

So it could be understood as a very strategic manner or strategic way. But I think the other thing more important is that Israel, on the one hand, does not have the capability to collect

enough humanitarian goods. And on the other hand, Israel right now does not have the very enough or efficient system to distribute very fairly of the goods that Israel itself collected.

for the Gaza Strip because we're talking about a system or distribution system or the relief system that should meet the demands of more than two million, I mean nearly two and a half million local people in the Gaza Strip. It's a big number because even Israel just only has nearly 10 million population. So the Gaza Strip have, I mean nearly one fourth or one fifth or nearly one fourth of the population for Israel's own population. So that's why Israel does not

have the enough capabilities that could sustain or maintain the kind of the long-term humanitarian assistance to the gala strip and on the other hand meanwhile i mean israelis their system is heavily dependent upon its military structure in the gala street but for the military structure i mean the idf or the israeli reserve forces their priority is to fight

their priority is the military operations rather than the distribution capabilities. So when it comes to the very daily necessities or the daily duties, what's the Israeli military forces' first concern is how to win the war and how to find out more Hamas members and more Hamas-related suspects rather than how to much more fairly distribute the goods that is collected.

So that's why it further makes things much more difficult to arrange. So that's why I think against this backdrop, Israel now maybe has to find new ways and international society should find new ways to give more pressure to Israel to make it much better and much more efficiently.

So this latest episode of violence in Gaza we are talking about here actually took place just a few days or immediately after the Trump administration rejected the Hamas's response to its latest ceasefire proposal, in which the Washington side suggested a two-month ceasefire in return for the releasing of some hostages held by Hamas,

What do you make of the Hamas concern about the latest proposal? I think it's a kind of interesting thing because on the one hand, United States rejected the proposal from Hamas. And also on the other hand, United States itself proposed some kind of similar plan. So I think United States want to gain the kind of the support

the much more dominant role in this kind of the circle of negotiation, hope to show that, okay, we're still the one on the table and we're still the one now hopes to control everything. So that's why

Hamas' proposal has been rejected, while on the other hand, the United States put forward some kind of a similar plan to Israel and Hamas. And if we are talking about this kind of a plan, it's actually related, as you mentioned, nearly two months long, and also includes some contents such as the release of the hostages who came by Hamas and returned as hostages to Israel, and then

Israel has to, for example, to transfer more humanitarian goods into the Gaza Strip to decrease the tragedies and disasters for the local people. And also maybe that Israel and Hamas will talk about how to end the war and how to withdraw forces in the future. But actually, it's a kind of comprehensive discussion.

plan in the future. But right now, I think the most pressing thing that Israel has to do is how to end the war. And the most pressing thing the United States should do is how to help bridge a very important communication channel, effective communication channel between Israel and Hamas to end the ongoing war right now. So, against this backdrop, United States has this plan. But the plan should be, on the one hand,

permitted or accepted by Israel. And then on the other hand, this plan should be further, be efficiently and effectively implemented by the cooperation both from Hamas and from Israel. That will be much more difficult. So that's why I think maybe United States

has now the kind of idea, but the United States should do more. What the United States is doing is far from enough. The United States should do more, not just from the lip service, but also from more realistic and practical activities rather than just empty words right now.

Thank you very much for joining us. Dr. Wang Jing, Associate Professor with Northwest University in Xi'an, China. Coming up, Iranian diplomat says Iran is poised to dismiss U.S. nuclear proposal. This is World Today. We'll be back. Tehran is set to reject a U.S. nuclear proposal, calling it a quote-unquote non-starter that ignores Iran's core interests.

Iranian diplomatic sources say the deal, delivered via Oman's mediation, is demanding that Iran rather abandon Iranian enrichment without clear sanctions relief.

Tehran insists on its right to peaceful nuclear technology, warning that the U.S. proposal is one-sided and unacceptable. For more, my colleague Xu Yaowen spoke with Dr. Zhang Chuchu, deputy director of the Center for Middle Eastern Studies with Fudan University. Iran's calling the U.S. proposal a non-starter and says it doesn't reflect Tehran's interests at all. So in your view, what are the main reasons behind Iran's rejection and what is Iran's current strategy?

Okay, from my own observation, I think the most important issue here is that Iran rejected the US proposal as a non-starter primarily because it demands a complete halt to uranium enrichment. So Iran views this as a violation of its own sovereignty and also its right to develop civilian use of nuclear technology.

It doesn't want to make this kind of compromise. And also, meanwhile, the proposal's offer of face sanctions relief rather than immediate relief does not align with Iran's need to alleviate its battered economy, because according to Iran, it's most important

demand is to alleviate sanctions. So if this is not going to happen immediately, so according to Iran, then what is the point of this kind of negotiation? And last but not least, Iran's rejection also stems from distrust in US commitments, given the withdrawal from the JCPOA in last administration of Trump.

So, you know, all these experience left Tehran skeptical of agreements lacking guarantees. This round of talks was mediated through Oman rather than through a multilateral platform like the 2015 deal. So do you think this kind of indirect regional mediation is effective compared to, say, previous negotiation efforts?

Well, I think there are two very important points worth noting. So on the one hand, of course, the most important issue here is the disagreement between the United States and Iran. And right now, Oman's mediation involving indirect talks between the two sides has been described as constructive, according to a lot of media reports, with very brief, direct interactions signaling some diplomatic flexibility.

And also Oman is known for its neutral and regional credibility, allow for discreet. So these characteristics actually allow for discreet trust building discussions. But on the other hand, it is also worth noting that Trump is not very interested in multilateralism, internationalization, etc. And he hopes to reach agreements through bilateral negotiation rather than within a multilateral framework.

in order to leaving himself with more transactional space. Dr. Zhang, the U.S. wants Iran to give up uranium enrichment completely and is offering only phased sanctions relief. On the other hand, Iran wants all sanctions lifted right away and insisted on its right to enrich for peaceful purposes. Is there any realistic middle ground between the two sides to reach a deal?

Exactly. As you have mentioned, there are a lot of challenges and hurdles. Among them is the mutual distrust between the two sides.

Personally, I think that a realistic middle ground is still possible because so far both sides are actually willing to reach an agreement. And I would say both sides need such an agreement to a certain extent. So for Iran, it is in real economic difficulties. And also, the resistance force in the Middle East led by Iran has been weakened over the past one year and a half.

So it hopes to lift the economic sanctions it has been subjected to by reaching a sort of agreement in order to have its economic recovery. And for the part of the United States, actually, Trump also hopes to achieve diplomatic achievements.

because actually at the very beginning of his second administration, Trump has promised that he is going to end the conflict between Russia and Ukraine and the Gaza war, but actually he has achieved neither of them. So right now he has hope to achieve certain diplomatic achievements when it comes to the Iran nuclear deal.

So I think there is still room for compromise between the two sides. But now the problem is neither side is willing to compromise and hopes to test each other's bottom line. We know with President Donald Trump back in office and pushing the maximum pressure campaign again, including threats of military action. So do you think there is a real risk of escalation? Where do you see the U.S.-Iran relationship heading from here?

So right now, a lot of media reports have focused on the ongoing process and we have a lot of concerns with what is going on. A lot of people are not very pessimistic, but personally, I think military escalation is not going to be imminent and I don't think there is going to reach the point of a real escalation for conflict or a war.

because at the moment Iran avoids direct provocation. It focuses more on nuclear leverage and proxy activities. And also right now Iran hopes to buy itself more time and to lift its sanctions. And as for the parts of the United States, it faces domestic and international pressure to avoid another Middle East war.

Also, it is important to note that if Israel attacks Iran's nuclear facilities, then it is going to cause a surge of oil price, which is not in the interest of the United States. And last but not least, the United States hopes to maintain the pattern of multi-country competition in the Middle East, and it doesn't want to completely break the existing regional political order by further weakening Iran.

And lastly, Dr. Zhang, the nuclear issue doesn't exist in a vacuum like you have also just briefly mentioned. Tensions with Israel, Saudi Arabia, and Iran's regional allies are all part of the picture. So if these talks break down completely, could they spark a wider regional crisis? And what kind of ripple effects might we see across the Middle East region?

Well, indeed. In fact, a complete breakdown of talks would very likely to spark a wider regional crisis, especially given Iran's tensions and confrontations with Israel.

So right now, I would say that there are going to be several spillover effects. For example, there might be an escalated proxy wars. For instance, Iran would intensify its support for its allies, such as Houthis.

targets the Red Sea shipping, or maybe there is even going to be a tension between Israel and the other forces of the resistance force in the Middle East, including Hezbollah, etc. And I think the second spillover effect might be the oil market disruption, because any sort of new US sanctions or Iranian retaliation would restrict oil exports, and that is going to further increase global

prices and also that is going to have a great impact on the Gulf economies. And meanwhile, there might also be a regional arms race because if like, let's say Iran is going to further enrich

which is uranium, that means that maybe the neighboring countries will also feel in danger. And so, for instance, Saudi Arabia and many of the other regional powers might also want to accelerate their own nuclear ambitions, which is going to destabilize the Middle East even further.

Dr. Zhang Chuchu from Fudan University. Coming up, Mexican president hails complete success in her country's first ever judicial elections. This is World Today. Stay tuned.

You're listening to World Today, I'm Dinghen in Beijing. Mexican President Claudia Sheinbaum has described the country's judicial elections as a complete success. Some 2,600 posts from local ministries to Supreme Court justices were up for grabs on Sunday. This is actually the first time that the country's entire judicial system has been put to the vote.

The elections were the result of a judicial reform pushed by the country's governing Marana Party. So joining us now on the line is Ina Tingen, senior fellow with Taihe Institute and the chairman of the Asian Narratives Substack. Thank you very much for joining us. Always a pleasure, Ding. So why is the country's entire judicial system put to vote as part of this judicial reform?

Well, the Moreno party, and this is under her predecessor, Obrador, believes that the elections are the only way to empower the people, make sure there's accountability and ensuring judges are responsive to the citizens and not entrenched interests.

They, you know, by electing judges, they're going to have to come back to the electorate. And they believe that by having this, it'll be a better system. There are plenty of questions. The turnout was low. But, you know, reform takes time. And the idea is Mexico has not done well with its existing judicial system. So they're trying something new.

So the party says that the reform it is pushing for will reduce corruption and impunity in the judicial system by making it more, like you said, more responsive to public opinions. Can the party achieve these goals?

Well, you know, it's very difficult. I mean, there's no system that can do away with corruption that's in the human being. Systems can try to train and make sure that people are competent at what they do. But, you know, there has to be constant vigilance. People get

They might have started out with very high morals and standards, but as time goes by, they become disillusioned and they become an easy prey. Now, Mexico has a real problem with organized crime. It is rampant. It is highly deadly. There's thousands of killings a year.

And the judiciary hasn't handled it up to this point. So they're trying this. I think, you know, it's one of the few nations, other Bolivia and the United States that elects judges. We'll have to see if it in fact works. They do have all sorts of safeguards in there. You have to be reviewed by a committee to make sure that you, you know, you're not a criminal, that you have legal experience, a good reputation, etc. And then you can put yourself up for election.

You know, there have been cases where the lawyer who represented one of the

most notorious drug dealers is also running in Chihuahua for a judicial position. And, you know, I guess the voters will decide. Yeah. So on the other hand, this reform, this judicial reform is also faced with criticism that it would bulldoze the separation of powers and could have flared the judicial system with candidates who are underqualified or aligned with certain political interests.

interests. How would you look at these concerns? Well, you can have that within a closed system as well. I mean, there's no as I said, there's no system that's impervious to corruption or special interests. The problem with the legal system before was it was very opaque. No one really knew who was being, you know,

You know, elevated or why was it because of connections or money? They really didn't know. And it wasn't producing results. Remember, the the test of any government or any organization is what it is able to do. So if you tried one system, it isn't working. You need to try something else. And this is what she's trying to do.

So, by the way, I know what is your take on this diplomatic squabble sometime we saw we saw sometime last year that has been triggered between the US and Mexico by this judicial reform? Yeah, it's very strange. I mean, the US has judicial elections and for some reason this is upsetting.

the US administration, it's very odd. I can do it, but you can't or something like that. I think

They're trying to say that they have fears that the drug gangs, who in some instances do control entire municipalities or have very, very strong controls, that they will try to elect local judges who are going to, in essence, give them a free pass. There will have to be adjustments as time goes on to make sure that these types of things do not go on. But sticking with a system that you know doesn't work,

is you know is silly you have to make some sort of change uh hopefully this will give mexico what it needs to battle uh the evil forces that are within it but remember end of the day these criminal gangs are operating on the demand from the u.s for drugs and the u.s for some reason feels no obligation to deal with that they just want to blame the people who are poor

and feel that there's an opportunity to supply drugs to the United States. I'm not saying they're good people. I'm not saying they're innocent. I'm just saying that supply and demand is the market, and if you create the demand, you cannot be held innocent for the repercussions.

So more broadly speaking, Ina, what do you make of the challenges if a country wants to move to reform its judicial system in terms of balancing between maintaining its judicial integrity and combating, for example, combating judicial corruption?

Well, there is, as I said, there's no system that's foolproof. It takes ongoing diligence. But there has to be a mix of qualifications and not only in terms of your legal ability. I'm a lawyer. I was very active in the state bar of my estate in the United States. But it has to be qualifications in terms of your personal, in terms of your professional side. And then you still have to look at these people to make sure that they're being responsive.

Now, being responsive to the popular will is not what you want. Just because everyone feels sorry for somebody and says, oh, you should let them go. That's not justice.

And this is a case where you have to have people who have very high standards, good morals and the willingness to make the right decision regardless. That's always been the case for the French system where they say, well, we have judges who are immune to public criticism and nothing can happen to them. They're there for life.

You have to have a mix. The switch is never on or off. It is just a question of adjusting it to make sure that your system in fact works. Mexico has a lot of problems. What it does isn't necessarily going to be the solution for everybody. Thank you very much for putting this into perspective. Ina Tengen, Senior Fellow with Taihe Institute and Chairman of the Asian Narratives Substack.

Unfortunately, that's all the time for this edition of World Today. To listen to this episode again or to catch up on our previous episodes, download our podcast. I'm Ding He in Beijing. Bye for now.