Is the US closing its doors to international students?
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Hello and welcome to World Today, I'm Zhao Ying. Coming up, Chinese Premier Li Xiang calls for upholding multilateral trading system at the ASEAN-China GCC summit. How significant is this message in advising global protectionism and unilateralism?

The Trump administration orders a pause on new student visa interviews as it weighs social media vetting. Is the U.S. effectively closing its doors to international students? Chinese Premier Li Cheng has called on China, the Association of Southeast Asian Nations and the Gulf Cooperation Council countries to jointly forge an example in openness and development cooperation.

He made the remarks when addressing the inaugural ASEAN-China GCC summit held in Kuala Lumpur, the capital of Malaysia. He said China is ready to deepen strategic alignment with the ASEAN and the GCC, enhance coordination of macroeconomic policies, and strengthen collaboration in industrial specialization.

The Chinese premier also urged the three sides to create a model of cross-civilization integration, noting that the three sides are home to vibrant civilizations and share Asian values of peace, cooperation, openness, and inclusiveness.

For more, we are joined by Liu Baocheng, Director of the Center for International Business Ethics at University of International Business and Economics. Premier Li emphasized the importance of upholding the multilateral trading system with the WTO at its core.

How significant is this commitment in the face of rising protectionism and unilateralism globally? And what concrete steps might China, ASEAN and GCC countries take to reinforce the multilateral system?

So far, it is globally recognized WTO is the only multilateral organization that is there to contribute significantly to the increase of global trade and enhance the prosperity of each of its member countries.

But now it is being endangered by the rising protectionism, geoeconomic fragmentation, and particularly the unilateral sanctions by the United States. And not to mention it's there to fracture its appellate system. Permanently, clearly refers to the current global geopolitics.

and economic landscape in which highly deterministic and predictability and transparency needs to be enhanced in order to counterweight the decoupling trade. Now, the concrete steps could be

that there should be a joint efforts to propose the reform of WTO as a multilateral trading system, particularly in the dispute settlement body, and also to promote the digital commerce across members and then

And the tariff commitment by each of its member countries, for example, United States commits only 3.3% of the tariff, needs to be maintained in order to give the business community a high level of security.

And then he's there also to promote the cross-regional coordination in a trilateral type of agreement, like the investment facilitation program, like the reduction of tariff and non-tariff barriers, and in promotion of the digital transformation and also grain transformation. That's why this meeting has been so much so important

against the current and urgent backdrop of global fragmentation. Premier Li described the ASEAN-China GCC Summit as opening a new chapter in trilateral cooperation. What unique opportunities does this three-way framework offer that the bilateral partnerships might not? If I take Blinken's

the famous table and manual theory, these three partners are there to sit equally across the table

and they all contribute to the manual. For example, the Gulf countries bring energy security to all members because with the vibrant manufacturing sector, both in China and ASEAN countries, they are highly dependent on the continued and sustainable supply of energy.

And GCC countries also have huge capital that look for more sustainable investment programs, which definitely fits both China and ASEAN countries.

The ASEAN brings very vibrant market and also the regional integration within the team members is also going on very rapidly so that goods and services can be moved more freely. And China definitely is the biggest industrial powerhouse and also they have a whole set of

infrastructure building the capacity and supported by finance. And China also has the successful experience

to upscale many of those practical technologies to benefit the industrial proficiency and also the people's consumer facilitation program. So the inter-regional value chain in a triangle type of format will be there to forge a stronger production chain

and also supply chain in order to be able to weather the headwinds that both of the three members are facing in the current global environment.

Okay. And Premier Li highlighted China's economic recovery and its proactive macro policy orientation. And he also mentioned China's strategy to focus more on expanding domestic demand and strengthening domestic circulation. So what are the potential implications for China's trade partners in ASEAN and GCC? China offers...

large opportunities both in the foreign investment to grow together with the Chinese, the high quality of growth. In the meanwhile, we offer

a huge consumption market with more of the stimulus package that is there to boost the domestic demand, definitely the energy supply will be highly needed and also the agri-food from ASEAN countries

will be highly welcome and also by the reduction of the tariff barriers and also smooth lining many of those hidden barriers at the customer house,

and also by harmonizing the quality standard in sanitary and phytosanitary inspection, we'll be there to reduce the cost of doing business so that everyone can really benefit.

And also China has been working very closely with the Gulf countries to support their diversification and industrialization drive that can help countries achieve their grand vision. Yeah, and also Li mentioned fostering a vibrant innovation system among the three parties. So what role can technology and innovation play in this trilateral cooperation?

Right now, the technology sector is also highly fragmented with the United States imposing very hawkish sanctions and control over its technology. And now China is there to stand out because we are close

in moving the technology into frontier, but more importantly, we are able to bring the technology into quick, the amplification so that in the industries and consumers can really benefit

a great deal. So therefore, to boost such sort of technology, particularly in the area of digitization, urbanization, and also in the energy transition is something that is highly needed by all countries and members involved in this trilateral type of engagement. And also the

digital currency are also placed on the agenda so that those technologies can be used and shared to really reduce the dependence on the u.s dollar domination and particularly now in view that the us is promoting more of their own uh the type of genius currency

And now the technology can also be used to deal with many of the soft part, for example, to strengthen the coordination, communication of regulatory transparency so that all countries and all stakeholders can really be better informed about what type of roles and what type of consequences

they might face in engaging with each other. Yeah, so what do you think are the fundamental factors uniting China, ASEAN and GCC countries in this trilateral cooperation? Like is this primarily a response to external pressures such as U.S. tariffs or does it reflect some deeper long-term strategic interests perhaps shared by Global South? First, they all have

ASEAN has its vision 2030 that is there to create what they term as rich ASEAN, which represents resilient, inclusive, competitive and harmonious region.

And the Gulf countries also have their vision of 2030 that is there to create a vibrant society in which all citizens can thrive and pursue their passion. China has its vision of 2035 to make a unique

a socialist country with a high level of modernization. So the shared vision bring them together. That's one thing. Second, it is the

a common need because all of them, they wanted to exercise their comparative advantage in order to boost their own industrial value and also to benefit the consumers. But in the meantime, it is there to further ensure there is a expanded global supply chain that is there to provide stable supply and a high level of accountability.

And third, yes, because they are all under the pressure of the United States in creating a lot more uncertainties. That's why they need to huddle closer together in order to be able to achieve their own national goals and their national values. And lastly, it is really the comparative advantage, you know, with China.

the energy and capital from the Gulf countries, whereas the huge market

and also integration program of ASEAN was the big manufacturing capacity and also supported by finance and also the increasing domestic conceptual market of China. So therefore they are all able to benefit by working together on a rule-based structure in which that's why they really wanted to defend the

WTO as the multilateral trading system that's there to give a betterment for their industrial growth and also conception patents. Thank you, Professor Liu Baocheng from the University of International Business and Economics.

Solomon Islands Ambassador to China Barat Salato has held the leapfrog development his country has experienced since establishing diplomatic ties with China. He made the remarks during the third China-Pacific Island Countries Foreign Ministers' Meeting in Xiamen, Fujian Province, where top diplomats gathered to discuss shared development goals and pressing regional issues.

Our reporter Xu Yawen had a talk with the ambassador. Your Excellency, Ambassador Salato, thank you so much for joining us today.

We met last July at the celebration of the Solomon Islands' 46th Independence Day in Beijing. So you mentioned that although China and the Solomon Islands have only established diplomatic relations for a few years, the country had already witnessed the development that has never seen in the past 40 years. So when you're on, do you still feel the same? Could you tell us more on what prompted you to make that statement?

One year on since I made that statement, I feel even more convinced and very optimistic about the fast growing relations between our two countries. Going forward, there will be, I'm optimistic,

a lot of tangible benefits that will happen as a result of this strong relation that we have built together with China. There is a high level of degree of political trust that have been established by leaders, highest leaders of the two countries. And based on that mutual respect and trust between our leaders at the highest level,

A lot of cooperation that we implemented went really well in the country. We've seen a lot of tangible benefits that happen. And that's why I said last year ago, we have achieved a lot compared to more than 40 years since we established as a country or we became independent.

Because I think the relations between Solomon Islands and China has changed all that for the country and for the better for my country as well. Last July, at the same occasion, I met a lot of Solomon Islands students studying here in China, and they majored in Chinese agricultural technology and international relations. So what are your expectations?

for these students studying in China? And how do you see them contributing to the development of the Solomon Islands and strengthening China-Solomon Islands relations after they return home? With no doubt in my mind that the future strength of the relationship between our two countries lies on these students we now have

studying in different universities in China. And you mentioned about the different areas of studies they attend in the different scholarship funded by the generosity of People's Republic of China. We are really thankful for that assistance given in educating our people, our young people here in China.

Why I said our students are the future for our relations, because they are the ones that are educated directly and have a thorough understanding of the real China is. China's experience throughout thousands of years during its early stages of development until it becomes a very powerful economy in the world, one of the second largest economy in the world. And so

This knowledge that they gain throughout their studies will give a real perspective, the true perspective that they will bring back to the country. And then they will counter or put right the misinformation, sometimes deliberately lies and disinformation propaganda that is coming from some of our friends even.

And so I'm really glad that Solomon Islands actually has the largest number of students studying here in China compared to other Pacific Island countries. So that's a big thing for us. And I'm really happy about it. When they go back after their studies, they will bring with them the knowledge.

and they will contribute to the development of Solomon Islands. Over the past few years, we have seen increasing investments in infrastructure development and other projects in the Solomon Islands, with China as the key partner from Solomon Islands National Stadium, that was the main venue for the 2023 Pacific Games,

to some highway projects and also the National Broadband Network currently under construction, which expected to expand coverage from 50% to 80% of the local population upon completion. So how are these projects shaping the daily lives of the people in the Solomon Islands? And how do local people think of this growing partnership with China?

This infrastructure that China is developing, or health and even health fund, a game changer for my country. As I was saying last year when I talked with you, we have not seen this level of developments since independence. And I confidently say that because I've seen it myself. The big changes that it's taking place in terms of addressing our infrastructure need in the country.

And so China is leading it. But not only that, since China is occupying now the infrastructure development space,

Our other friends, our development partners are also coming in to help also in those infrastructure. But China has developed leading this in terms of, you pointed out the broadband network that is being rolled out around the country, putting up telecommunication towers in different provinces around the country. And this will connect our people. Solomon Islands is a

very dispersed islands, a lot of islands. And so having this communication network towers built in different parts of Solon will connect our people. And it will also help to address productivity, not only communication, but people now will see the potential of Solon

producing something or products that they can be able to sell through communication and network. They can be able to

sell to the markets, to the people, by basically using for the new technology. And China is leading globally in technology. And so we have a lot to learn from China in this respect. And so the beginning, the starting point is to have this communication infrastructure in place and then other technology in terms of making ease of communication possible.

reaching out to the communities will be much more easier and faster in the near future. Mr. Ambassador, we know this year marks the 80th anniversary of the victory in the Chinese People's War of Resistance against the Japanese Aggression and also the World Anti-Fascist War.

Looking back to the history during the Second World War, the Solomon Islands played a critical role in the Pacific theater and also carries a deep historical memories from that time even today. So as both China and the Solomon Islands have experienced the pain of war, we share a deep appreciation for peace and development.

Under this background, so how do you view China's initiatives for peace and security? And what's your perspective on China's role in promoting peace and development in the South Pacific region?

Olmouna Alans really support and welcome China's leadership in trying to find solutions to global problems that we are facing at the moment. It's good to see the leadership by the President Xi Jinping in this initiative to find long-term and sustainable peace.

for the global community and so solomon islands is very supportive of the leadership that china is thinking there is development would not be truly achieved if there is no peace and stability and i think china have demonstrated throughout many many decades of its uh stability uh

political stability and the level of peace internally in the country that it experienced. And this actually shows for everyone to see the impact, the development that comes with that stability that China has able to maintain throughout its development experiences. And so we really see that achieving peace and stability

is a recipe for achieving sustainable development going forward. And so in a world now that there are chaos everywhere in different corners of the world, we are looking at the leadership of China to ensure there is a rule-based international order that even the very smallest country like Solomon Islands can be able to be part of it.

And we are grateful for China seeing us, even the very smallest country like us, are

are in the same footing, that we also have a right to development. And so we are grateful for what China is doing in its initiative to address the security. We know on Solomon Islands, as the country strengthens its relationship with China, what kind of example does this partnership set for development in the region? And what lessons or experiences

would you share with other Pacific countries that are looking to work more closely with China? I can point to one aspect that I see with the relationship with China, is that China doesn't see us as small. They see us as equal, important country, even though we are small.

And so that gives us a sense of dignity in ourselves. That is, we can be proud of ourselves as well as that we can achieve something. And there are this country that sees us as equal. And so, you know, for Solomon Islands, it's new for me, especially to see that happen.

We are being treated with respect and dignity as well, that we also have the right to develop ourselves and be benefit of people to enjoy the fruits of development. China is demonstrating these values and principles in the Pacific region. And I would like to see more of China's involvement in the region in all areas of development to assist the small countries like Solomon Islands.

Because we need China to be there to share its experience to us and help us in our development pathway. That is Solomon Islands Ambassador Barrett Salato speaking with Xu Yaowen. This is World Today. We'll be back.

You're listening to World Today. I'm Zhao Ying. China has continued to ramp up fiscal support for scientific and technological innovation. Data from the Ministry of Finance show that national spending on science and technology reached 295 billion yuan in the first four months of this year,

up 3.9% from the same period last year. Local governments across the country are optimizing fiscal support to inject new momentum into technological innovation. For more, we are joined by Professor Zhang Gong from the University of International Business and Economics. Professor Gong, thanks for joining us.

Thank you very much for having me. It's a great pleasure. So any idea which key sectors are benefiting the most from this increased fiscal support? Like, are we seeing a focus on specific technologies like AI, semiconductors or green energy?

I would speculate that the Sunrise Industries, like you mentioned, AI and a couple of other emerging technologies would definitely be the focus of

on the efforts for China from China's perspective. But also, I would also argue that, you know, those critical technologies that are termed as the choke points, in other words, that are controlled by other countries, definitely China is

making a lot of efforts to break through in these areas. And also I want to add that fundamental research, these are really sort of the very fundamental physics, chemistry, those very fundamental areas also are seeing more and more support from the government.

How are local governments translating this national level priority into the regional action on the ground? And what types of fiscal tools or incentives are being prioritized? I think what the local governments do are usually in the area of fostering business, incubating businesses, and of course also attracting mature operations, investments.

There are various tools they can use. For example, they can act as a venture capital, government sponsored venture capital to invest in, as an angel investor to invest in startup companies. It can also provide fiscal incentives for investments, tracking investment from companies. Usually these are in the form of tax rebates,

favorable prices for utility and these kinds of things. So usually, you know, for some deep pocketed local governments, they have a wide variety of tools that they can use to incentivize investment in R&D. Yeah, but to what extent is the increased public spending actually translating into meaningful innovation and technological breakthroughs?

Well, I think sometimes you look at the empirical research in this area, they might find

it may be difficult to find solid linkage between investments, government support, what we call state subsidies and business successes. But nevertheless, I think this is actually beside the point. My perspective is that it really doesn't matter whether the money put into this is indeed working out for a specific project, for a specific investment, as long as it essentially

incentivizes the entire industry level investment in R&D probably also can be leading to other companies great success and breakthroughs in R&D. So I think this is essentially acting as a catalyst, probably not directly to the receiving end, but I would say to the receiving market

I think there's solid empirical evidence that the Chinese model in the form of local government state aid or subsidies are indeed translating to solid breakthroughs in R&D efforts.

Yeah, that's an interesting point. So do you think the current funding model is successfully supporting the smaller disruptive innovators and startups? Or is it largely concentrated on some big companies or national champions?

Well, I think, you know, I've been sort of making this point. It is very difficult in my view to point out, you know, this money spent on this project is leading to this success. This may not be the case. I mean, usually the R&D money is very risky, of course. The success of breaking records

making breakthroughs is very small. Nevertheless, I think if you look at the entire country level, look at the entire industry level, and I think, you know, you look at the recent series of technological breakthroughs by great Chinese companies, you know, it's very difficult to say that these are all pretty much on their own. There's no, there's nothing to do with the

the government support, I think it's hard to say that. So I would say, at least the Chinese model has been working very well for the country, for industry, for the market so far.

So is this rise in science and technology funding part of China's effort to achieve greater self-reliance in critical technologies? And do you see any tension between these inward-focused goals and the need of international scientific collaboration?

I'm pretty sure, absolutely. What you're saying is absolutely right. The rise in science and technology funding is definitely achieving its greater self-reliance goals, as said by the government. Whether it is having a crowd-out effect with respect to international scientific collaboration,

I don't think so. I think for the most part, the very much developed world, especially United States, have been taking a very cautious and restrictive approach when it comes to this kind of scientific collaboration. So you're not getting anything anyway from these collaborations in my view. So I think the question about whether it's actually taking away the opportunity cost,

buying in collaborations with American scientific institutions, for example, I think the answer is a very tenuous one. I don't think it has much to do with that at all. Well, you know, Western critics often argue that China's high-tech industries are overly reliant on state subsidies, and they argue this may lead to market distortions and unfair competition. How valid are these criticisms, and how would you respond to them?

If we're talking about a rules-based international order or global order, this issue you're raising pertains to the domain of the WTO. And as a matter of fact, even under the WTO framework, state provided support for R&D, for innovation,

This is actually a very gray area. It doesn't have a clear statutes, for example, that says this is prohibited. As a matter of fact, many Western countries do the same thing. You look at the history of the development of Airbus in the EU, you look at the tons of subsidies received by Boeing company from the federal government. I think I can also make a case that

all of these countries, the developed countries also have been engaged in the state subsidies. So I think this argument is also a very tenuous argument. And if anything, I'm not saying that this is absolutely should be upheld, but it should be doing this. I said, this is actually forcing the gray area of the WTO relevant provisions.

So I think if there's any international dispute, any controversy about this issue, this is something very much subject to debate, subject to discussion, subject to dialogue, subject to negotiation. If it is outlawed, it should be outlawed. If it's not outlawed, it should be doing this. So I think at this point,

You know, you call it market extortion or not. Pretty much every great power is doing this right now. Yeah. Thank you, Professor Zhang Gong from the University of International Business and Economics. The U.S. State Department has ordered embassies to stop scheduling appointments for student and exchange visas as it expends scrutiny of applicants' social media posts.

Secretary of State Marco Rubio said the pause would last until further guidance is issued. It comes amid Trump's feud with some of the elite universities in the country. Trump says they have enabled anti-Semitism on campus and uphold discriminatory admission policies. For more, we are joined by Joseph Mahoney, professor of politics and international relations at East China Normal University. Thanks for joining us, Professor Mahoney.

Good evening. So what is the immediate impact of halting student and exchange visa appointments on international students and U.S. universities?

Well, I think in terms of the impact on students, we're talking or students who want to become students in the U.S., it's obviously creating a lot of anxiety, confusion, fear. We've heard reports of anger, disappointment, distrust. You know, people have already started putting together money, have invested in applications and certainly much longer periods of investment, you know, preparing for the exams that are required by American universities.

So, you know, they're experiencing derailed plans, maybe ruined dreams. And, you know, certainly their so-called American dream has taken a hit. And this is on top of all the uncertainties for students who are already there. You know, I think they increasingly realize that they're also in a tenuous position to

and that they can't, even if you get there and get a student visa, you can't feel secure politically, physically, financially, emotionally, and so on. So I think it's certainly leading to a lot of deep questions right now. As for institutions, it's something that's really important

troubling in so much as so many American universities do rely on receipts for students paying full tuition or certainly attracting high-end talent from overseas, particularly in STEM programs. So institutionally, this is provoking a crisis.

So how should we interpret this temporary halt? Is this just a procedural pause to implement new social media vetting protocols, or does it signal a broader shift in U.S. immigration policy toward international students?

Well, I don't think we have a clear idea of what temporary means. You know, how long would it take to put in place a wide-ranging vetting process? What would be the standards for determining whether or not a social media post was deemed offensive to the Trump administration?

It really opens a Pandora's box of sort of an ideological purity test, which I think a lot of people would struggle to pass, except for the people who simply have decided to stay off social media, which wouldn't be many people in today's younger generation.

But I think it's probably wise to assume that this is part of a larger anti-foreigner campaign. We've seen several other campaigns going on at the same time in the U.S. directed at foreigners. It's probably wise to assume that it's about exerting control over universities. And it's probably going to target ultimately some nationalities, ethnicities, political affiliations, and religious groups more than others.

Yeah, you know, some critics argue that the administration's focus on social media vetting is an attempt to suppress free speech. How valid are these concerns? And should foreign students have the same protections as American citizens when it comes to free speech and due process?

You know, I'm a U.S. citizen, and I was bought out and blacklisted as a professor of American University in 2009 for saying things that the state and federal government didn't like. And my case is a garden variety case. It's one of the reasons I settled in China and have enjoyed a fruitful career thereafter. So,

Just because, you know, even U.S. citizens, having free speech doesn't entitle you to a job. It doesn't entitle you to being able to make a living in your profession. It simply means that it's quite difficult to prosecute you and imprison you for saying things that officials don't like. That's what free speech really means.

So I think it's important to sort of debunk this mythology that anyone can say whatever they want and not be held accountable for it, certainly held accountable by those who wield power. Certainly there has been this longstanding cancel culture in the universities being waged by the center versus the right and vice versa.

And so we've already seen for about 20 years increasing studies that show that tolerance and freedom of speech has been significantly eroded on universities. It's been a longstanding problem. So there's that. And then I think there's also some confusion about who or what, again, the Constitution protects. Now, legal precedent says that if you're a foreigner and you're in the United States,

then generally you enjoy the same constitutional protections, you know, aside from those specifically guaranteed to citizens like the right to vote or the right to run for president. But we know that Trump has wanted to test constitutional limits and to assert authority, particularly as he moves against foreigners and in many cases suspends Americans.

habeas corpus in terms of deportation. So on the one hand, we shouldn't assume that freedom of speech is such a big right. And secondly, while it should apply to foreigners, Trump is probably wanting to test those limits.

Yeah, as you said, this is perhaps part of Trump's broader political confrontation with elite universities like Harvard. Then what do you think is fundamentally driving this action? Like, is this hostility toward elite universities part of a broader political strategy or ideological agenda that may resonate with Trump's base?

Well, you know, the White House asserts that this is a matter of national security. Trump previously said that Harvard must provide data on its foreign students so the government can evaluate whether any of these pose threats to the U.S. The government alleges Harvard has become a hotbed of international anti-Semitic ideology and activism for opposing the apartheid and genocide and for some students opposing the apartheid and genocide in Gaza.

And there's also been allegations from some members of the Trump administration that Harvard works too closely with groups the U.S. government alleges are connected with the Communist Party of China. Now, we know that there's this broader dispute going on between the White House and Harvard. We know that Harvard is trying to resist this.

And I think on the one hand, we might see this upping the ante by blocking, you know, or at least halting for the time these student visa interviews as being triggered in part by Harvard getting a stay on Trump, you know, banning him.

international students at Harvard. But at the same time, I think we have to look at this in the broader context of his struggle against foreigners generally and immigrants in the United States. Now, some critics of the White House, you know, frame this simply as authoritarianism versus U.S. constitutional protections. Others do view it as elitism, extremism.

as sort of a populist politics versus elitism. And certainly it's fair to say that U.S. universities have done a very poor job drawing close to the masses. They've experienced tremendous inflation and declining returns on their investment. And a lot of people now, a lot of people even with

with college degrees are very angry with institutions for having charged them so much and basically this forced culture of people taking loans and now owing $300,000 or $400,000 for a bachelor's degree but unable to get good jobs. So there's all this resentment and certainly in an institution like Harvard that receives billions of dollars in federal support but is inherently an elitist institution

institution and one that looks down on, one might argue, the ideological values of Trump's base. Certainly that sets the stage for this type of conflict. Okay. Thank you, Joseph Mahoney, professor of politics and international relations at East China Normal University.

Japan has lost its position as the world's largest creditor nation for the first time in 34 years. According to data from the country's finance ministry, Japan's net external assets were over US$3.7 trillion at the end of 2024, rising about 13% from the previous year. However, Germany has surpassed Japan as the world's top creditor with nearly US$4 trillion in net external assets.

The euro-yen rate rose around 5% last year. With more, my colleague Zhao Yang spoke with Yan Liang, professor of economics at Willamette University. So Yan, Germany has now surpassed Japan as the world's top creditor for the first time in more than 30 years. So what are the main factors contributing to this change and what does it say about the global economy?

Well, I think both Japan and Germany are sort of export-oriented, and so both countries have run up trade surplus over the years and acquired assets abroad. And so both countries have relatively large overseas net assets. In this case, Japan is $3.7 trillion, and that compared to Germany, which is slightly bigger this time,

about 6.9 percent larger when it comes to Germany's overseas net assets. So the margin is still quite small in terms of the difference between the two countries. So I think

Germany sort of won this very tight race by having a larger trade surplus last year. Germany's trade surplus was $283 billion last year, whereas Japan was only $180 billion. And so that helped to put Germany's overseas net assets slightly higher than Japan's.

Not to mention, Japan's – the Japanese currency, the yen, has depreciated about 5 percent against the euro. And so that really helped to also increase the – in terms of the dollar valuation of Germany's overseas net assets compared to Japan's. So the – two major reasons: One has to do with the larger trade surplus.

from Germany and second has to do with disvaluation changes due to Euro being stronger than the Japanese yen. And you mentioned the Japanese yen has depreciated last year. So what are the main reasons for the weak yen?

Well, I think there are quite a few different reasons. One has to do with the fact that the Japanese economy has been relatively stagnating, and so that slow growth prospect in some ways weakened the yen.

And in recent weeks and months, as we also know, that the U.S. has been waging trade war. And so because Japan is a very much sort of export-oriented economy, when some of its major industries rely on the North American market,

So, I think that in some ways also reduces the yuan value, even though I would also say that compared to earlier this year in 2025, Japan's currency actually appreciated a little bit against the U.S. dollar. And one of the reasons has to do with the fact that the Japanese inflation started to climb up. And so, that gives some sense that the Japanese central bank is going to raise the interest rate rather than reducing it.

Very different than the global counterparts the usdcb are all projecting to lower the interest rates when in japan the interest rate is likely to increase and so that helped to strengthen the yuan value but I think the

you know, in the recent years has to do with the Japanese sluggish economy. And so that really weakened the Japanese yen value, which on the one hand helped their, you know, export industries, but at the same time, it did put some, uh,

you know, higher cost in terms of the imports, especially food prices. And so that is also one of the reasons why Japan's inflation rate started to rise, largely due to the imported food price has been going up due to the weak yen in the past few years. And how will the Trump administration's tariff policy affect Japan's economy, do you think? Well, I think the impact will be significant. As I just mentioned, that

Even though now there is a 90-day truce with Japan before the punitive, the so-called reciprocal tariff rate may be reimposed, right now in this truce period, Japanese exports to the U.S. are still subject to certain tariffs. For example, the universal tariff of 10 percent, and then the steel and aluminum 25 percent, and also cars and auto parts, all of these are subject to 25 percent.

And so, you know, for Japan's economy, which relies on exporting automobiles, that is going to be a significant impact. So when we look at the numbers, Japan's first quarter annualized growth rate was negative 0.7 percent. And this is actually, you know, before this sort of tariff was being imposed.

And so this tariff is estimated to reduce the Japanese growth rate by negative 0.8 percent by the end of this year. And so even with the tariff truce, Japanese economy is still pretty much hard hit

by the current tariff rate, especially when you look at Toyota, who basically projected to lose 30% in its profits, and Honda, 70% due to these tariff rates. And not only the auto industries, but some of the industrial heavy machinery, for example, Komatsu was also estimated to reduce 30% in their profits.

from March 2025 to March 2026, because again, almost 30% of the sales rely on the North American market. So just to sort of put it in short, the tariff war that the U.S. waged against Japan is going to be a significant one

blow to the Japanese economy. And that's why I think the Japanese government is also very keen to reach some trade deals. And yet they are very hesitant to make any compromises, knowing that this could be a relentless, I would say, request from the United States to open the Japanese market, to

compelled Japan to import more and compelled Japan to invest more in the United States. So it is a very tricky balancing act, I think, on the part of the Japanese government. And I think the recent move to work closer with China and South Korea in confronting the U.S.'s trade war, I think that is a positive step towards the right direction.

And we know that Germany overtakes Japan as the third largest economy in the world in the year 2023. And now it surpassed Japan as the world's top creditor for the first time in more than 30 years. So how would you compare Germany and Japan's economy right now?

I think it's very interesting that both economies confront very similar challenges. For one, both economies are facing an aging population. Both countries struggle with the shortage of skilled young labor force, and they're also facing productivity slowdown and also wage pressures, wage increase pressures.

And that's the first sort of similarities in terms of the both common challenges that they face. And second, both countries are also facing some kinds of lack of, you know, public investment in their productivity growth.

And so the lacking of digital economy transformation, the lacking of some of the very important technological breakthroughs, I think also put these countries' struggle in terms of the manufacturing capacity. Because now China has risen as a major technological and manufacturing powerhouse. Germany and Japan, they have to innovate more and they have to invest more in R&D and their human capital in order to catch up in the technological race.

and to revitalize some of their manufacturing capacity, especially in the automobile sector and in the digital electronics and other tech sectors. And third, I think both economies are also very export-oriented, as I just mentioned. They heavily rely on the exports to the United States. And so now they both face this trade war coming from the United States, which would undercut their export prospect.

And so I think those are the three major challenges that both face these two countries. And so, as I just mentioned, that Germany is overtaking Japan's economy and also as the largest overseas creditors by very thin margin. So it remains to be seen how long Germany is going to remain in the place. I think it's a common challenge for both economies

you know, to be able to innovate, to develop the technologies and boost the productivities, and also to explore more domestic markets as well as external markets. One thing I think that is also, you know, in a way different for the two countries at this particular business cycle is that Germany's economy as well as Eurozone economies, they're more looking at these inflationary environment. So the recent number from,

France indicates that the inflation has climbing down and there's more room for the ECB to have rate cuts. The most recent one is forecasted to take place in June, whereas in Japan, as I just mentioned, their inflation is elevating. Their core inflation rate has just reached 3.5%.

largely due to the food price has surged by 7%, including, by the way, the rice price hike of 90%. So in Japan's scenario, it's more likely that the Bank of Japan is going to raise rates. That's all we have for this edition of World Today. Thanks for listening. See you next time.