Decoding China's countermeasures in response to US tariffs
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Hello and welcome to World Today, I'm Dinghan in Beijing. Coming up, China is going to impose tariffs regarding 10-15% on some American products. EU leaders have agreed to step up their defense efforts. Economic cooperation and counterterrorism top the agenda of Pakistan's president's ongoing China trip.

Donald Trump, the U.S. president, says an American sovereign wealth fund could acquire TikTok possibly. To listen to this episode again or to catch up on our previous episodes, download our podcast by searching World Today.

China has announced plans to impose tariffs on some U.S. products in a slew of measures to counter U.S. tariffs. The move is a response to the 10% additional tariff imposed by the U.S. on Chinese products.

China will levy additional tariffs of 15% on coal and natural gas imports from the United States and additional 10% tariff on petroleum, agricultural equipment, high-emission vehicles and pickup trucks. China's Ministry of Finance has accused the unilateral U.S. tariffs of violating the rules of the World Trade Organization.

In the meantime, China has also announced a slew of export controls on key minerals and launched an anti-monopoly investigation into U.S. tech giant Google. China has also put a U.S. clothing company and a U.S. biotech company on its unreliable entity list, saying they have interrupted normal transactions with Chinese enterprises.

So joining us now on the line is Liu Zhiqing, Senior Fellow with the Chongyang Institute for Financial Studies, Renmin University of China.

So thank you very much for joining us today, Mr. Liu Zhiqing. Now, first of all, do you agree with this statement from the Chinese government that the unilateral U.S. tariffs on China are not only unhelpful in terms of solving the own problems of the United States, but also undermine the normal economic and trade cooperation between China and the U.S.?

Yes, definitely. I personally fully support the announcement and statement of our government because as we always reiterated before, five or six years before already, that the United States should not take unilateral actions imposing any kind of tariffs on China's product.

This is not a reasonable and not a friendly action because as we know, the cooperation and the inclusiveness and the mutual understandings are the basis for China and the United States.

And actually China has done its best to implement all these obligations and commitment we have agreed with the United States. And also China always try to improve the business environment in order to have more business with the United States in different areas.

So I think the global market has already noticed that China's efforts have done before. And we made a really very great contribution to the global supply chain and the industrial chain in order to get a fair

business conditions. So I think we should fully support our government actions taken in order to deal with all these problems with the United States. Now, as we look at these additional tariffs that the Chinese government has announced to levy on the U.S. products in response,

We are talking about 15% on coal and natural gas imports from the US and 10% on petroleum, agricultural equipment, high-emission vehicles and pickup trucks. As we look at these tariffs, what do you think could be the considerations of the Chinese government in deciding on these tariffs?

I think China's government has really well prepared to make a response in a very reasonable, very considerable, polite way to give the United States what China would take and follow up. Because from the products we have announced, I think the two points should be noted.

The first point is that all these products that we put in the tariff list are non-consumer products. I mean that not for normal consumers in the United States. So that means it will have less effect on the US normal consumers. So this is one point. The second point is this is only one small step.

to make a trial response to the United States, whether we should take further actions if this is only

I have to say this is only the first step for the Chinese government to make a response. So if we can find a final decision on the negotiation, I think all these lists to be imposed on tariffs will be also lifted. So in that way, just try to find a good and a reasonable foundation for further cooperation and negotiations.

Now, with regard to the new export controls on minerals announced by the Chinese government, it is generally believed that these targeted minerals or materials can be used in industrial or defense applications, including, say, the manufacturing of solar cells, etc. Do you think this represents an appropriate countermeasure from China?

Yes, I fully support such actions. Actually, China and Chinese enterprises are suffering a lot from the sanctions from the United States.

for instance, for the chips export control and other high tech related technologies and equipment, even for related personal exchanges are fully prohibited and controlled by the United States only under the so-called national security issue. So this is, I think we should have the right response because all these minus that we put

in the list are very sensitive, very crucial to make

chips and make other defense related products. All these products will be used to threaten China's security. So I should say that we should not supply raw material to the United States to produce the product that to against or even to fight against China. This is wrong. So we should make a real control on this

rare earth and other products to the United States. It depends on the US government whether they can change their policy more friendly to China. Now, in the meantime, Mr. Liu, what do you make of China's planned antitrust or anti-monopoly investigation into Google?

I guess when we talk about Google, a basic fact we need to note here is that it is actually facing widespread anti-monopoly regulatory scrutiny in many markets, including in both the EU and the US itself.

Yes, this is a very good question because antitrust or monopoly policy is not followed by the Chinese government, but this is a global common action. Because Google, I think in the past has done something good to promote or to provide communications

to the world but actually their monopoly actions really has damaged the people's interest especially the consumers interest in different areas for instance in this certain area that they always try to limit to put the google as the first line to be used by their consumers they have some limitations and the second also for the advertisement that they make the

but very strong advertisement in all level, in all different companies and different actions in commercial. So this made Google more favorable conditions to make profits and make more

earns and gaining from these actions. And the third is also very essential for the operational system. For instance, they use only the Android as the operational system. But as we know, the Android already occupied 77% in the

in the smartphone. So this is really an absolute monopoly that gives no chance for other products to replace this

operational system. And the second, the fourth is a very important thing that they make the so-called cloud communications, cloud computer business also have monopoly that made the people that there's more losses and the sufferings. So that's why in the United States, in Europe, in many countries that they have already policy or law measures that against the

Now, during his first term in office, Donald Trump was talking about the US trade deficit with China when he was launching his trade war with China at the time.

Why do you think this time around he has resorted to a different tactic, let's put it this way, by talking about the fentanyl related issues?

you know the drugs is a key problem for the uh trump administration during his campaign for re-election that he already that promised to deal with the drugs and also the migrants issue but the drugs especially related to fentanyl is a long history chinese government has done

Now it's the best made a great contribution to control this drug export. And also some related organization department in the past years have settled down

and all these agreements and regulations with the US partners to make good regulations on the market distribution and export control, and also in details. So I think the United States government has shown their satisfaction that the Chinese counterparty has done its good job to control the things. But Trump didn't care about these facts.

He just used the case list as an excuse to make their own policies for instance to take tariffs on China's products.

kind of the reasons are exclusive. So that's why the Fentanyl is something he tried to use it, but it's wrong. And also it does not help to control the trucks distribution among the America, especially on the borders of America. So in this way, he should try to discuss all this issue with China, with Mexico, Canada, with other countries related in order to make a

more effective control of these drugs import and export, especially for the smuggling. The final question before we let you go, Zhiqing, what do you make of the potential fallout from a second US-China trade war? Regardless of whether Donald Trump is ready for it, do you think American businesses and American consumers are ready for it?

I should answer the second part of the question. I think nobody is getting really well prepared to deal with the so-called second world trade war with China or with the United States because the consumers are very sensitive to deal with all this price hike or inflation and the

difficult time for the supply chain, even including some local government in the United States. Some states government still need a lot of support from China. That's why many states have signed contracts with Chinese partners to have more

good and cheap products from China. So in this way, I should say that China has done its best in order to avoid any serious so-called trade war in the second time because any war in trade business will

harm will damage all the supply chain and also the quality of life of both countries. So nobody like it because only we have losers, no winner, if we have the so-called trade war. A trade war is in nobody's interests, that's for sure. But thank you very much for joining us. Liu Zhiqing, Senior Fellow with the Chongyang Institute for Financial Studies, Renmin University of China.

Coming up, EU leaders agree to step up defense efforts. Stay tuned.

You are listening to World Today, I'm Dinghan in Beijing. European Union leaders have agreed to do more to bolster their defenses by hiking spending and filling gaps in their military capabilities. The bloc on Monday held a summit on defense in the city of Brussels. European Council President Antonio Costa said that a lot has been done already, but the EU needs to do much more.

European Commission President Ursula von der Leyen has also vowed to strengthen the bloc's on-defense industrial base, noting that the bloc has under-invested in defense for many, many years. So joining us now on the line is Dr. Kamal Makili-Aliyev from Raoul Wallenberg Institute of Human Rights and Humanitarian Law in Sweden. Thank you very much for joining us, Kamal.

Thank you for having me. So first of all, let's begin by talking about what the EU has already done in most recent years. Last year's data tells us that EU countries spent an average of 1.9% of GDP on their defense issues, or somewhere around 326 billion euros, representing a 30% increase on 2021.

So what has prompted EU countries to ramp up their defense spending in most recent years? Well, in the recent years, they've been prompted by two very distinct factors.

geopolitical developments. One was the new sort of push from the United States and not in a friendly manner but already in the more coercive manner to spend more on defense, starting with the first Trump administration that actually rallied a lot of European leaders.

But that actually pushed this kind of increase, constant increase in spending in terms of percentage of GDP. And the second was, of course, a Russian military campaign in Ukraine, which have prompted a lot of fears.

that the European defenses have been underinvested for a very long time and that may create a huge security problem for Europe on the whole. So these two factors. So regarding the very first factor that you have mentioned,

I mean, if we check on the rhetoric from US President Donald Trump, he has actually most recently, I guess, suggested that the European NATO members should spend 5% of GDP on defense. How would you look at such a comment or such a demand from Washington? Is that a realistic demand?

Well, you know, this is a very interesting question because it's a little bit speculative in terms of that, well, can US actually demand something, right? And it turns out because of this transatlantic connection and all those ties, sometimes this kind of demands...

are actually in coercive of nature. And we've seen that the first Trump administration actually prompted the Europe moving towards this goal of 2% that the demand before of GDP. And I think it's going to have the same kind of effect. So the Europe is going to start

moving towards 5% GDP for sure. The thing is, realistic in short term, of course not. It cannot be done in the short term. You see it took years to get to almost 2% on average, right? And most of the countries are doing...

good, except for Ireland, maybe. But to reach 5% is going to take a lot of time. But I think in terms of goal setting, yes, it's realistic in the midterm. And especially if the geopolitical trend that we see right now continues. Now, it appears that at this Monday summit on the fence held in Brussels,

EU leaders have largely left this question unanswered with regard to how their planned surge in terms of defense spending could be paid for financially and monetarily. At a time when governments across the EU are facing economic stagnation, including this ongoing budget crisis, even political crisis in both countries,

economic heavyweights of France and Germany. How much room is there, Kamau, when we talk about a further surge in the EU's overall defense spending? Well, actually, the room is there. The willingness to fill that room is a different kind of question. So you would have to, of course, divert the attention

money from certain programs that have been financed more or less by Europe. You have also to make the spending more efficient because there are always questions about how to make the spending, European spending efficient. A lot of times the European spending tends to, so to say, waste a lot of resources on the middlemen or on the

sort of middle-sized institutions that are in between the practical goals that where the money should go and the budget in Brussels.

So, if these measures are taken and if such problems are fixed, so to say, plus if there is a willingness to divert certain spendings that might not be as critical as defense spending in certain geopolitical instances that we've seen in the recent years,

then this is very realistic. But again, it's going to take years just because of how Brussels' bureaucracy and the budget bureaucracy and the political process within the European Union is working. So it's not going to be immediate effect. But one key factor here is willingness to make those kind of changes. And it's anything but certain.

But if we look back at how it was after the first Trump administration, we see that, you know, that the European Union even slowly, but is going to move in that direction. So if I have to make a prognosis, I would say it's not going to be immediate.

But there is going to be that discussion at least and probably the decision to start diverting more financing towards defense spending. Now, will that reach the goal of 5% immediately? No. And if it's even going to set the target as high as that, no. But it will move into that direction for sure. So I guess money and the financial power is just one aspect here.

curtailing or curbing some of the internal bureaucratic issues like you mentioned represents another layer of the question or problem here and I guess there is another question say in terms of

strengthening the EU's own defense industrial base. I guess the ambition has been made clear by people like von der Leyen in terms of fulfilling this critical gap in things like air and defense and ammunition, military transport, transportation, etc. And I guess down the road, a lot of internal hurdles within the EU needs to be overcome. So

The final question before we let you go, Kamau, if, let's suppose, a pro-NATO and EU-friendly American president is once again elected into the White House in the future, is that going to weaken Brussels' resolve to bolster its own defense and, in a bigger picture sense, seek strategic autonomy?

In short, no. But more expanded answer is if you take a look at what happened after the Trump administration ended its first term and then the Biden administration came in, we will see that although the pressure on the Europe has been decreased by the policies that the Biden administration have started to implement instead of Trump's administration,

It's still moved in towards this more spending and towards that goal, even if the Trump administration was not there to push it further. Why? Because that push was actually, you know, even if it was taken very negatively at first,

It also fed into the overall understanding of Europe that the strategic autonomy and strategic defense is something that Europe will need to work on. Will need to work on further and it also been prompted by the war between Russia and Ukraine as well. So we can think that the same logic is going to apply after the Trump administration have finalized its second term.

that Europe is still going to be moving into that general direction. And that also strategically it is so that all the time that Europe starts on some kind of a journey, it continues there dynamically. So I would say no. Okay. Thank you very much for your perspective and for joining us. That was Dr. Kamal Makili-Aliyev joining us from Raoul Wallenberg Institute for Human Rights and Humanitarian Law in Sweden.

You are listening to World Today. I'm Dinghan in Beijing. We'll be back after a short break.

You are listening to World Today. I'm Dinghen in Beijing. Pakistani President Asif Ali's diary is on a five-day state visit to China. Pakistan's foreign ministry has indicated that the president is focusing on economic cooperation and security collaboration during his trip. His trip is coming nearly eight months after Pakistan's Prime Minister Shabazz Sharif paid a trip to China.

So joining us now on the line is Gao Xirui, political science PhD candidate with the University of Hong Kong. Welcome back, Xirui. Thank you. So, Xirui, I think it's pretty fair to say that we are seeing some kind of very, very frequent high-level exchanges, official exchanges between Islamabad and Beijing. What do you think this tells us in general?

Indeed. So on the one hand, it indicates that China and Pakistan are all-weather strategic cooperative partners now. Two countries have built high-level political mutual trust and practical cooperation. But on the other hand, it suggests that there are lots of issues to be accomplished ahead.

So issues to do can be roughly categorized into first, economic and infrastructure, second, defense and security, and third, international cooperation and affairs. So for the economic infrastructure agenda would include the following items. First is China and Pakistan now enters the phase two of China-Pakistan Economic Corridor or CPEC.

Second is two countries need to put more efforts into infrastructure projects. For instance, seeking financial support for the Karakoram Highway realignment project, the further developing the quarter port and airport as a key hub for cross-regional connectivity. Also, some arrangements are needed to strengthen industrial cooperation and promote international cooperation in industrial supply chains. So...

Also for defense and security, Pakistan needs to ensure the safety and security of Chinese personnel, projects, and institutions in Pakistan.

Last but not least, two countries need to exchange opinions and improve cooperation on international affairs such as the issues of Afghanistan and presumably Trump's second administration. Since you have already talked about the second phase of the CPAC, China-Pakistan Economic Corridor, the second phase, according to the Pakistani side,

would involve setting up special economic zones in partnership with China to overhaul Pakistan's agricultural and information technology sectors while trying to attract Chinese corporations to relocate parts of their industries to Pakistan. Now, the Pakistani government is quite confident that CPAC 2.0

would enable this country to become a regional export hub. So what do you think needs to be done if we want to turn that vision into reality? Of course, there are security concerns, infrastructure, but I would like to highlight two points here. First is the Pakistani economy recently fluctuates.

For instance, the GDP growth rates decreased from 6.1% in 2018 to negative 0.094% in 2020 and rebounded to 5 and 6% in 2021-22, then decreased again in 2023.

So the GDP, the whole economy of Pakistan is fluctuating. And the second is financially, Pakistan needs to maintain its financial health. For example, the interest payment absorbs some of its government revenues. So the Islamabad needs to watch its balance table. But there are solutions, however. So first,

Pakistan should enhance its export to China. The Pakistani enterprises can make full use of platforms such as the China International Import Expo to expand their bilateral trade with China.

And second, the Pakistani side should provide Chinese enterprises and investors with better security environment to expand investment in priority sectors for enhancing export-oriented industries. Now, despite the momentum we have seen and acknowledged with regard to the ongoing construction of CPACs,

The security risks that the program is faced with is also undeniable. This very notorious, I would say, separatist Belochestan Liberation Army has been responsible for many attacks on those CPAC-related units.

Chinese-invested projects or programs. So how do you think China and Pakistan can strengthen their security and anti-terrorism cooperation? Thank you. So the terrorist attacks in Pakistan have surged, if you look at data, in 2024 and has reached its new high. So security concerns rise, especially in Palestine and KP provinces in Pakistan.

Two factors that contribute to the turmoil can be identified now. So one is religiously inspired militants. Another is the separatist forces, including the Balochistan Liberation Army and the Balochistan Liberation Front. So their logics are quite the same. The separatist force targets Chinese citizens and interests to coerce Islamabad.

Now we are seeing Pakistan government putting more commitments into anti-terrorism. Some arrangements can be done to further address the problem. So first, the two countries can enhance their cooperation on intelligence gathering and sharing, especially analysis.

The intelligence gathering analysis between Pakistan and Chinese intelligence communities would be challenging for China without cooperation because we need to train security experts who understand Polish language and politics of local tribes.

And analyzing such information in Paloche or Udu or other local languages and dialects would also be challenging, even with the help of AI. So investigation, for example, and identifying such targets are also problematic.

So intelligence gathering and sharing between Pakistan and China is important to address the security problems. The second is allowing Chinese security companies entrance and to play a greater role in this. So Pakistani security troops have experienced large casualties. So allowing Chinese security companies to play a greater role would benefit more.

Also, they need to ensure and develop people's livelihood in Balochistan. The socio-economic environment in Balochistan province is somehow asymmetric compared to Punjab province where the capital, Islamabad, is located. So the worsening security environment would make people less willing to invest there and further make it

more underdevelopment and make it a vicious cycle. Yeah. So, Xirui, we still have about like one minute before we need to finish this dialogue with you today. So the final question before we let you go briefly, some people speculate that because of the security risks that CPAC has encountered,

There has been a subtle shift now in terms of China's approach to engaging with Pakistan. Do you think this kind of analysis or speculation has a point? Why or why not?

Hmm.

Thank you very much for joining us. Gao Xirui, political science PhD candidate with the University of Hong Kong. Coming up, we will analyze some latest economic figures from the Eurozone. We'll be back.

Eurozone inflation unexpectedly accelerated to 2.5% in January from a reading of 2.4% in the previous month. The European Central Bank lowered borrowing costs for the first straight time last week, hitting at even more policy easing. The ECB has warned of headwinds to the Eurozone economy as it cut the interest rate by a quarter point.

The Eurozone economy saw zero growth in the last quarter of 2024, and among the bloc's major economies, Germany's GDP fell by 0.2% in the fourth quarter, while the French economy also shrank slightly. So with regard to the key challenges that the Eurozone is faced with, my colleague Zhao Yang spoke with Professor Yan Liang with Willamette University.

So, Yan, what's the current situation of the Eurozone economy and what are the main challenges do they face? Right. So when we look at the European economy, the major problems are, first of all, the two largest economies, Germany and France. Their economy actually contracted by 0.2 percent in the last quarter of 2024 for Germany and France contracted by 0.4.

So because these are the two largest economy and they are accounting for half of the GDP of the eurozone. So because of these two economies are not doing well. So the entire prospects of the of the eurozone economy is not looking very good.

So we're looking at zero growth in the last quarter of 2024. So in a way, I think this is a wake up call that European economies really need to sort of get their act together. So the ECB has been cutting interest rates and they're now cutting their benchmark interest rate for deposits.

by a quarter point to 2.75, hopefully to reflate and to rekindle the economy. But I think there are many structural issues facing the eurozone economies, and we can talk about some of those challenges are.

And the US President Trump has pledged to impose duties on the EU in the coming days, and the European Commission said it is ready to retaliate, and the European leaders warn of pain from transatlantic trade war. So how will that drag down the European economy, do you think?

Yeah, that would be a major. I think there will be a major impact on the eurozone economy if the Trump's turf does go through. And with the retaliation, it's not going to really help the European economies because Europe does rely a lot on the U.S. when it comes to the export destination. So, for example, the automobile sector.

So if the trade war does escalate, I think it's going to produce loose situation for both Europe and the United States. So I think it's all the more important at this time for Europe to think about diversification and also to bolster the domestic economy. Cutting rates is only one thing, but there are a lot more

the European policymakers can do. So all these issues will continue to weigh on the European economies in addition to the potential tariff. And the ECB president Christine Lagarde said the economy was set to remain weak in the near term, adding that surveys pointed to a continued contraction in manufacturing sector. And she said consumer confidence is fragile. So how do you view all this and why is this situation?

Yeah, I think her assessment is accurate, but also, you know, sombering. I think she's right when it comes to, you know, the consumer sentiment. That is very important to, you know, push the economy forward because, again, the export markets are very uncertain at this point. So they really need to have the domestic consumer demand to help the drive, you know, demand side. But on the other hand, you know, after going through the high inflation and then interest rate hikes and

And, you know, even though the real wage is growing, still, I think the consumers are worried about their jobs. They're worried about their, you know, income growth. And so there will be still time for the consumer sentiment to really improve. Not to mention, as you just alluded to, which is the manufacturing sector has been declining. We have here stories, you know, about Germany's automobile sectors. They're facing...

you know, competitions coming from China. They're looking at the work, weak demand domestically and now the export market uncertainty. So I think all these will weigh on the consumer sentiments. And for the manufacturing sector, it's not helping when they're struggling with high energy costs, the lack of, you know, innovations, the lack of productivity growth. So all these structural issues

In addition, again, to the trade prospect, all these are going to weigh on the economy. So I think Lagore's assessment is sombering. I do think that even though the IMF is projecting better economic growth,

this year and 2026, I think that there's still a lot of obstacles. And so the policymakers need to remain vigilant, for example, in their rate cuts. And also, I think more importantly, in terms of public investment and fiscal expansion in order to help the economies. And confidence is in short supply, as you mentioned. So how could they fix the confidence?

Yeah, I think this is a very difficult question. So for one thing, of course, you want the ECBs to continue to help to ease the economy and give more sort of confidence so then consumers will feel that

On the one hand, inflation has been under control, and on the other hand, the credit situation is being eased. But I think more importantly, I think the fiscal side needs to, especially in countries like Germany, right, they're still having really high level of so-called fiscal discipline. The government is not helping enough to support the demand, and it's not enough in terms of public investments, right?

So I think all these needs to happen, not to mention also policy coordinations among the European economies in terms of really promoting the integration of the market. I think this is very important for Europe because for every single country, if their trade prospect with the United States is somehow undermined,

because of Trump's tariff policies, then they really need to think about how they improve their market integration and trade with each other to improve both the efficiency, but also the complementarities of their economies. So there's a lot, I think, at stake, both at the individual country level, but also at the collective level that they need to coordinate policies, to think about implement industrial policies that are not sort of at the expense of each other.

And as you mentioned, Germany and France both contracted in the last quarter of 2024. So what do you think are behind the setback in, you know, German and France economy?

Right. So if you contrast, you know, Germany and France with countries like Spain, Portugal and Hungary, you know, the latter, the usual sort of the so-called peripheral countries, they actually grow at a much better rate than Germany and France. So I think, you know, the major reasons, again, is these two countries, France and Germany, they're very much reliant on

reliant on manufacturing. They also very rely on their export markets, whereas countries like Spain, they have much stronger service sector and they are less hit by the energy cost and so on and so forth. So I think the reason for Germany and for France to a lesser degree is this energy cost

Again, also the lack of productivity growth in the past few years. Also, the lack of, in German's case, lack of public investments to upgrade their infrastructure, especially the digital infrastructure, right, to promote their digital economy. So I think, you know, these two countries will continue to face some of these struggles. And especially when it comes to, you know, managing the competition with with

with China and with other countries, and also trying to redevelop their industrial sector by innovating, by getting reliable and cheap energies, and also by increasing the public investments to support their infrastructure.

And what do you think is the fix for the Eurozone economy? Talking about competitiveness of Europe, the former ECB chief Mario Draghi in his report calls for the EU to build its own artificial intelligence infrastructure, to double down on industrial policy and finish the work of integrating the single market. And he also calls for the big increase in the investment. But in your opinion, what kind of reform do they need?

Well, I pretty much agree to a large extent the Jargit report. I think for one, again, I emphasize that the public investments in building the infrastructure to allow for more innovations, I think that is very important. So

That I think it's still lagging, right, in countries like Germany. And not only itself has been really self-imposed, right, this kind of fiscal discipline, but it's also in a way constrained other countries to have the

you know, fiscal activism and increased public investment. So I think that's number one. And number two, I think Draghi report, well, I mean, again, going back to this public investment aspect, Draghi has talked about, you know, 800 billion euros investments that is needed for the eurozone. So that is nearly,

the current level is nearly far from enough. And the second point, I think, again, it's at the collective level. I think policy coordinations between countries and build this integrated market, I think that is a second priority that they need to work on because otherwise there's so much regulatory differences and there's so much red tape, it becomes very difficult for businesses to navigate and to maneuver.

Yan Liang, professor of economics with William Mudd University, talking to my colleague Zhao Yang. We'll be back. You're listening to World Today. I'm Dinghan in Beijing. U.S. President Donald Trump has signed an executive order calling for the creation of a sovereign wealth fund. He says the fund could potentially help finance the purchase of TikTok.

U.S. Treasury Secretary Scott Benson says the plan is to monetize assets currently owned by the U.S. government for the American people. More than 90 countries across the globe have sovereign wealth funds. So joining us now in the studio is my colleague Zhao Ying. Hey, Zhao Ying. Thanks for having me. So first of all, can you help explain what is basically a sovereign wealth fund and how such a fund typically operates?

Well, a sovereign wealth fund is essentially a government-owned investment vehicle. It's a way for a country to manage and invest its surplus financial resources, typically accumulated through budget surpluses or natural resource revenues like oil or gas.

And the idea is to take these surpluses and invest them in a diversified portfolio of assets such as stock, bonds, real estate, and even private equity. And the goal is to generate returns that can be used for future priorities like infrastructure, education, or pension, or to stabilize the economy through times of financial stress.

And for instance, Norway's sovereign wealth fund, which is one of the largest in the world, is funded by oil revenues. And it invests in everything from global companies to infrastructure projects. And, you know, these funds are usually set up with an emphasis on long-term growth, which means they're less concerned with short-term returns and more focused on building wealth over decades. And often they're managed independently from the country's day-to-day government operations to keep them

insulated from political pressure. And the U.S. has never had a national sovereign fund before, although in some states like Alaska and Texas, they do have smaller wealth funds tied to oil revenues. But Trump's proposal is different because it would be a federally run investment vehicle. And it raises a lot of questions about how it would work in a country that doesn't really have a surplus to fund it. I see. So,

Why do you think Donald Trump is now interested in creating such a fund? Well, he has been hinting at the idea of a sovereign wealth fund for quite some time, even during his campaign. But now it seems like he sees it as an opportunity to further his economic agenda.

I mean, the idea of a sovereign wealth fund fits into his vision of boosting American economic strength and reducing reliance on foreign entities. He sees it as a way to make direct investments in strategic industries and infrastructure at home. For instance, it's talked about using it to finance major projects like highways, airports, and even medical research.

And I think this could also be part of his America First agenda, especially he mentioned that he could use this fund to possibly acquire TikTok. And that fits into his practice of using government intervention in strategic industries as a tool to

counter foreign rivals, particularly China. But also, I think he may also view this as a political move to solidify his legacy, because sovereign wealth funds are seen in many countries as powerful tools for national prosperity. So if he can successfully create one, it could be seen as a major achievement in his economic policy. But that said, it's clear that

that his proposal is still in very early stages and there's a lot of uncertainty about how or even if it will ever happen. Okay. So talking about his very suggestion here that the funds could be possibly used to acquire or buy TikTok, do you think it is appropriate or even...

realistic for a sovereign wealth fund to be utilized for purchasing a private company like a social media platform.

Well, that's highly unusual because sovereign wealth funds are typically used for long-term investments like stocks, funds, or infrastructure rather than acquiring entire companies, especially private ones. And the goal of these funds is usually to diversify assets and build wealth over time, not to make highly concentrated and potentially risky investments in specific companies.

And from a practical standpoint, TikTok is valued in the tens of millions of dollars and it's unclear whether the U.S. government would get the funds to make such a purchase. And as I said, unlike countries with massive budget surpluses, the U.S. actually runs a deficit. And there are also serious questions about how the government would manage TikTok because

Sovereign wealth funds are designed to be insulated from politics to ensure investments are made for financial instead of ideological reasons. But if the U.S. government owned TikTok, it could face accusations of censorship or bias. And legal experts have also pointed out that the government ownership could clash with First Amendment protections.

So also, there's another serious problem is that many young Americans nowadays, they do not have much trust in US government. So if they perceive TikTok as being controlled by the state, then we just abandon the platform and this could undermine the app's value and make the investment a financial liability.

That's a good point. If TikTok is controlled by the Chinese state, there wouldn't have been so many American youngsters enthusiastic about this platform. The U.S. state as well. Yeah. So like you said earlier, Zhao Ying, sovereign wealth funds are usually backed by budget surpluses, which is not the case for the U.S. government right now. So with that in mind,

Do we have any idea with regard to where the Trump administration plans to get the money needed to feed this fund? Well, that's one of the biggest challenges with this proposal. And one idea Trump has floated is using tariffs. During his campaign, he suggested that revenue from tariffs on countries like China or Mexico could be funneled into the fund. But tariffs are often passed on to consumers in a form of higher prices.

And they've historically generated limited revenue compared to the scale needed for a sovereign wealth fund. And another possibility is leveraging existing government assets. Treasury Secretary Scott Benson mentioned this monetizing the asset side of the U.S. balance sheet, which could mean selling or borrowing against federal properties, land or other holdings.

For instance, the U.S. government owns vast amounts of land and infrastructure, but converting these into liquid assets for a fund would be a complex and politically contentious process. And also there's the idea of repurposing existing agencies like the U.S. International Development Finance Corporation, which currently finances projects in developing countries.

And Trump has reportedly considered converting the DFC into a sovereign wealth fund-like entity. But this would also require significant new funding and congressional approval as well. Thank you for putting this into perspective. That was my colleague Zhao Ying.

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, you can download our podcast by searching World Today. I'm Dinghan in Beijing. Thank you so much for listening. Bye for now.