Israel-Iran conflict: Is there still a window for diplomacy?
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Hello and welcome to World Today, I'm Zhao Ying. Coming up, President Xi says China is ready to work with Kazakhstan to contribute to regional and world peace and development.

21 Arab and Muslim countries have issued a joint statement calling for de-escalation in the Israel-Iran conflict. Does diplomacy still have a chance? The U.S. and U.K. have agreed to move ahead with the AUKUS pact despite a Pentagon review. Does this fully settle the uncertainty around Washington's commitment to the deal?

Chinese President Xi Jinping says China stands ready to work with Kazakhstan to contribute more to regional and world peace and development with stability and positive energy of bilateral ties. He made the remarks when meeting with his Kazakh counterpart Kasim Dzhomart-Takayev in Astana ahead of the second China-Central Asia Summit. China-China relations have undergone an international change of the climate.

China-Kazakhstan relations have withstood the test of shifting international dynamics and consistently maintained high-level performance. This is attributed to the geographical advantage of being close neighbors as well as the historical legacy of enduring friendship.

It is also the natural choice of our two countries for common development. China stands ready to work with Kazakhstan to steadfastly strengthen our friendship, make concerted efforts to advance all-round cooperation and contribute more to regional and global peace and development with the stability and positive energy of the bilateral ties.

President Xi said the two countries should continue to support each other on issues involving core interests and major concerns and promote synergy of the development strategies. He called on both sides to expand law enforcement and defense strategies, jointly combat terrorism, separatism, and extremism, and added that the two sides should promote connectivity, high-tech cooperation, and green development.

For more, we are joined by Andy Mock, senior research fellow at the Center for China and Globalization. How would you describe the current state of relations between China and Kazakhstan? And how important is the China-Central Asia cooperation mechanism in advancing bilateral ties? Well, Zhao Ying, I think that the current relationship between China and Kazakhstan is very strong and

And it is deepening further, but it's also important to point out that the ties between these two countries go back a very, very long ways. Of course, we can even think back to the original Silk Road as to the length of these ties.

I think for today, we can see Kazakhstan as being very important as a bilateral relationship to China as a neighboring country, but also as a major part of the so-called C5 countries as well, or the Central Asian countries. So while Kazakhstan may not have the largest population, it does have the largest land area and the largest population.

GDP as well. So I think for many reasons, it is a very important relationship for China and has a very solid foundation with lots of potential for future growth.

Well, the two leaders have reaffirmed their commitment to the Belt and Road Initiative, including major infrastructure projects like cross-border railways and port upgrades. How significant are these projects in boosting the economic ties between the two countries? Well, I think these projects...

are important from a bilateral perspective but also from a regional as well as a transcontinental perspective because what this part of the world does is it links china to europe and the middle east especially by rail and what this means is that it can speed up

uh transport of goods compared to oceans shipping it is also uh more secure uh as well so i think this plays the physical infrastructure plays a very important role but on top of that we are also seeing the rapid development of digital infrastructure so here it's not just

computers and the internet, but also the what we could call the soft infrastructure. So standardization, harmonization of policies, customs, et cetera, logistics.

that can expedite shipping. And one statistic I've seen about this part of the world is that every dollar in railway, invested in railway infrastructure, returns up to $1.8 in economic return. So I think this is also a very important driver of economic development. And Kazakhstan has ambitious plans

GDP growth goals. So I think from the Kazakhstan perspective, the Kazakh perspective, these types of projects are very, very important. Well, looking into the future, which sectors hold the greatest potential for further cooperation between China and Kazakhstan?

Well, I see three main areas at least. So one is logistics. So again, as this infrastructure continues to deepen and I guess stack vertically since we have the physical infrastructure and then adding the digital layer on top of that, this is very important. I think this is not exactly a sector, but when we look at these Luban workshops for training

vocational education in places like Kazakhstan and the other C5 countries where China provides equipment as well as training. This is a very, very important way for developing human capital, which is not only important from an economic perspective, but from a regional security perspective as well. So this is, of course, another very important topic. And I think the third sector is tourism.

where we see again, so this is a part of the world that is not necessarily large in absolute terms with about 80 million population in total, but with Kazakhstan and Uzbekistan with the majority of the population facilitating tourism both ways is another, I think, very important opportunity and a very important growth sector.

President Xi called for joint efforts to combat terrorism, separatism and extremism. How do you view the role of China-Kazakhstan security cooperation in addressing these challenges? I think it's very important because, one, of course, Kazakhstan is a multi-ethnic society, so it has to face some of these potentially divisive issues domestically.

This region, again, has been a challenging one historically. Afghanistan also borders these countries and has been a source of not only religious extremism but also narcotics as well. So I think certainly the security dimension is very, very important. And also I think we need to consider this from a broader perspective of it's not just child

China plus the C5 countries working in this mini lateral format to address economic development issues as well as security issues. But this also plays a very complementary role with the SCO or the Shanghai Cooperation Organization, which moves more slowly because there's more countries and it's consensus-based.

which means that any country can potentially stop or veto any action. But this is very important for political legitimacy and political symbolism.

Whereas China working with the C5 countries can more rapidly deliver tangible results. And when these are successful, we can think of it as uploaded to the SCO. So they play very symbiotic and complementary roles as well, which makes it very, very important. Well, both leaders have highlighted collaboration within multilateral frameworks such as the SCO, the UN and BRICS.

How do you think China and Kazakhstan's cooperation in these organizations could influence regional stability and global governance? Well, I think one of the hallmarks of these countries, and Kazakhstan in particular, is that

They are very pragmatic and non-ideological. And as a result of this, I think they can clearly recognize China's achievements with reform and opening. Again, not just economic development, but the diplomatic strategy, participation in multilateral organizations, establishment organizations.

of multilateral organizations as well. So I think this makes them very natural partners to work together. And again, I think the SCO is, of course, one

a very important organization since China, Kazakhstan and four of the other five C5 countries are our members as well. So clearly I think it's an important region and Kazakhstan is a very important country because of its location, because of its natural resources and I think also because of its orientation of being very pragmatic and results oriented.

Yeah, and you mentioned tourism earlier, and the two leaders actually also emphasized expanding cultural and people-to-people exchanges, including Kazakhstan's China Tourism Year. How can these initiatives strengthen the social and cultural foundation of bilateral ties?

Well, I think the essence of people-to-people diplomacy is enhancing mutual understanding. And that, I think, best happens when you have the opportunity to immerse yourself in another culture, in another society. And of course, tourism is a great way to do that. Study abroad is also another very important way too. But I think tourism is a very, very important way. And what we've seen is

even with those that have historically been quite skeptical and negative of China in places like the UK and the US, when some of these people actually do overcome their prejudices and come to China, they're often enormously pleasantly surprised at how well-functioning society is, how free and open society

uh society is as well and it's nothing like the uh the negative propaganda that some of them have been fed now again the c5 countries kazakhstan in particular do not have this kind of ideological baggage but still i think the opportunity to see for themselves is very important as it is for chinese to to travel uh to this part of the world too

Yeah, and we know that Russia has long been viewed as a traditional security partner for many Central Asian states. How would you characterize China's growing role in the region? Like, is it aiming to complement the existing partnerships? Or is it seeking some sort of geopolitical realignment?

well i think these are not mutually exclusive um and certainly uh china and russia have a a very deep strategic relationship as well um so and of course we have to recognize that in one sense these c5 countries have a lot in common but they're also uh distinct sovereign nations as well so of course i think an effective uh diplomatic

uh set of policies requires recognizing this recognizing of course russia's historic role uh in this part of the world but at the same time i think also recognizing um you know that it's a very complex world russia is facing challenges in ukraine it is uh facing related to that

challenges with some of the Western countries. Iran, of course, recently now is broiled in a conflict. Afghanistan, there have been longstanding problems. So I think that when it's taken...

with the respect for mutual sovereignty, non-interference. It's not a mutually exclusive decision in terms of bilateral security or regional security. That is Andy Mock, Senior Research Fellow at the Center for China and Globalization. This is World Today. Stay with us.

You're listening to World Today. I'm Zhao Ying. 21 Arab and Muslim countries have issued a joint statement condemning Israel's airstrikes on Iran. The countries led by Egypt called for a ceasefire, respect for sovereignty, and nuclear disarmament without selectivity. In the meantime, the leaders of G7 nations have called for a de-escalation of hostilities in the Middle East, adding that Israel has a right to defend itself.

Regional tensions have escalated since Friday when Israel launched strikes on multiple sites across Iran, including military and nuclear facilities, prompting Tehran to launch retaliatory strikes.

Iran reported explosions and heavy air defense fire in Tehran early on Tuesday that came hours after Israel targeted Iran's state television headquarters during a live broadcast. For more, we are joined by Dr. Wang Jin, associate professor at Northwest University in Xi'an, China. Dr. Wang, thanks for joining us.

It's my pleasure. Well, what do you see as the key drivers behind this rapid escalation between Israel and Iran? And how does this current conflict compare to previous flashpoints in their longstanding rivalry?

i think the very key uh driving forces for israel to launch the attacks against iran should be understood as the different uh understandings from israel and iran over the iran nuclear issue because from the perspective of iran and the most states in the international community that the iran

seriously and firmly hold the so-called peaceful aim or peaceful use of nuclear capabilities. And Iran does not want nuclear bombs. Iran still wants to maintain the purpose of the nuclear capability and nuclear research rather than making the ultimate

the atomic bombs. So that's why Iran maintains they are peaceful and they are non-violent purpose. But then from the perspective of Israel that Iran now violating the regulation from the

IAEA and other international regulation and Iran is challenging the red line of the so-called nuclear consensus international community. And also from the perspective of Israel, that Iran is very, very close to the capabilities of nuclear bombs.

So that's why Israel started to strike the targets inside Iran, given that Israel estimated that if Israel does not launch the strikes, Iran might produce the nuclear bombs within a very short time.

So that's why it's very driving forces between the two. And I think this round of the conflict is quite different from the previous one. I mean, the last April and the last October, two rounds of conflicts erupted between the two countries.

And at that time, they just finished their attack and with the other counterattack from the other side, then the crisis is over. But this time, I call it a kind of the very large scale of total confrontation because they do not declare war against each other, but actually both of the countries enter the war status. So that's why with the time goes by, we might witness more escalation and more tension between the two countries and might further expand it to the other parts of the region.

Well, those 21 Arab and Muslim countries led by Egypt have condemned Israel's airstrikes and called for de-escalation and respect for sovereignty. How significant is this unified stance and what role might these countries play in mediating or kind of shaping the course of the conflict?

I think it's very important because we know that at a very crucial time, everyone wants to know how the original country's understanding. So at a very important time, now the Arab states and Muslim countries, they share their opinion and the calling for the de-escalation of tension as well as condemning Israeli attacks against targets inside Iran, as well as respecting the sovereignty

This is very crucial because on the one hand, it withstands international norms and regulations, and on the other hand, it has already expressed very important voices for calling for peace. But we cannot overestimate these voices because right now, maybe the voices and maybe the expressions are important, but the most determining thing is

how these kind of voices will be transferred into the real reaction. So given that the war is still continuing and the escalation of tension is very possible, I think maybe more should be done. So that's why I think the international as well as the regional countries should do something more urgently to intervene in what is happening right now to stop the war as early as possible.

Well, the statement actually called for nuclear disarmament without selectivity. How should we understand this phrase? Because when we're talking about the origin of the war, we mentioned that Israel feared that the nuclear war capabilities from Iran and also Iran condemned Israeli bombs and the Israeli production of nuclear capabilities

without the condemnation of the international community. So that's why the nuclear capability, the nuclear arm become the very, very important resources and the sources and the origins for the uncertainties and the crisis right now in the Middle East. So that's why in the statement, the Arab states as well as the Islamic states, they call for the nuclear disarmament.

and without the selectiveness. So I think it is very crucial because it captures the very sense of the origins and the motivations of the war. And in the future, I think it will win more recognition and support of the international community. And it could become the foundation in the future to construct the more peaceful and more stable original order.

Well, in the meantime, the G7 nations also issued a joint statement calling for de-escalation, but they also reaffirmed support for Israel's security. And actually, we learned that at first, Donald Trump refused to sign that joint statement, but he later agreed to it after they adjusted certain statements. So are we seeing a divided West when it comes to this conflict?

Of course, when we are talking about the divides and the division, there were of course divisions. There were some kind of shared view, for example, the support for the Israeli security and safety. This is a very shared understanding of the Western countries, particularly G7. But then there were some divisions, for example, that the United States may maintain a more

aggressive and more assertive stances to protect Israel and impose new pressure towards Iran. While the other G7 countries, the rest of the G7 countries apart from the United States, they may hope that the peace could come back and Israeli military strikes against Iranian targets should be stopped.

and the original order should be maintained. So these are the things very different from each other. And I think the division is great, but I don't think the division will separate the G7 because they still share the very similar views over the ongoing war. And I don't think this division will separate this G7's new consensus over how they understand this war.

Okay. Well, Donald Trump left the G7 summit early due to the crisis, and he has expressed strong opposition to Iran's nuclear ambitions, but he also resists direct U.S. military involvement. So how would you interpret the U.S.'s current stance?

I think Donald Trump is also facing a dilemma inside the United States because some maintain some political figures and some influential opinions now pressing the United States and Donald Trump to take more harsher

and more aggressive measures towards Iran, for example, to targeting directly against Iran and attacking directly against Iran. Whereas on the other hand, some other opinions maintain that, okay, United States should stand out of what is going on in the Middle East and do not intervene directly into the ongoing war. So that's why I think...

On the one hand, Donald Trump maintains that they want to limit the so-called ambition of Iran's nuclear capability. But on the other hand, he also strongly opposes the United States' possible intervention or direct intervention into the war.

So that's why he's standing in the middle, because actually the situation is still changing and it's very complicating. The United States does not want to be dragged directly into the war that could run out of United States national and strategic resources and manpower as well as wealth. So that's why I think the United States now still kept some kind of watch and see stances against the ongoing crisis right now.

Yeah, and actually, despite the intensity of Israel's attacks, it has not yet achieved its stated goal of dismantling Israel's nuclear program. So from a military standpoint, how capable is Israel of carrying out such operations without U.S. support? And what could be the implications if the conflict increasingly targets nuclear infrastructure?

Well, you're right, because without the United States support, I don't think Israel would continue for quite a long time to for its strikes against the targets inside Iran. And also that Israel could not so-called eliminate the capabilities of Iran, but I think

Israel could only damage or seriously shaken Iranians capability. But the problem is that I don't think that the United States will suspend the military weaponry assistance to Israel. And also that Israel may not be able to stop the capabilities of nuclear inside Iran, but

could do something to delay or to slow down the pace or even intervene and mess up Iran's nuclear capabilities. Okay. Thank you, Dr. Wang Jin, Associate Professor at Northwest University in Xi'an, China. You're listening to World Today. We'll be back after a short break.

Welcome back. You're listening to World Today. I'm Zhao Ying. The U.S. and U.K. have agreed that the multi-billion dollar AUKUS submarine pact will go ahead despite a Pentagon review. British Prime Minister Keir Starmer said the deal is important for both countries with Donald Trump at the G7 summit in Canada.

Australia Prime Minister Anthony Albanese welcomed the comments by his British counterpart. He had been scheduled to meet with Trump the next day to press support for AUKUS, but the meeting didn't happen due to Trump's early departure. For more, we are joined by Chen Xi, Associate Assistant to Director of New Zealand Studies Centre with East China Normal University. Thanks for joining us, Dr. Chen.

Thanks for having me. So Trump has now publicly backed this AUKUS pact after meeting with Keir Starmer. How should we interpret this endorsement? Does it fully settle the uncertainty around U.S. commitment to this deal?

Yeah, I think this endorsement serves more as a political signal and it won't fully eliminate the uncertainty, as we know that the British review took about 10 months time to finish with its findings just reviewed two weeks ago. And Trump's unpredictability we know also means that a public endorsement doesn't necessarily guarantee the follow-through later.

So the Pentagon is conducting a review of AUKUS to align it with Trump's America first agenda. How do you understand this? Like what specific aspects of the deal might be seen as incompatible with the America first policy?

Yeah, so at the very beginning, the US submarine industrial base is stretched already. The AUKUS agreement outlined the US selling at least the two Virginia-class submarines to Australia with other submarines jointly built. However, for years, the US Navy has been struggling to keep its construction of Virginia-class submarines on track.

And it was also reviewed last year that a US submarine was already two or three years behind the schedule. So when the US is experiencing a stretched situation of its own industry, whether the sailing to Australia will undermines its own capacity would be the primary concern. And the second is Trump's

An America First policy consistently took a transactional approach to dealing with its allies. So the AUKUS deal was formed to build up Australia's maritime capacity in the Pacific region, but how much could that serve Washington in enough ways is not clear. So for example, AUKUS involved unprecedented levels of the US defense technology sharing.

So Donald Trump may view this as a loss of US technological edge or giving away competitive advantages, particularly if US defense interests are not clearly prioritized. And also in terms of the burden sharing the same, like Trump has long demanded his allies to pay their fair share. So if the Pentagon review finds finally that the US bearing

a disproportionate load, it could prompt demands for Australia to further increase financial commitments. And this is very similar to the US Defense Secretary's recent address to say that its allies, including Australia, should dramatically increase their defense spendings.

Okay, so now Keir Starmer has strongly advocated for AUKUS, but what do you make of the UK's role in maintaining the momentum for this pact? And how much influence does London really have over Washington's defense decisions?

Well, Starmer's strong advocacy for AUKUS reflects the UK's desire to be seen as a Pacific power and their dependable US ally. However, its influence over Washington's different decision is very limited and very indirect.

So his backing of the deal was sending a political signal first back to the domestic audience that he could seek to stabilize the deal with the U.S. and make questions about the latest political vulnerability. And also this gesture kind of conveyed its capacity to seemingly bridge the potential divide between Australia and the U.S. And besides this symbolic gains, we know that the U.K. can actually gain a lot from the deal.

The office actually enabled Britain to have more permanent basing rights for its own submarines in Australia, and this would enable a more sustained naval presence in the Pacific region. And also the UK aimed to secure the economic dividends through its defence industry engagement as well. But that said, London's influence on Washington's ultimate decision, especially on the current transaction or US administration, is very modest.

Okay, well, Prime Minister Albanese had hoped to press Trump for stronger support, but the meeting was cancelled. And Australia's opposition has called this a diplomatic failure. I mean, do you think that is fair? Or was this simply bad timing due to the Middle East crisis?

Yeah, so the response from the opposition shows that they are actually hedging a bit and it's very different to the Euro rhetoric adopted by the previous leaders such as Peter Dutton. So Susan Lay stated that it's disappointing that the PM won't have a meeting with Donald Trump, but also she acknowledged that it's understandable considering the deteriorating situation of the Middle East crisis.

However, it is still detrimental to Australia and the real criticism actually lies only on that Albanese only secured a set sideline meeting. So I would say it is indeed a missed opportunity, but also no one should expect a very complete resolution of the issues, you know, can be reached just through one meeting.

Okay, but do you believe AUKUS genuinely serve Australia's long term national interest? Or does it risk tying Australia too closely to a strategic agenda driven by the US or the UK?

Yeah, so Australia has been trying to increase its defence capability, which was evidenced from its previous deal with France already. And this has been consistent as Canberra's response to the changing global geopolitical landscape. But there are too many problems with the workers. As was repeatedly pointed out by the Chinese government, that the manufacturing bloc confrontation or anything, the employees,

the risk of nuclear proliferation and exacerbates the arms race should be opposed at the very beginning. And the deal itself was nailed in a very hurry with not enough discussion within the federal government and also Australia's public debate. There were a lot of unanswered questions like the US rail delivery capacity.

and four years have already passed and hundreds of millions of Australian dollars were thrown into it but still no concrete output was given yet and former Australian prime ministers from both parties of Australia including Malcolm Turnbull and also Paul Keating they emphasized that Australia traded sovereignty for security with the AUKUS submarine deal but it might end up with neither

So currently the British, the Briton has a view and the American has a review, but there has been no view from Australia itself. Well, I reckon this is actually a fair question to ask, but the chance for Australia to pull itself out of the deal is undoubtedly narrow because there was no plan B put on the table, which will further make it harder for Australia to strike for its own national interests.

Okay, but do you think the reviews, especially Pentagon's review of AUKUS, is something of a wake-up call for Australia? Like, should Canberra be rethinking its defense strategy instead of relying so heavily on the United States for its long-term security guarantees?

Yes, I think it could serve as a wake-up call for Australia from several perspectives. So first, the review is another recent example to show that the US prioritises its own interests in the front rather than that of its allies. And the second, there could be two results from the review. One, the US withdrawal from the treaty, which will be an absolute high price for Australia to pay.

And two, even the deal still exists, the US were likely to further adjust it to suit its own national interest instead of that of Australia. And it's fair to say that during the past decade, the US has underpinned a lot of Australia's core interests, but Washington's recent moves have shown that the US is undermining these interests and limit the facto Australia's

ability to advance them. So yes, the review is a wake-up call and Australia should think more clearly with whom and how it should actually work and collaborate in the region and elsewhere to truly serve its own interests. Okay, thank you Chen Xi, Assistant to Director of New Zealand Studies Centre with East China Normal University. This is World Today. We'll be back.

You're listening to World Today. I'm Zhao Ying. Gold has surpassed the euro to become the world's second most important reserve asset held by central banks. A report from the European Central Bank reveals that the gold made up 20% of global official reserves in 2024, outpacing the euro's 16% and second only to the US dollar. The total

The total volume of central bank gold holdings is nearing historic highs. Analysts attribute the shift partly to a nearly 30% surge in gold prices last year, which significantly boosted its value in reserve portfolios. For more on this, my colleague Zhao Yang spoke with Yan Liang, professor of economics at Wellamite University.

So, Yan, first, what do you think are the main factors driving up the gold prices from last year to this year? And why are the central banks increasingly turning to gold? Right. So I think the purchase of the gold by central bankers especially has really helped to boost the demand for gold. And that's why you see the surge of the gold price, 28 percent so far this year, followed by a 30 percent increase

from last year. So what we are seeing is that many emerging market governments, for example, governments like in China, in India, in Turkey, they have been buying gold since 2021. These countries together added more than 600

And so that is really driving up the demand for gold. And to the question, you know, why governments are buying gold and also investors are purchasing gold, I think there are several reasons. And the most obvious reason in the past is that gold is seen as a hedge against inflation.

So if there is inflationary pressure, for example, the US is waiting the tariff war, then there is a concern that inflation is going to rise. And so investors wanted to go buy gold to hedge for the inflation. But now we're also seeing more incentives to buy gold, for example, to diversify their official government reserves.

We're seeing gold for de-risking for geopolitical reasons. And then finally, we're also seeing buying gold as a way to avoid any sort of sanctions and the losses in, for example, dollar reserves. So I think all of these are the reasons for why you're seeing a surging demand for gold and therefore the price increase.

And in recent years, central banks have also been trying to diversify away from the U.S. dollar among some concerns about geopolitical instability and U.S. debt levels. So what do you make of that? And how do all this affect the gold appeals?

Right. I think that's exactly right. So we're seeing, for example, in 2024, last year, central banks bought over 1,000 tons of gold, which is double the prior decade's average. And so that's why you're seeing the government official holdings of gold now reached 36,000 tons, which is very close to the peak of 1965 when governments

held up 38,000 tons of gold. So again, this is very close to that historical peak. And I think now the ECB just show in their new report that gold accounts for 20% of the world's government's reserves, which is only second to the USD and is more than the Euro's share, which is 16%. So as you mentioned, there is the concern

about the geopolitical tensions, for example, the recent military flare up between Israel and Iran. On top of that, you know, the US's trade war and so on. And so that really, I think, incentivize the global investors in government to buy gold as a inflation

hedge, but also a diversification of risks, geopolitical risks. And also, like I mentioned earlier, avoid sanctions. If these countries are seeing some potential geopolitical tension with the United States, for example, they would want to diversify away official reserves from the dollars. And that's why you're seeing all the central banks are buying more gold and that drive up the prices.

And as you mentioned, the U.S. dollar is often seen as the global reserve currency and gold tends to move inversely to the dollar. And so with the shifts in the U.S. fiscal policy, how do you think the dynamics, you know, between gold and the U.S. dollar will evolve?

Right. So what we're seeing is that because of Donald Trump's policies, including the tariff war and now with the big one big beautiful bill, we're seeing the dollar value has declined by about 8% since January this year. And we also see the dollar 10 year bond, 10 year treasury decline.

bond yield has gone out by 11%. So that again says that investors are worried about the dollar value. They're worried about the inflationary pressure. They're worried about the US's fiscal situation. And so they are diversifying from dollar assets.

They don't consider dollar and dollar assets as really the sort of safe haven assets anymore. So they're going to buy more gold, buy more, you know, euro denominated assets, Chinese yuan denominated assets and so on and so forth. As a matter of fact, the U.S. Bank Corp just issued a report that says many exporters now, they don't want the dollars. They prefer to have RMB or euro for their export receipts.

And so what you're seeing, this is going to weaken the dollar furthermore as countries and individuals and investors shift away from dollar assets to other alternative assets. So you're likely to see the dollar price continue to go up and the dollar continue to weaken because of the U.S.'s policies. And what does it mean for the international currency system?

Well, I think it's clear the trend is that governments, investors, you know, no longer really have this very firm belief about U.S. exceptionalism, that the dollar is a safe haven assets. They're going to diversify. So, you know, it's not just the gold that central banks or investors are investing, but they're also investing in other assets denominated in other currencies.

So that's, I think, a trend that we're seeing that the dollar is, you know, reserve currency status, it's vehicle currency status. It's probably going to be weakened over time, although this is going to be a graduate process simply because, you know, the dollar assets are still the most liquid assets.

market. And so, you know, the Treasuries is a very large and liquid market. And so I think, you know, the process of diversification is clear, although it would take some time, I think, to really significantly reduce the dollar share in the international reserve system and also as an investment vehicle assets.

And as gold prices approach new record highs, are we seeing the return of a kind of gold rush mentality where people begin to buy simply because others are buying? And how has the rise in the gold reserve status affected the global gold markets and investor behavior?

Right. So I think, as you just mentioned, I think there are definitely various reasons. One is the structural reason. As I mentioned earlier, there is a diversification need. There is a hedging need. So that is a structural factor towards diversification and therefore the demand for gold. But then you also have more of the, I would say, contemporary reasons, the rising geopolitical tension. You know, the oil price could be affected because the Middle East is

tensions and so on and so forth. And so that again, give a very much short term, but very significant boost in the demand for gold.

At the same time, I think the long-term trajectory is the idea of diversification. So I think we're likely to see this trend continue on. And so this is going to continue to drive up the gold price. At the same time, I think you're right, there is interactive effect, which is because there's a large demand for gold and there is the rising prices and there is a perception that the gold price is going to rise and therefore you attract even

more buyers. So that cycle is going to continue on. And I think as long as the US is continuing with its policy trajectory, as long as the rising geopolitical tension and also the US continuously weaponize the dollar system and impose or threaten to impose sanctions,

against other countries, I think demand for gold is going to continue on. But hopefully, you know, there are more alternative assets denominated in euros, in yuan, in other emerging market currencies. We're likely also to see increasing demand as well as, again, the whole world is diversifying away from the dollar and dollar assets. And while many are bullish on gold, is there any factors that could derail the upward trend that we've seen?

Well, I think like you mentioned earlier, if the demand for gold is really, you know, but just by sort of fundamental demand, right, the real needs for diversification and so on and so forth, then we're likely to see gradual increase in gold price. But at the same time, if there's too much speculative moves in the market, again, buying gold just because you expect the prices to go up because you expect others to continue to buy gold.

Then I think that sharp increase in gold price supported by this kind of speculative motives, then we're likely to see the gold price to have some kind of technical correction. But so far, I think, you know, the gold price increase last year, 30 percent, and this year so far, 30 percent, seem to reflect some kinds of uncertainty.

really the sentiment of diversifying of hedging risks and therefore the demand for gold. So I think it really depends on, you know, how the geopolitical situation is going to evolve in the next few months. And also the U.S. policies, whether or not our trade war is going to escalate and all the U.S.'s government deficit and debt will continue to worsen. I think all of this would play a role in determining more of the sort of the long term value of gold and other

alternative assets as well. That is Yan Liang, professor of economics at Bill Lomit University, speaking with my colleague Zhao Yang. This is World Today. Stay with us. You're listening to World Today. I'm Zhao Ying. US chip giant Nvidia will attend a major supply chain expo in China for the first time.

The third edition of the China International Supply Chain Expo will be held in Beijing in mid-July. The event will welcome more than 230 new participants from home and abroad. U.S. companies will represent the largest contingent of foreign businesses at this year's expo, with an increase of 15% compared to last year.

NVIDIA is one of the main corporate victims of the increasing U.S. export controls aimed at curbing China's access to advanced American chips. Joining us now in the studio is my colleague Ding Heng. Thanks for being here. Hello, Zhao Ying. So what signals do we read from NVIDIA's planned participation in this supply chain expo?

Let's wait and see whether Nvidia is going to clinch any particular deal at the upcoming expo in July. But definitely this is a sign that the company stays committed to the Chinese market. And here I guess we need to remind our listeners

about what exactly Nvidia has gone through. Beginning in 2022, under former President Joe Biden, the US government imposed curbs on the sale of the company's most advanced chips to the Chinese market.

Responding to the situation, the company modified one type of its chips, make it less powerful, for example, so that the US government would allow that particular type to be sold to China.

Earlier this year, however, the company said that American officials were requiring a license for future sales of that particular type of chips to China as well. So the result was that the company...

really had to take a 5.5 billion US dollar loss on the inventory that it had already planned to sell. Very painful. So here you can really see how Washington's chip export control measures in the name of the National Security Ground are creating challenges for NVIDIA to do business in China. But despite the difficulty,

The company seems to be doing everything it can to keep selling chips in China. The company's top leadership has sent a very clear message in this regard. During its last fiscal year, the company still managed to make a revenue of 17 billion US dollars in China. So my sense is that the company cannot afford to lose the Chinese market, at least at this point.

Why do you think the US companies will represent the largest contingent of foreign businesses at this year's Supply Chain Expo? Yeah, again, I think this is pointing to US businesses continuing, even growing, expanding commitment to the Chinese market. This trend is unlikely to change simply because of a trade war between Beijing and Washington.

Let's keep in mind that in April this year, a few days after China announced its countermeasure in response to President Donald Trump's so-called reciprocal tariffs, China's Commerce Ministry actually held a roundtable meeting with American business representatives in the country. And a key message of that roundtable meeting was that China would continue to welcome and support investors from America.

Every few months, there is a shortening of China's negative list governing the country's foreign investment. And in addition to this supply chain expo in Beijing, actually for six years in a row, American companies have ranked first in terms of the size of their exhibition area at a signature annual import expo held annually in Shanghai. So...

We can really see the clear trend here in that China has a consistent long-term policy to build itself as a very open economy. And the common interests, the common commercial and business interests between the U.S. and China are way too many. So

The US business community is quite unhappy, I think, with a trade war or economic decoupling or the so-called restructuring of trade between the US and China that Washington is chasing after.

Well, last month, Nvidia's chief executive, Jensen Huang, openly suggested that the U.S. government's attempt to limit China's access to cutting-edge AI chips has backfired and only made Chinese tech companies stronger. Does he have a point here?

From NVIDIA's corporate perspective, the US government action, like I said earlier, has definitely dealt a heavy blow to the company's business interests in China. The 17 billion US dollar China revenue I mentioned earlier by percentage actually represented the least amount in more than a decade in a company's history.

And according to the company, at the beginning of the Biden administration in early 2021, the company's market share here in China was nearly 95%. Today, guess what? It is about 50%. So the company has every reason to make this argument that the U.S. government has a failed, bad policy.

But beyond the perspective of NVIDIA, I think the action of the US government has really incentivized China, especially the Chinese government, to make increased investment in the country's own science and tech innovation capabilities. Self-sufficiency is a key objective of Chinese government policies.

And under such kind of circumstances, Chinese tech companies such as Huawei will naturally become stronger and more competitive, not because China is excluding U.S. technologies, but because the U.S. is not allowing its advanced technologies to compete in the Chinese market.

Well, at a time when we see serious challenges to global supply chains due to certain countries' trade policy, to what extent can China help stabilize international supply chains?

The reality is after decades of economic opening up, China is profoundly integrated into the global supply chain system. Trade flows in intermediate goods like components or semi-finished products usually serve as an indicator of the level of a particular economy's involvement in global supply chains. So in the case of China,

Imports and exports of those intermediate goods now make up more than 60% of China's foreign trade. In 1992, China accounted for 3.3% of global trade in intermediate goods. By 2022, that proportion has risen to more than 15% globally.

With that in mind, I think as long as China maintains a predictable, stable trade policy, we can still expect much stability in global supply chains.

But that being said, I think maintaining stability in this regard also requires concerted efforts by all those like-minded partners, like-minded economies or countries that champion free trade. This mission cannot be completed by China's power alone.

Okay, thank you. That is my colleague Ding Heng. And that's all the time we have for this edition of World Today. To listen to this episode again or to catch up on previous episodes, you can download our podcast by searching World Today. I'm Zhao Ying. Thank you so much for listening. See you next time.