Why is China holding its ground in the face of U.S. tariffs?
52:30 Share

Daily news and analysis. We keep you informed and inspired. This is World Today.

China says it does not want a trade war but is not afraid of fighting one. Meanwhile, Beijing draws a blueprint for building a community with a shared future with neighboring countries. And in South Korea, presidential frontrunner Lee Jae-moon enters leadership race. Welcome to Road Today, a news program with a different perspective. I'm Ge'anna in Beijing. To listen to this episode again or to catch up on previous episodes, you can download our podcast by searching Road Today.

Tensions in the global trade arena are heating up once again. The U.S. ramps up its tariff pressure, slapping a staggering 125% duty on certain Chinese goods. But China isn't sitting idly by. In a strong response, Beijing is calling out Washington's action as blatant economic coercion and warning that if it's a trade war that U.S. wants, China is ready to see it through.

At a press conference on Thursday, Chinese Foreign Ministry spokesperson Li Jian made it clear China will defend its interests, protect global trade rules, and push back against any bullying tactics by the United States.

So what's really behind this dramatic escalation? What could it mean for global supply chains and the rule-based international trade system? And how far is each side willing to go? To break it all down, we are joined today by Einar Tiangeng, Senior Fellow at Taihe Institute, and Dr. Zhou Mi, a Senior Research Fellow with the Chinese Academy of International Trade and Economic Cooperation.

Welcome, gentlemen. The 125% tariff recently announced by the U.S. is a number few could have imagined. It keeps climbing and feels almost arbitrary. So, Professor Jomi, could you please help us understand if there's any real logic behind President Trump's concept of

so-called reciprocal tariffs? And what's the number based on any serious economic reasoning or analysis? Well, you know, when we heard the name of the reciprocal, it means, reminds us that both sides are trying to reduce the impact of the tariffs. Actually, it is what has happened in the

previous decades, every countries are trying to reduce the tariff instead of just increase that. So when we are looking at the logic of the Donald Trump, I don't think it's really a good one because they want to reduce the so-called deficit with the trading partners around the world and is just trying to conclude everything into the tariffs. They believe that it is because of the so-called non-tariff barriers or other kind of unfair practices by other

trading partners that United States suffered from that, but it's not that. So they want to use the tariff to require or to force other countries or partners to change their behaviors. And I believe that is a kind of a very important, as you mentioned, the correlation to other partners. And I think that is also something to do with the balance of the budget of the United States government. They want to increase or collect more tariffs from the

you know, all other countries, they think it's the far state away. But I don't think it's a real state because when the important exporter changes the patents and the quantities, I don't think that the United States can still have the ability to collect the tariffs from other countries. And also, it will have a lot of pressure on the supply chains to do with the United States.

I know what's your take on the 125% tariffs on Chinese goods and on the consequences, for example, for U.S. companies that rely heavily on Chinese imports? What kind of pressure will this create for their supply chains, production capacity, profit margins and even jobs in related industries?

Well, let's be clear. The tariffs are not paid by other countries. It lessens demand for, for instance, China, because this is an irrational number. Basically, Donald Trump was bluffing. He thought that he could, you know, shock and awe everybody, make sure the penguins got in line, things like this.

And he was expecting a muted response that people would just come and beg him to take down the tariffs. But, you know, as China has seen, that doesn't work with Donald Trump. Look what he did to our closest neighbor and also ally, Canada. I mean, Justin went down to Mar-a-Lago and said, look, you know, let's work this out.

As soon as he got back to Canada, he found out that he was being called the governor of Canada and that it was going to be the 51st state. He's done the same thing over and over again. South Korea, they said, OK, we give in. What do we have to do? Well, it's not just tariffs. You have to accept 10 percent. And then on top of that, you're going to have to pay tens of billions of dollars or not 10, but billions of dollars for our protection.

And, you know, this this is a pattern repeated with the EU. They said, OK, let's do zero zero. And he said, no, no, no, no. You have to buy four hundred and fifty billion dollars worth of energy or whatever it was. And this is Donald Trump trying to remake the world in a way where the U.S. is the hub and every country is a spokesman.

in this wheel, and they all come back to the United States. And the United States can then use its superior size, military might, economics to, in essence, force a unequal deal with all of these countries. Now, it's worked for some. Some have said, look, what do we have to do? That's not working out very well. Others have just said, look, we're just going to wait and see. China has just stood alone by coming out aggressively and saying, you're bluffing, in essence.

And we will match your bullying tactics because you cannot sustain this economically over the long term. It's impossible. The the.

pain that is going to be felt by U.S. consumers is incredible. China is 30 percent of the world's production, and it cannot get away from that. So at this point, it's just Donald Trump trying to save face, say, look, I'm going to pause things for 90 days and I'm going to teach China a lesson. Well, it doesn't matter if you go 85 percent or 125 percent or 400 percent.

Basically, you're saying that you don't want to trade with China. And as I said, the ones that are going to suffer are the ones who are forced to pay the tariff simply because they have no other source for what they need. And this is not just consumers.

Consumers in America, every $1 out of $4 goes out to imported goods. They will suffer, but so will businesses. He has said that he wants to reindustrialize the United States. Well, that's fine, but in order to do that, you need machinery. You need all sorts of bits and pieces. You need chemicals. These are done by China, and there are no ready products.

sources for these. So it's a very, very difficult thing. It's really just Donald Trump trying to save face and China sticking to its guns. So at this point, expect a lot of, you know, as I call them, white rabbits, big announcements by Donald Trump to try to disguise the fact that he lost the biggest gamble in American history economically since they went,

The U.S. went off the gold standard in the 70s. That's a very clear explanation. Professor Zhao, do you think the U.S. can sustain the bluffing, as Einar mentioned? How will the 125% affect U.S. companies and consumers?

Okay, so we know that numbers really matter something for the people that really want to buy the things. But if it is too high for them to make the decisions, I don't think that they are still trying to do that. Well, if, you know, like the import has increased the price for more than 100%, how can we just try to increase

I think that, you know, many of the people are just thinking about the final consumers, the conceptions that we have to buy from different sources, like the shoes coming from China or Vietnam or Bangladesh or any other countries. So it's just a very limited part of this import. We know that a lot of imports have to do with the intermediate products.

And these intermediate products are really part of the supply chain and the industrial chain of United States. So the factories in the United States cannot afford to find another alternative supply of these things. So they cannot finish the products. How can they just try to export to other countries? So I would say that the shock is too much to afford because it's not only about the prices. It's also about the uncertainty. How can we try to find another country

who can supply us with such a good quality and sustainable supply. That is the most difficult thing. And I would believe that it is also something to do with international rules about how can we trust each other. Without trust, I don't think the international trade will even happen. As we recall the time in the 1930s when the Great Recession happened,

The high tariffs of the United States has made the export of the United States decrease for 81 percent. It's a really big shock, even for the United States.

So if we tend to right now, I think that situation becoming more complicated because we know that internationalization has reached a very high level. So maybe in the past that we can do a lot of things in the country by just the one party. But now we have to depend on the international coordination and cooperation, like for the, you know, the making of the automobiles. So we have to import a lot of things from other countries. I know that there is a data

that when the automobiles coming from the raw materials to the final products of the automobiles, it have a lot of transfer or crossing the borders of United States with Mexico, United States with Canada for more than 100 times. So how can we imagine that one country can do that alone? I don't think that any country can do that. So based on that kind of facts, I would say that higher tariffs are not

only trying to make the United States greater again, but trying to weaken its position in the international trade and also abilities for export. Then, Professor Zhou, in another dramatic change of policy, just hours after levies against roughly 60 of America's trading partners kicked in, Trump announced a 90-day pause on his tariffs.

And I said he was authorizing a universal lowered reciprocal tariffs of 10 percent as negotiations continued. How do you view these moves and the intentions behind it? Well, if you're looking at, you know, the change of the policies, I think that the United States really want to find some, you know, some alternative choices if they have to fight against so many other trading partners.

But I don't think that the negotiation is just a mercy given by the United States. I don't think it's just like that. So if you're looking at the past experiences that South Korea has reached the free trade agreements in the Obama administration, Donald Trump came into the office and he said, it's not good. It's a bad thing. It's a bad deal. So he used the so-called three, two, one.

two, three, two, the tariffs on the aluminum and the steam to steel to force South Korea to giving them even more offer. So I would say it's not just, you know, something to do with a fair negotiation. It is a really a greedy of United States. They want to take it

again, and they want to take it over, take everything. So the negotiation may be not just started as a fair basis. So I think it's not only about China, also about your nice with other trading partners. They have to think again whether the negotiation can bring them more peace or

maybe Donald Trump will just raise the tariff again if they are not something, you know, agree with his Princeton post. So I would say that it is a dangerous thing of this, you know, even the postpone of the 90-day so-called grace period is not a grace. Indeed. Einar, do you share the same stance? How do you view Trump's decision on a 90-day pause and the motivation behind it?

Well, this is the same man that three days beforehand had said that I'm never changing my policies. I'm sticking to my guns. You know, you don't expect me to change. And, you know, quite frankly, his trade representative was sitting in front of Congress and was notified by a congressman that, listen, you know, you're here defending a policy that your leader just put on hold 90 days. And the guy had nothing to say. He didn't even know about it.

He was stammering around. Well, I can't discuss. We talk about a lot of things. I can't discuss what I've talked about with the president. I mean, it was pathetic. I want to give due respect to the president of the United States. Trump is the president, but he clearly has no plan. It's bluster. He wants to intimidate people into countries, into kowtowing to him. And it's not going to work.

It's over. I don't know how else to put it. He tried. It didn't work. Now he's looking for some sort of face saving way of getting out of this. And you'll probably hear something in the coming days or weeks about now I've taught everyone a lesson. Everyone knows I'm serious. Now we'll get down to the real work.

Well, yeah, I don't think that that's really what he intended. But let's look at this. And I completely agree with Joe Me in terms of this is not just about trade internationally. You know, look what he did with Vietnam. He went, they said, look, you know, what do we have to do? OK, we'll do that. Then he said, OK, we have a long list of non-tariff issues.

that you have to agree to. And most of those issues have to do with origin. They basically have said to Vietnam, you cannot import anything from China and put it into products. Well, that would cripple the Vietnamese industry because they wouldn't have the intermediate goods necessary to produce things. So what he's doing doesn't make sense.

All right. And he's just caught in his own web of, you know, the dreams that he could somehow resurrect U.S. industrialization by threatening everybody. And then eventually what he wants to do is reduce the value of the dollar by about 30 percent. Now, this isn't just Donald Trump.

This was a plan that was hatched by Robert Lighthizer, who was the U.S. trade representative now and then before. And he did this about 12 years ago. So this is well before Trump. And he was pushing this idea that the only way that the U.S. could return to being a mighty nation was to reindustrialize and then devalue the dollar so that American products were more competitive with the world.

But even at 30%, all right, there's no way that the U.S. can compete in terms of labor with countries in Africa, Southeast Asia, even South America.

So it's kind of a pipe dream. People are scratching their heads. And it's not just people in China. You know, JP Morgan, all the investment banking houses, Fitch, everybody is kind of like, well, what on earth is he doing? That's why the markets are crashed. There's this momentary thing where they think, well, maybe this was just negotiations. This is just Trump being Trump. Extreme

extreme transactional. Maybe he has a big plan somewhere, but he doesn't. And right now, the forecast is that the U.S. is going to go into recession. And when that happens, it's not just the world that's going to suffer. It's the number one group that will really feel it is the American consumers and their voters. And they're going to

express their opinion about Donald Trump's lack of planning when it comes to the midterm elections, which will be in about 14 months. Einar, building on that, it's not just the numbers that are alarming. Experts are more worried about the speed at which this is happening, leaving governments, businesses and investors little time to adjust or prepare for a remarkable and different global economy. What do you make of the long-term impact of this?

U.S. trend on global economy today? Well, the U.S. has shown itself to be an unreliable partner. And you can't just say, well, Donald Trump was an aberration. He's now been voted in two times. The first time, you know, didn't get reelected. And now he's back. Now he's talking about a third term. There's this point where, you know, Europe has said things have changed. Right. Europe, you know, America's closest ally. You have the Canadians, the

who said, you know, this is no longer the way it was. You have changes unseen in 100 years, as to quote Xi Jinping. And these are impacting groups,

that really thought that they were close to the United States, that they could sit down and talk about things. I mean, Root, the fellow who heads NATO in Europe, you know, he was asked directly, he says, well, there's a clause in the NATO agreement that we won't engage in, you know, economic warfare. And he was just dumbfounded. He said, well, I can't answer that. I only care about the military.

Well, militaries are supported by economics. And right now, there's no even guarantee that the U.S. will remain in NATO. So everything is changing, but it is not changing in a way that is favorable to the United States. I mean, many people outside of China have told me, said, my goodness, Donald Trump has done what China could never do.

He has alienated all of America's partners, neighbors, and for no apparent good reason. I mean, America has wonderful strengths. We had universities. We had learning. We could have doubled down and done a Sputnik moment to try to get ahead in terms of technology, attract more people, talk about opportunity. But instead, nothing.

We went to this idea that we're going to build walls, you know, and then these will protect us and then we will reconquer the world economically. It's a tale that has been told before. It's called colonialization. And in Trump's case, he wants to do it economically as opposed to physically. Right.

Professor Zhou, what's your take? People are increasingly concerned about the rapid and unpredictable shift in U.S. policy today. We've witnessed a sharp decline of its A market. And can American economy itself actually withstand the shockwaves caused by such aggressive and fast-moving policy shifts today?

I don't think it's so easy for them to adapt to these changes because we know that the world is much more internationalized. Even for the United States, there are a lot of people, a lot of capital flow inside and outside. So I would think that connections are really giving us less time to respond about the changes, especially the policies. Like the people who want to buy our

TV, television, they have to think about what they can earn in the coming months or even years. And they have to find out what they can buy for the TV set for, you know, for the prices and origins. And can they have a better performance in the coming future or whether there will be some issues to do with the so-called national security or other problems?

So for the manufacturing, if they are going to expand their capacities, how can they charge the market, whether it will becoming bigger or smaller or will break the broken by, you know, by some kind of a policies. So, you know, the change of the policy intentions from Biden administration to Donald Trump is so large and complicated.

I believe that even within the 100 days before, you know, after he came into the White House, there are already so many changes. Who can expect what will happen in the coming three and more years? So there are so many uncertainties for the people who live in the United States and who are doing business with them. And that is definitely a bad thing for the people to make a longer term of decision.

and that will also cost so many extra money or they have to pay more risk on doing the judgment and also the planning for the economy and development. Professor Zhoumi, let's shift gears to China's response. It was swift.

You raised tariffs on U.S. goods from 34% to 84%, placed 12 U.S. entities under export control, and added six companies to unreliable entity list. How do you interpret China's response and position in this escalating trade dispute?

I would say that for China, the very longstanding principle is that we want to deal with disputes in the multilateral platform of WTO. So any kind of unilateral practices should be stopped.

But according to our law of the foreign trade law, we have to protect our companies, have to protect our consumers. So we are put in that position to fight against that. But we are not just trying to break the law of the multilateral system.

So I would say we have to respect the market because we need to depend on that to allocate the resources and help people to have more confidence in doing business. Maybe the world has so many countries and they are not only just the United States, but we still want to deal with this problem with the United States because we are the two most important economies in the world. Aina, very briefly, what's your take on China's response?

Well, it was the correct one. I mean, they called Donald Trump's bluff, as I said before. They knew. I mean, Donald Trump is trying to convince the world that he has four aces and that, you know, he's going to win. But the fact is, all of America's cards are on the table. And so are China's. So are Europe's. Everyone understands the situation.

So you can't bluff when you, in essence, have shown your cards. And this is what Donald Trump is attempting to do. He just thought by sheer force, you know, being a bully on the playground, he could take everyone's lunch money. And right now, with China doing this,

All right. This is a signal to the rest of the world that you don't have to get in. It's not that there's going to be a consortium that gets together and says, oh, we're going to coordinate all of our responses. But you're starting to see on a regional basis. Thanks, gentlemen. You're listening to Rode Today. We'll be back after a short break. Welcome. I'm Elav Elad, economics professor and member of the Data Science and AI Center at New York University, Shanghai.

On the World Today program, you can find in-depth and impartial insight, as well as critical commentary on key trends in the Chinese economy, financial technology, business and blockchain. To prepare for the world tomorrow, join me on World Today.

You've been listening to Road Today with Mika Anna in Beijing. As Washington ramps up its tariff war, sending shockwaves through an already fragile global economy, China is taking a very different approach, one that emphasizes cooperation over confrontation. At a central conference earlier this week, President Xi Jinping reiterated the importance of building a community with a shared future, especially with Chinese neighbors.

A statement released after the meeting noted, although relations with nearby countries are at their best since the modern era, they also face challenges arising from profound global changes. To address them, it was proposed to work under the community principles of shared destiny and Asian value of peace, cooperation and openness.

So what does this all mean at a time when global trust is eroding and economic nationalism is on the rise?

Could this neighborhood-first strategy offer an alternative path forward? Joining us now to break it all down is Dr. Rong Ying, chair professor with the School of International Studies at Sichuan University. Thanks for joining us, Professor. Thank you. Thank you for having me. Professor, let's start with the big picture. The United States is escalating its tariff war against almost the world.

Again, this back job, China is talking about building a community with a shared future with its neighbors. How do you interpret this contrast in strategic approaches? Indeed, there's a huge, I think, contrast, not only in terms of the strategic approaches between China and the United States,

but more importantly i think that contrast reflects the values or i i think that china and the the importance of and of china and the united states that are being attached to these uh countries that suits sits uh in china's neighborhood uh back in uh i think 2013 when china hosted the first ever

work symposium on neighborhood diplomacy since New China. I think the sort of guiding principles, the thinking is very much focused on amity, sincerity, mutual benefit, and inclusiveness. And ever since then, we have seen that

China and its neighboring countries has been, their relationship has moving and up in the sense, I think now the two sides are working very closely to fulfill the mission, excuse me, the vision of building a community of shared future.

And this is, I think, going to be certainly has make a sharp contrast with what the United States has been done. Not only history, I think, but most importantly, I have seen that the Trump administration's abuse of Paris, which constitutes a naked intimidation and blackmail,

for all the partners of trade. I think today's ASEAN ministers, economic ministers meeting came up with a very strong, harsh word of that tariff that has been imposed by the Trump administration.

criticizing the United States for disrupting the trading investment flow, impacting their economic safety and security, affecting the livelihood and welfare of ASEAN people. Most importantly, I think,

hindering the economic prosperity, particularly these less developing countries. So that is such a contrast I think we are talking about. That is, I think, definitely, I think, tells

loud and clear the differences, different approaches, but also the different thinkings and different, I think, values reflecting different cultures that are treating big, I mean, countries and partners, big and small.

Yes, I think this concept of a shared future, it seems to be gaining new weight amid global uncertainty. Professor, at a recent conference on neighboring countries, President Xi Jinping emphasized the region is fundamental to China's development and security. How do you rate the significance of neighborhood diplomacy to China today?

Well, back in 2013, 12 years ago, that was the first ever meeting or symposium for China's neighborhood diplomacy. And the meeting, the conference, central conference that you mentioned was just concluded. That is a further development. And also, again, a demonstration of the continued commitment of China to

to its neighbourhood. And of course, it also highlights to the extent, I mean, that China, I mean, China's neighbourhood has always been the top priority of China's work. Not only I think diplomatic work, that is of course very much important, but as one can see from the statement, it is very much related to China's own development and security.

and its own sort of mission or sense of responsibility as a major country in promoting building a secure, safe, amicable, I think, neighborhood, of course, first and foremost, but also the world.

And it's not just talk. We've seen some concrete moves, right, especially in partnerships and trade. Over the past decade, China has signed a Belt and Road Agreement with 25 neighboring countries and reached a consensus on a shared future with 17 of them. What's the broader strategy here, in your opinion? How do these partnerships actually work on the ground?

Well, I think the border strategy is China wish to have a kind of common development, win-win cooperation with its neighbors, with its neighborhood, so that I think China's development would not only help its own people, but more importantly, I think China's neighborhood, which of course should be the

which is so important to China itself, but in the world as a whole. As we see, most of China's neighbors are developing countries, and they assume their own model or own way of development. Again, at the conference, I think the central conference of China's neighborhood work, President Xi made it very clear China would like to continue to develop

foster kind of neighborhood, which is secure, prosperous and amicable. The most importantly, I think, would like to

prioritizing cooperation and seeking common ground and share differences. That is also, of course, very much important because as we know that between neighbors, it's only natural there are some differences and even sometimes disputes. But to manage these differences perfectly

prevent these differences, I mean, developing into a kind of a conflict is very much important. China has always committed to that, has always committed to resolve these differences through dialogue and through diplomacy.

Professor, one last question. Of course, it's not all smooth sailing, right? The conference statement acknowledged challenges in the region. Despite what's described as the best relations in modern history, China's neighborhood still faces challenges arising from profound global changes. What are some of the biggest risks or tensions you see right now from global changes? And is China and its neighbors ready for those changes ahead?

I think the largest, the biggest challenges or biggest risk for China's neighborhood is of course what is happening now when a big country, a major country like the United States, because its own sort of, for the sake of its own sort of interest,

that would like to pursue in a unilateral way that at the expense of others. So that kind of behavior, that kind of thinking

And the consequences that are arising from that is now becoming very much kind of hard. Not only disrupt the current international order, but bring uncertain and untold sort of problems for neighbors.

Personally, I think it's the first time for me to come up with such a strong-worded statement by the ASEAN. And I think that is a very telling example on how sort of...

how much damages the United States. And China has made it very clear it's ready to work with its neighbors and to – for – by sharing wheels in the world and to ensure that its neighborhood is stable, peaceful, and

so that it will continuously enjoy a prosperous and secure sort of environment for its own development. Thanks, Professor, for your insight of analysis. That was Dr. Rongyin, Chair Professor with the School of International Studies at Sichuan University.

Now let's take a look at China's economic landscape. There are signs that country's deflationary pressures are starting to ease. In March, China's consumer price index dipped just by 0.1% year-on-year, an improvement compared to February's 0.7% decline. On the other hand, China's producer price index, which tracks factory-level prices, fell 2.5% in March,

slightly dropped from February's 2.2%. Officials point to the seasonal factors and falling international commodity prices for the shift.

To delve deeper into what all this means, my colleague Xue Wen talked with Dr. Zhang Gong, a professor at University of International Business and Economics. Dr. Gong, first of all, China's CPI has decreased by 0.1% year-on-year in March, but is an improvement compared to February's 0.7% decline. So what do you make of this improvement? And do you expect

to see this positive trend to continue in the coming months? Well, first of all, let me say that a negative CPI number is not necessarily a bad thing, actually. I think it's driven by a couple of things. I think more recently, the CPI number getting very small, close to zero, even negative, has a lot to do with the global commodity prices not going up.

oil prices has been coming down for quite some time. And so I think these are the fundamental factors driving this. Another thing I would argue is that the CPI number also reflects the extent of competition on the Chinese market. Prices, after all, is also driven very much by competition, as we all know, there's intensive competition here in China. And the production chain, the

the value chains are also getting more and more efficient

that makes costs come down. So I think that's why the prices can indeed come down a little bit. So I don't necessarily interpret this as a bad thing. I think as long as the P&I number is less than, let's say, 2%, which is sort of the threshold that economists believe is a healthy threshold, anything less than that is over-sceptical. So I think we're OK right now. And I would expect

CPI numbers will remain in the very low territory for some time. We have noticed that the National Bureau of Statistics says that the consumption boosting policies is the main reason for the improved CPI numbers. In your view, which specific measures are having the most visible effect and how might these be expanded?

Well, I think the central government and also provincial governments have been doing very things to try to boost consumption. I think we're starting to see these policies to display some effectiveness, to display some efficacy. I think if you really ask me the question about what is the most important factor among these policies, and I would say most directly, of course, is the quote subsidy. These are actually really

rebates of taxes, in my view, associated with consumption. I think this has a direct impact on people's pocketbook. And that's probably the most important reason driving the recovery of the consumption sector right now. And I think it's all the more important to see and to maintain this momentum in consumption

against the backdrop of this trade war you naturally waged upon us by Washington. Dr. Gong, so China's PPI also dropped by 2.5%, and this is a wider decline compared to February. In your view, what are the main factors behind this decline, and how does this reflect the overall health of China's industrial sector?

Yeah, well, I think, you know, I will stick to the same theme that I've been talking about here. You know, the global commodity prices, oil prices, the improved efficiency in production, the market competition, these are all the things that are exerting pressure on the price. And again, I would say the PPI number coming down is not necessarily a bad thing. That means that Chinese manufacturers are getting more and more competitive.

competitive and efficient. So I think again, that's a bit of the good news. You know, in terms of we're getting to a

age of intense competition with Washington and also sort of like a decoupling from Washington. And another thing is that we have observed that both the CPI and the PPI declined. And also, as you mentioned, the ongoing trade war launched by U.S. against China and also the rest of the world and along with some domestic demand pressures

There has been growing speculation about potential interest rate cuts and reserve requirement ratio reductions. So how likely do you think is that People's Bank of China will implement these measures soon?

I think it's inevitable. I think the overall trend towards partial decoupling or maybe even complete decoupling from U.S. is a long-term trend that is bound to happen, in my view. I previously would hope that this process can be manageable. We hope this process can be less destructive and less abrupt.

But now what's happening in Washington is that President Trump is accelerating this process. And this is something that, you know, very difficult to to avert.

Nevertheless, I still would encourage, I would still advocate that both sides should be talking to each other. I think a negotiated solution is in both sides' interest right now. So certainly I would hope that this would happen. Nevertheless, this is something that kind of a very difficult to unilaterally avert from China's side.

And one of the policy tools that central government can apply is exactly what you've been talking about. That's the loosen up the monetary policy to encourage consumption

and beef up consumer confidence, beef up the equity market, investor confidence as well. These are typical policies in face of great difficulties externally. So I would expect that China will adopt these policies.

Currently, the U.S. market represents almost a half trillion dollar market. It's still a very sizable market. So we need to come up with policies to deal with that. And I think the things you've just mentioned, the things that I've just mentioned are the usual tools that the government can use to at least weather through this very challenging time. Then what's your forecast of the Q2 performance of China's economy? I would expect...

The momentum will at least continue. I think the impact of the trade war may take a few more, maybe two or three months to take effect. But I would at least expect the second quarter will be OK, maybe around 5%. That would be my guess. But I would imagine that to get into the third quarter and fourth quarter, we're wading into more challenging territories. But we have to see what's going to happen there.

That was Dr. John Gong, a professor at the University of International Business and Economics. Coming up, in South Korea, presidential frontrunner Lee Jae-moon enters leadership race. This is REL Today. Stay tuned.

History doesn't just echo, it warns. As Washington ramps up tariffs and the world braces for economic whiplash, we're rewatching a 21st century rerun of Herbert Hoover's Great Depression playbook.

From China's counter-strikes to cracks in America's economy, we unpack whether this trade war is strategy or self-sabotage. Get all these on this week's Chat Lounge, wherever you listen to podcasts, and on CGTN Radio.

You've been listening to World Today. The former leader of South Korea's opposition Democratic Party has announced his bid for the presidency. Lee Jae-moon is the frontrunner in opinion polls. He resigned as party leader on Wednesday amid widespread expectation for his presidential run.

He has promised to fix inequality and spur economic growth. South Korea caught a snap election for June 3, following the Constitutional Court's removal of former President Yun Suk-yeol from office. So for more on this, Zhao Ying joins us in the studio. Welcome, Zhao. Thank you.

First of all, could you please give us a brief introduction? Who is Lee Jae-moon and what's driving his lead in the poll with 34% support according to recent surveys? Yeah, he is perhaps one of South Korea's most prominent and polarizing political figures. And actually, he is a familiar figure to South Korean voters because he narrowly lost the

The 2022 presidential race to Yun Su-yol is literally narrow because the margin was less than 1% and it was the closest election in South Korea's democratic history. His leadership in the Democratic Party's landslide parliamentary victory in 2024 further entrenched its support among liberal voters.

And notably in 2023, he undertook a 24-day hunger strike to protest what he called the UN administration's incompetent and violent governance, particularly its

softened stance toward Japan. And he's also seen by many as a fighter, someone who's been through legal battles, a knife attack earlier this year, and intense political opposition, but keeps coming back. But I think what's really driving his lead now is timing and positioning because following Yun Suu's impeachment and removal from office, many voters are disillusioned with the ruling people

People Power Party, which is still scrambling to find a strong candidate. And in contrast, Li has hit the ground running with a well-organized campaign and a clear message. He's calling for a government that serves the people, not the elite. And he's portraying himself as someone who came from humble beginnings and understands the struggles of ordinary citizens.

And this narrative resonates especially well now as many Koreans are grappling with rising costs of living and their housing insecurity. As you said, Lee has positioned himself as a champion of the common people. Now, what are the core elements of his economic and social platform that are resonating with voters?

Well, at the heart of this platform are policies aimed at addressing what he calls the polarization crisis, both economically and socially. And one of the biggest pillars of his platform is government-led investment, because Lee argues that South Korea's economy cannot rely solely on the private sector, especially during a downturn. And he's calling for massive public investment and key areas like

areas like technology, green energy, and talent development, not just to stimulate growth, but to make it more inclusive and future-ready. And he's also been vocal about income and wealthy inequality. Lee says that while South Korea has become richer overall, that prosperity is concentrated in the hands of just a few, and he wants to rebalance the skills, and that includes promises of stronger social safety nets,

support for small businesses, affordable housing policies, and possibly even a renewed push for universal basic income. And on social issues, Li emphasizes unity and pragmatism, like he's trying to move beyond partisan divides by focusing on what he calls common sense solutions. For example, he's spoken about bridging the urban-rural divide, tackling youth unemployment, and improving quality of life for the elderly.

which he argues are not ideological issues, but basic responsibilities of a functioning government. And also what's interesting is how he's connecting his economic platform with national identity and pride, because he said that South Korea's cultural exports, like from K-pop to film,

show the country's potential on the global stage. And he wants to see more government support for the creative economy to turn soft power into an economic engine. Speaking of resonating with voters, Li is currently facing multiple legal challenges, including bribery charges and property development scandal. There are some recent court decisions that have cleared certain hurdles.

But how might this ongoing case affect his candidacy or public perception at the election approaches? Yeah, his legal troubles are definitely one of the biggest wild cards in this election. And conservative critics argue that a candidate under criminal investigation shouldn't be allowed to run for the highest office in a country. And they're using their charges to frame Li as corrupt and untrustworthy. But in fact,

In the wake of Yoon So-yul's impeachment and the political chaos that followed, Lee's poll numbers actually have gone up and many of its supporters view the charges as politically motivated and as a continuation of what they see as the former Yoon administration's attempt to neutralize opposition figures through legal means.

And the bigger picture here is that South Korea has become somewhat used to politicians facing legal scrutiny, sometimes even while in office, because past presidents from both major parties have been indicted or jailed after their terms.

And that has contributed to a sort of public cynicism about political scandals. And what seems to really matter now is whether voters believe a candidate can actually deliver on the promises and bring stability. And I think Li now, he is trying to positioning himself as a survivor of political persecution

and someone who's endured attacks but remained committed to the public good. And whether voters buy the framing, we'll need to wait and see. On foreign policy, Lee has called for a pragmatic approach that puts South Korea's national interest first. How does this differ from former President Yoon Suk-yool's values-based diplomacy?

Yes, Lee has said that while the South Korea-U.S. alliance is important and South Korea-U.S.-Japan cooperation is important, but the consistent principle is that the national interest of South Korea comes first. And he is signaling more flexibility and more independence in Seoul's foreign policy. For instance, he has called for a proactive negotiation

diplomacy to reduce military tensions with North Korea, in contrast to Yun's hardline, almost exclusive defense oriented approach. And he's also critical of the idea that South Korea should get pulled too deeply into confrontations involving Taiwan or the broader US-China rivalry. And he's also said South Korea should be willing to learn from

how Donald Trump defends American interests, even if it means imposing tariffs on allies or negotiating with adversaries. Then aside from Lee, who else has entered the race so far? And is anyone from the conservative camp emerging as a serious challenger?

Well, the conservative field is crowded but lacks a clear frontrunner right now. Former Labor Minister Kim Myung-soo is polling at around 9%, making him the top conservative contender so far. And Han Dong-hyu, a former justice minister and once a close ally of Yoon So-yeol, has also entered the race. His break with Yoon over the impeachment gives him some distance from

from the scandal, but this also made his position within the conservative base kind of shaky. And other names include Seoul Mayor Oh Si-hyun and Ahn Cho-su, but none of them have broken out of the single digits in recent

polling. And the ruling People Power Party will hold a primary in May. But for now, the conservative vote is fragmented and no one has really emerged as a serious match for Li's momentum, at least not yet. Thanks, Zhao Ying, for your insights. That's all the time for this edition of World Today. I'm Guiana in Beijing. Thank you so much for listening. Bye for now.