Will the US get involved in the Israel-Iran war?
51:51 Share

Hello and welcome to World Today, I'm Zhao Ying. Coming up: Israel and Iran have intensified attacks as Trump says he may or may not strike Iran. How close is the US in entering the war? New Zealand Prime Minister Christopher Luxon is on a visit to China. What's on his agenda?

The Federal Reserve cuts outlook for U.S. economy but holds interest rates steady. What's behind this decision?

U.S. President Donald Trump has reportedly approved an attack plan on Iran, but has not yet made a final decision on whether to strike the country. Trump said at the White House that the next week is going to be very big and that nobody knows what he's going to do. Iranian Supreme Leader Ayatollah Ali Khamenei has rejected Trump's demand for unconditional surrender, saying any U.S. military intervention would be costly.

Israel's military launched more attacks on Iran, hitting missile sites and nuclear facilities. Iran said it has fired hypersonic missiles in response. For more, we are joined by Dr. Zhang Chuchu, deputy director of the Center for Middle Eastern Studies at Fudan University. Israel has continued to strike Iran's nuclear facilities and claimed to have controlled the skies of Tehran while Iran retaliated with hypersonic missiles.

So what do these latest developments reveal about each side's military strategy and the current balance of power? Well, I would say that the current situation is indeed very worrisome. And we can see that the relations between Iran and Israel is highly intense. And also, I think it is very likely to continue this kind of attacks between the two sides.

Because although Israel has already attacked a lot of targets in Iran, at the moment, since Israel says that its objective is to damage totally Iran's nuclear facilities, but we know that actually a lot of Iranian nuclear facilities are deep under the earth. So it's very hard for Israel to achieve this kind of objective. So right now what we are seeing is that Israel does not want to stop here.

and in response iran also continues its attacks against israel including its important cities and key facilities so um things are going worse and also we can see that as a result there is a whole of the ongoing nuclear talks between iran and the us so in general i think the situation

of security in the Middle East has deteriorated, and also the regional order may become even further imbalanced. Yeah, and Donald Trump has reportedly approved the plan for a potential US strike on Iran, but he has yet to make a final decision. So what are the factors likely weighing on his mind right now?

Right, I think the United States is trying to make a balance of a certain sort between involvement with caution to avoid deeper entanglement in the Middle East. Okay, as Trump adopts the America First policy, he does not want to invest a lot of diplomatic and military resources in the region.

And meanwhile, we can see the United States avoids to become a target of Iran's retaliation actions. In particular, Donald Trump tries to protect the United States military bases in the region from becoming targets.

So I think at this stage, I think Trump, what he's going to do is that he will continue showing firm support of Israel, acting as a very hotline actor, keeps threatening Iran. But I think he is very unlikely to deeply and directly get involved in a conflict at this stage.

Well, Trump has called for Iran's unconditional surrender and even hinted at targeting Iran's supreme leader. But at the same time, he also expressed hopes for a negotiated agreement with Iran. How should we interpret these mixed signals and what impact might they have on diplomatic prospects?

well from my personal observation i think trump's call for unconditional surrender and his threats to target the supreme leader are likely intended to project his power and intimidate iran into concessions

by keeping his intentions very unclear. I think Trump, well, you know, one of his characteristics is that he always wants to maintain his leverage, his flexibility in order to leave more room for transactional benefits. So right now what he wants is to pressure Iran while leaving some room for de-escalation if negotiations bear fruit.

And also, I think this indicates a willingness of Donald Trump to explore diplomacy so as to avoid direct U.S. military involvement. But here the problem is that this sort of discourse actually hardens Iran's stance, reducing the likelihood of immediate talks. So that is what is becoming even worrisome.

Well, Iran's Supreme Leader Khamenei has rejected demands for surrender and he warned of irreparable damage if the U.S. intervenes. But should the U.S. choose to engage militarily, what retaliatory options does Iran realistically have?

Well, in fact, Iran has already been placed in a very hard situation and is facing a dilemma. Okay, so Iran has threatened to target United States bases across the Middle East, particularly in its neighboring countries. And also we can see that its ballistic missiles, etc., could also inflict significant damage.

although Israel's disruption of the missile launchers may limit this kind of capability. Also, we need to take into consideration that Iran would also mobilize its allies and militias in its neighboring countries in the Middle East in general to coordinate with itself and harness United States forces.

And last but not least, Iran could also attempt to disrupt oil shipments through the Strait of Hormuz using naval mines or attacks on tankers so as to impact the global energy markets. But in general, I think Israel right now does not want to go to these kind of extremes, and I think it still wants to control and limit

the geographic scale and in general, the extent of this kind of conflict. So I think this would also be a high risk move for Iran at the stage.

Well, we see that the EU is also looking to talk with Iran and France is pushing for this negotiated solution with EU partners. So could this European initiative realistically gain traction given the current tempo of violence?

Well, indeed, I think right now we can see France is trying to make an effort. But I think the feasibility of this kind of initiative, this kind of efforts gaining traction is very limited. And this is caused by a lot of factors. So above all, Trump's ambivalence and Israel's insistence on continuing operations and attacks until objectives are met actually undermine European efforts.

And secondly, we can see as Iran has already suffered from huge losses and the attacks from Israel continues. It's very hard for Iran to make significant concessions immediately at this stage, as this would affect the legitimacy of the government. And last but not least, we also need to see the whole picture, because at the very beginning, since Trump's second administration, he is trying to

to change a little bit the mechanism of the talks with Iran regarding the nuclear issues. Because in the past we had the so-called P5+1 mechanism, but right now what Trump wants is to actually just focus on the bilateral dialogues between the United States and Iran. So at this stage, I think what EU can do is still very limited.

Okay. And then what role, if any, are regional powers like Saudi Arabia, Turkey or the UAE playing right now? I think actually Saudi Arabia is very likely to play a cautious role. So this may, it's likely to influence United States restraints.

and it's very possible that Saudi Arabia is indicating economic or diplomatic coordination so as to stabilize oil markets. And also Saudi Arabia is also very likely to pressure Iran. As for Turkey, actually Turkey is engaging in diplomatic efforts to broker a ceasefire leveraging its regional influence and ties with both Iran and the West.

But I think Turkey will focus more on mediation rather than direct intervention. Now it comes to the UAE. So as for the Emirates, I think its interests align with Saudi Arabia. So the UAE is also likely maintaining a very low profile to avoid entanglement in the conflict.

And also, it's very interesting that the UAE, it has a lot of problems and tensions with Iran as well. And at the same time, we also know that during Trump's last administration, the UAE and Israel had already reached a reconciliation. So at the moment, I think the UAE will also keep very cautious approach.

you know, a position. And for the UAE also its priorities to secure the Persian Gulf shipping lanes. Yeah. So now with U.S. carrier strike groups moving to the Middle East and Iran preparing potential retaliatory strikes on U.S. bases, what are the risks of a broader regional war involving other states and non-state actors?

Right. Well, on the one hand, these kind of actions obviously heightens the risk for wider conflict because now we can see that Houthi rebels has already participated in this conflict.

And also Iranian other allied militias in Syria, in Iraq, etc., might also be mobilized if there is a further escalation of this conflict, particularly if the United States take direct part in it.

and they are likely to target, for instance, United States or Israeli assets in the region, and this can escalate cross-border violence. And last but not least, we should also take into consideration of Russia's role. Well, at the moment, Russia tries to take a very cautious response.

But at the same time, also for Russia, because Syria's Bashar Assad regime has already ended. So right now, its ally in the region is not a lot. And among them, the most important ally of Russia is Iraq.

So Russia's move suggests very limited direct involvement, but if the violence escalates, it could also provide Iran with diplomatic or material support.

But in general, we should also see that I think all of these actors, they know clearly that an escalation of this kind of conflict serves no one's interest. So at this stage, I would say that still a lot of actors here want to control this conflict at a limited scale. Thank you, Dr. Zhang Chuchu, Deputy Director of the Center for Middle Eastern Studies at Fudan University. You're listening to World Today. Stay with us.

You're listening to World Today. I'm Zhao Ying. New Zealand Prime Minister Christopher Luxon is on a three-day visit to China. The trip focuses on strengthening trade, tourism and green development ties between the two countries.

In a social media post on Wednesday, Luxon described China as New Zealand's largest trading partner, suggesting that cooperation in multiple areas is helping economic growth for his country. This is Luxon's first visit to China since he took office in November 2023. He has brought with him a delegation of 28 business leaders.

Joining us now in the studio is my colleague Ding Heng. Thanks for being here. Hello, Zhao Ying. Why do you think New Zealand is looking to strengthen ties with China in areas like trade and tourism? Because first of all, we're seeing a lot of global uncertainties and trade disruptions right now.

In the words of New Zealand Prime Minister Luxon, his trip to China is coming amid choppier waters worldwide. I guess he is referring to or he is talking about the serious challenges that our globalization and free trade is faced with nowadays.

New Zealand is a steady, fast supporter to free and open trade because New Zealand itself represents an open yet small economy whose prosperity actually depends very much on trade. International trade accounts for some 60% of New Zealand's GDP.

So Wellington, I guess, Wellington is very much worried by the current global situation, especially regarding trade and tariff war. And against this backdrop, China has really emerged as a stabilizing force for global trade, so to speak. So New Zealand has every reason to see China as a reliable, dependable partner on trade and beyond.

And it's actually very, very encouraging and exciting to see Prime Minister Luxon clinch commercial deals worth more than 871 million US dollars during his stay in Shanghai as part of his trip to China this time. Then in terms of tourism, for example, if...

I would tell my fellow Chinese citizens, if you are a fan of natural sceneries, if you are a fan of mountains, lakes, rivers, then New Zealand is the place to go. I personally had a great experience traveling to New Zealand back in 2016 and then in 2018 as part of my honeymoon actually. China is already implementing a visa-free policy for tourists from New Zealand.

On the eve of Prime Minister Luxon's trip this time, his government announced a visa waiver trial for Chinese passport holders visiting from Australia. But of course, over the long term, we Chinese people hope that New Zealand will move towards a full visa-free entry for Chinese travelers.

And in the meantime, there were also great potentials in areas like, for example, education. It's interesting to note that during his trip this time, the New Zealand Prime Minister has actually met with the Chinese author Ma Boyong, you know, a TV drama.

adapted from a novel written by Ma Boyong is now a great hit in China. Ma is a graduate of the University of Wakaato in New Zealand. So meeting with Ma is actually a very, very smart step taken by the New Zealand Prime Minister in terms of highlighting deepening education ties between China and New Zealand.

Well, in Shanghai, Prime Minister Luxon witnessed the signing of a memorandum of understanding for a new air corridor connecting China, New Zealand and South America. What do you make of the significance of this planned air corridor? Traditionally, Chinese people are traveling to or flying to South America and vice versa. They need to transit in a European country or in the Middle East, I guess. Now,

If there is a new flight route to be able to allow them to transit in New Zealand, definitely the corridor can boost the train to travel and development across China, New Zealand and South America, that's for sure. China Eastern Airlines has already announced that it is going to launch the first flight route from Shanghai via Auckland in New Zealand

to Buenos Aires in Argentina by the end of this year. And on the part of Wellington, New Zealand has also confirmed visa-free transit for Chinese travelers.

China is forging closer ties with Latin America. That's one trend. So in the future, I guess New Zealand actually will have a role to play, will have a very significant role to play in terms of enhancing the ties and personnel exchanges and trade between China and Latin America. That's good for the development of New Zealand as well.

Earlier this month, a lineup of former New Zealand political leaders, including former Prime Minister Helen Clark and Sir Geoffrey Palmer, published an open letter urging Luxembourg to use this visit to make it clear at the highest level that New Zealand retains its commitment to its strategic partnership with China. How do you look at their message?

Well, in New Zealand, there are some hawkish voices about China. They somehow see China as a threat. That's undeniable. And within the New Zealand's policymaking circle, there is also some debate about how to deal with the relations with China.

But to me, this is not surprising, actually, because ideologically and culturally speaking, New Zealand is part of the Western society. But this open letter, on the other hand, is really a is really reflexive of this fact that there are people.

Still, plenty of people who hold reasonable, rational perceptions about China, they see China as a vital partner of their own country, and any antagonism will really risk serious fallout and is totally needless and unnecessary.

These people worry that soaring relations with China could carry serious economic consequences for New Zealand. I think at the end of the day, these people are...

setting their eyes on what's really best for their own country. The latest data suggests that New Zealand's latest quarterly GDP growth was only 0.8%. So against that economic backdrop for the country, I think for the sake of the economy to say the least, Wellington needs to have a good management of the relationship with China.

A scenario in which the bilateral ties are negatively affected by their differences is in the interests of neither party.

Well, there are signs that under Prime Minister Luxon, New Zealand has developed closer security alignment with the U.S. Is this a stumbling block of the partnership between New Zealand and China? Not necessarily. For sure, New Zealand is an ally, is an Asia-Pacific ally of the United States. But I think as long as New Zealand does not position itself alongside the United States as an adversary of China,

It's entirely possible for New Zealand to maintain a robust and healthy relationship with China. I see independence as part of Wellington's wisdom and part of Wellington's foreign policy legacy. In 1984, New Zealand passed a piece of legislation that made the entire country a...

nuclear-free zone. And that legislation and that very step in 1984 effectively barred American warships, especially nuclear warships, from docking in the country's ports.

And with the current White House administration, I think it's actually quite difficult for Wellington to somehow argue that it shares common values and interests with the Trump administration. So, yeah.

I think it's probably true that this bigger geopolitical rivalry between the United States and China is making ties between Wellington and Beijing more complicated than before. But in the meantime, this is also a mature relationship which enables both New Zealand and China to make sure that they will continue to have huge areas of cooperation.

How does China view its relationship with New Zealand? And in what ways does this relationship matter to China?

To China, this is a very, very special relationship. New Zealand is the first developed country to sign a free trade agreement with China back in the year 2008, I guess. And also, it was one of the first developed countries to recognize China's market economy status.

Those things were very, very significant in retrospect, and they are very much appreciated by China. And I think on the part of China, China definitely hopes that this special relationship in the eyes of China will continue to be valued by the New Zealand side as well, in

In the meantime, China is also, you know, actively engaged in diplomacy with Pacific Island countries for the sake of mutual benefit and a common development. This is part of China's bigger, you know,

strategy or tactic to try to deliver broader goods to the global South community. And because of the huge influence enjoyed by New Zealand in that region among those Pacific Island countries, I think still China sees New Zealand as a very important partner in terms of, you know, jointly delivering goods or benefits to that very region.

Okay, thank you, Ding Heng. And coming up, the Federal Reserve cuts outlook for U.S. economy but holds interest rates steady. What's behind this decision? And some U.S. states are sending delegates to the EU for advice on green policy. What's behind this move? You're listening to World Today. And remind our listeners, if you want to hear this episode again or to catch up on previous episodes, just download our podcast by searching World Today. We'll be back after a short break.

You're listening to World Today. I'm Zhao Ying. The U.S. Federal Reserve has left the target range for the federal funds rates unchanged at 4.25 to 4.5 percent. This marked the fourth time in a row that the Fed has let benchmark interest rates in place.

The decision came amid forecasts from policymakers suggesting they expect slower growth, higher unemployment and faster inflation. For more, we are joined by Dr. John Ghosn, professor from the University of International Business and Economics. Professor Ghosn, thanks for joining us.

Thank you very much. It's a great pleasure to be here. So the Fed cited somewhat elevated inflation and weaker growth forecasts as the reasons for holding rates steady. How do you interpret this cautious approach? And what does this suggest about the Fed's confidence in where the economy is headed?

Well, I think the Fed's primary job is to deal with inflation. I think Powell is still very much concerned about the prospect of inflation as a result of the tariffs that have been introduced by the Trump administration. I think it's going to take some time for these tariff effects to take place, to work things out in the market. And ultimately, it's got to be reflected

on the shelves of retail outlets in the United States I think he understands that and is preparing for that so I think this is what he's mostly coming from so that's why he is keeping the rate unchanged right now even against much pressure coming from President Trump

Okay, so do the Fed's projections of slower growth, rising unemployment and higher inflation kind of point toward a risk of stagflation in the U.S. economy?

I'm actually not even sure about slow growth. I mean, the first quarter, actually, we are seeing a contraction. There's a little bit of a contraction. And I would expect the second quarter may be more or less the same, actually. Very little growth for the first half of the year, you know, for a couple of reasons. The federal spending has been dramatically cut.

tariffs being imposed, cutting into people's consumption. All of these things is creating a macro sentiment, I would say, that is impeding American consumers to further spend money. And the GDP, the growth is very much driven by consumption. So I think we're likely to see very little growth for the rest of the year.

Yeah. And as you said, tariffs could be a potential driver of inflation in the coming months. How significant could the impact of Trump's trade policies be on inflation? And how might that influence Fed's timeline for rate cuts?

The extent of tariff increase, we're still not very sure actually, right? I mean, the United States has only worked out only one agreement with the United Kingdom. With China, it's still very much in the air. Reportedly, it has already been negotiated out, but it's waiting for approval. And what's happening with the rest of the world, we don't know yet. And on top of this, there's a tremendous amount of uncertainty

regarding global stability right now. The United States is poised to make a profound decision by President Trump in the next few days, I would say, whether it's going to bomb Iran or not. And if that's the case,

The Iranian side has already said that they're going to entirely close down the Hormuz Strait, which will drive oil price. And some experts are saying oil price can be shooting to as high as $400 per barrel. I mean, it's just really a scary scenario. And if that's the case, I am pretty sure that we will have a global recession, period. So, you know, this is a moment of a moment

tremendous uncertainty right now. And I think the Fed is taking a very cautious position right now. Stay put right now and see what's going to happen next.

Yeah, and also we see that inside the Fed, we see that the dot plot shows a split among Fed officials, actually, with 7 of 19 now expecting no rate cuts this year. And that's up from 4 in March. So what does this growing divergence suggest about the challenges the Fed faces in reaching a consensus on their monetary policy?

I think this is subject to a lot of uncertainties, subject to major decisions. I think if we take away this piece about the potential war, the way the economy is going is still, I think it's essentially, it's a trading sideways economy right now. It's not going anywhere. It's in the process of digesting all these shocks.

And I also think that Powell is probably seeing a future recession might be coming and he is preserving some space for rate cuts in the future. So that's why he is not in a big hurry to go ahead with the rate cuts right now.

I think probably this is where he's coming from. Well, Trump has publicly criticized Powell and he called for a two percentage point right guard. How might this political pressure influence the Fed's decision? And how much real independence does the Fed still have in this political environment?

Yeah, well, I think power is doing a good job of standing on its ground. He's not yelling. He's not succumbing to President Trump's tremendous political pressure. You know, Trump always, as a president, of course, in the executive branch, he certainly wants to see a

low interest rate, the economy is growing and he also wants a weaker dollar. So understandably, he wants the rate cut. But United States Federal Reserve has a long-held tradition of making independent decisions not influenced by the executive branch. It's supposed to be a political decision-making process.

So I think at least Powell is standing on his ground and he's not backing off. So this is actually good. So I wouldn't expect that he would change course at all this time. I think he's going to continue that tradition and take actions when it's called for.

Okay, thank you, Dr. John Gong, professor with University of International Business and Economics. This is World Today. Stay with us.

Welcome back. You're listening to World Today. I'm Zhao Ying. U.S. states are sending delegations to Brussels to seek advice on climate policy in the face of the Trump administration's deepening opposition to green measures. Lawmakers from states including Washington and New York have met European Commission climate officials in recent weeks. EU officials say states are mostly Democrat, but the visiting lawmakers have been bipartisan.

The EU views the outreach as a key part of its efforts to promote carbon pricing worldwide. For more on this, we're joined by Harvey Zoden, former vice president of ABC TV Network. Harvey, thanks for joining us. Thanks. So what do you think is driving U.S. states, especially those sending bipartisan delegations, to look to the EU for climate policy advisors at a time when the federal government is rolling back green initiatives?

Well, until Trump won in 2002,

There was some degree of overlap between Democrats and Republicans on the national level that the climate agenda was important and needed to be accomplished. Trump, who's beholden to dirty energy special interests, has taken a dirtier position on the national level. So he's gone all in on drill, baby, drill. The state level was a little bit different.

Democratic blue states were generally going all out to save the environment.

but Republican red states were opposed to regulation other than by market forces. But now many blue states and localities, even some red states and localities are realizing that the crisis is an imminent emergency and that the federal government is not helping. So they realize time is running out and that the,

It's almost an impossible task to limit greenhouse gases to 1.5 degrees above pre-industrial levels as required by the Paris Climate Agreement. And an expert panel just reported that we may only have three more years to reverse this trend. We're really up against the deadline, and it's not a pretty picture.

Well, carbon pricing appears to be a central topic in these discussions. To what extent does the EU's emissions trading system serve as a model for those US states considering their own carbon pricing schemes?

Well, the EU Emissions Trading System, or ETS, it's seen as the global leader, and it serves as a model to be studied. In fact, it's already inspired some subnational regulations in the U.S., and the EU ETS is a cap-and-trade program that puts a price on carbon pollution. So how it works is,

The EU sets a limit or a cap on the total amount of greenhouse gases that big polluters like power plants and factories can emit each year. Companies have to buy or they receive special permits for every ton of CO2 they release.

So if they reduce their emissions, they can sell their unused permits to others. If they go over the limit, they pay a hefty fine or have to buy permits from other more efficient companies. Many American states and jurisdictions are viewpoints.

viewing the EU system as a model, and they like it because it uses market forces to cut emissions at the lowest cost, and it encourages companies to innovate. So it's a system that is a win-win system.

So do you think the EU sees these state-level engagements as kind of a workaround for federal inaction under Trump? And could this outreach influence U.S. climate policy more broadly over time? Yes and yes. For now, the EU probably does view some national-level engagements as a pragmatic workaround during President Trump's tenure.

with the federal government rolling back environmental regulations more aggressively than before. The EU, it has no choice but to shift its focus from the U.S. federal level to collaborating with U.S. states such as California and sub-level jurisdictions that are committed to ambitious climate goals. So

So at least this is going to allow the EU to maintain some degree of movement on transatlantic climate action. It keeps dialogue open with influential U.S. environmental actors who may rise to future national leadership. And maybe it buys some time until we have a different national leadership in the U.S. that is more pro-environmental.

But how much autonomy do U.S. states actually have when it comes to shaping their own climate policies and what legal or political barriers might they face? It's complicated. The U.S. was born out of trying to balance state and federal powers, and they're still trying to adjust this.

The U.S. doctrine of preemption arises from the supremacy clause of the U.S. Constitution, and that establishes that federal laws take precedence over state laws and can override state laws, including those about the environment.

This can make environmental regulation extremely tricky. Sometimes states want to set stricter rules, but federal law may block them. It can also stop states from innovating or protecting their own environment.

Legal battles, in fact, often arise over whether federal rules are just minimums or maximums. So this creates confusion and can slow down environmental progress, especially when federal and state governments disagree about how much protection is needed. So the picture is really cloudy, and it's going to be fought over for some time.

Okay. And actually, we are seeing a growing number of state-level diplomatic efforts, not just on climate, but also around issues like trade and tariffs. Why do you think these states are increasingly stepping onto the international stage? And what does this suggest about the evolving relationship between states and the federal government? Certainly suggests that

that there's a lot of disagreement. And for many years, I've been calling the United States as the untied state of America. But it's been exasperated under President Trump and people who think like him. So these growing efforts in a variety of areas at a subnational level

are a result of the frustration that these states and localities are feeling. They want action. They see the environment degrading. They're seeing the effects of tariffs and other trade policies that President Trump is trying to put in place, and they're hurting. So this is their message.

method of reaching out and trying to make change. It reminds me of the Norwegian painter Edvard Munch's painting, The Scream. These states are screaming. They're screaming for action. They're not getting it. They're getting reversals at the federal level, and they're not happy about it.

Okay, well, let's go back to this carbon pricing system, because this idea is obviously gaining global traction as we see many countries expanding their carbon pricing efforts. But is there a risk that the burden of decarbonization will disproportionately fall on those less wealthy nations or regions? Like, do you think this carbon pricing mechanism is kind of fair? Or should they deepen the economic inequalities both within countries and globally?

Yeah, as carbon pricing becomes more widespread globally, there is indeed a significant risk that the costs of decarbonization are going to fall disproportionately on less wealthy countries or regions.

So many developing countries lack the financial and technological resources to transition quickly enough. Yet the mechanisms, let's say like the EU's carbon border adjustment mechanism, analyzes exports if they don't decarbonize at the same pace as wealthier nations.

So the result is that this can reduce vital trade revenues and strain economies already facing poverty and limited redistribution systems. And potentially it's going to push vulnerable households deeper into hardship without...

targeted support and fair compensation. Global pricing can actually worsen existing inequalities. So like so many policy choices, it's complicated. And if you squeeze in one area, bubble comes up in another area that kind of negates the policy. We have to do so much work in this area, but we have so little time. I think it's very worrisome.

Okay. Thank you, Harvey Zoden, former vice president of ABC TV network. This is World Today. Stay with us. You're listening to World Today. I'm Zhao Ying. The second China-Central Asia summit has concluded in Astana, marking a significant step towards deepening ties and fostering shared interests.

In the context of a rapidly evolving global landscape, China and the Central Asian economies are collaborating closely. During the summit in Astana, my colleague Tian Wei spoke with Renat Bekhtarov, governor of the Astana International Financial Center. They discussed how the region is seizing opportunities presented by the rapidly changing international and regional dynamics to enhance financial cooperation with key players around the world, including important partners like China.

I see that both sides, the leaders of China and Kazakhstan, have seen not only the realities but also the potential between the two countries. How much do you think the interactions between the two countries can bring more potential and clarity to this strategic cooperation? For Kazakhstan, this neighborship is a huge opportunity. Even in Astana International Financial Center, we are experiencing that opportunity.

Last year when we met here, we had under 3,000 companies registered. Less than a year has passed, now we have 4,000 companies, so almost like 30% increase in the companies that registered in the AFC. And those 4,730 are from China or have Chinese capital. Just this year, only more than 100 companies have registered.

There are big stories, small stories. For example, CNPC has registered CNPC Central Asia in AEC just recently to manage its assets where it has a large or small stake in the region in all of the countries. This is among the big stories. But there are so many other stories, startups, fintech solutions companies that are coming in. And I believe that

Opportunities are even more in many areas, transport and logistics, right? Of course the middle corridor and how it connects to the Belt and Road Initiative, it's a huge investment topic. It's not just an idea, it's an investment topic. People actually can invest into the projects in the hard infrastructure or in the soft infrastructure. And it is again happening in the AFC. You know the number of companies who are registered here to develop the

transportation routes between the countries connecting it from China all the way to the west. And again, during the visit in Xi'an, that was the first train that started in Xi'an and in 10 days it was already in Baku. That's super fast, right? Because from Baku then you can get to the Black Sea and then that's pretty much Europe. And then the maritime routes take 60 to 90 days.

And this is one of the stories. There is a huge story of the rare earth critical minerals, right? And I've been to China before COVID and there was after, and there was like, again, super fascinated how EV have, I wouldn't say developed, it's just like- - Soared. - Soared, exactly. But I think it's not only about trade, but I think Kazakhstan can play a role in the supply chain actually.

We are endowed with natural resources, especially of critical minerals. Of course, those assets are subsoil and they need investment. That's where the AFC plays a role as a hub that facilitates investment into the project. But again, the potential in cooperation in this area is huge. So how do you see this future?

relationship well tested over the past 10 to 20 years already during the ups and downs and what does that mean at a time when we really need trusted partners?

As if it happened yesterday, but already 12 years have passed since the announcement of the BRI initiative. And this has been, I think, transformative for the region, for Central Asia, but a wider Asian region, all those who are part of the BRI. A lot of the hard infrastructure was built, again, in Kazakhstan. It's railroads. One of the fundamental relationships that our countries have is in oil and gas. So we have this

oil pipeline built between our countries and wishes to be expanded. We have dry port one of the big infrastructure points between our countries was built and now we're in discussion of building a second

crossing between the big crossing between our countries and potentially even third one that shows right how big is this partnership is happening. The financial access with the Shanghai Stock Exchange becoming the shareholder of AAX, China Construction Bank coming in and opening its branch in AFC. This is like big stories that everyone knows but also

brilliant group has a bank in AFC as well and actively developing in CNPC story I've told you right it's only the part that is taking place in Kazakhstan all the Central Asian countries I'm sure they can talk about a lot of the projects I think in Kazakhstan now there are more than 50 different projects taking place within like a BRI initiative and again this is not

The end is just like... We are just starting. We are just starting. The flow of capital, the flow of technology, the flow of minds and ideas, that's what BRI was so far. And even in sustainable finance, like we are the local chapter for BRI's great green bonds initiative, right?

AFC was a pioneer in the region. We have discussed the first bonds in 2020. We have discussed how this became a two billion market now. But we're also trying to share that experience with our neighbors. So just last year in December before COP29 in Baku,

One of the private banks in Baku issued first green bonds in Baku, and our Green Finance Centre helped with that. We have helped a number of issuers in Kyrgyzstan and Uzbekistan to issue green and social bonds. Especially, I remember the one with the Kyrgyz Bank, it was a gender bond, which the proceeds they then used as the

loans for women entrepreneurs. This is also very important so that all the different groups in the societies can participate in economic activity, right? So if you look at it again, this is not only about the first order effects of BRI, right, investment in hardware products,

infrastructure, I mean. But it's a third and second order effects, right? This financial, this like woman entrepreneurship, green agenda, all this kind of stuff. I mean, we can talk about it. There are already rippling effects of it, right? Everywhere, almost. Yes. And I think China itself is a huge market, right? It was very internalized, but now we see that it's

becoming, as you said, like a connector within the ASEAN region, within the Central Asia, and ready to share this growth story with those countries.

Now, one of the biggest uncertainties in the world is the tariff war, one economy against the rest of the world. Of course, different economies might be impacted differently. What does the uncertainties as a result of tariff war mean to AIFC as a new and rising financial hub?

Of course there will always be a residual risk, but when the risk becomes this huge and unpredictable as the tariff wars, that has a big impact. In our case, I think again, this is somewhat is an opportunity, right? Because a lot of the companies that come into AEC, they are focused in our region and from here maybe Europe, right? So it's not exactly the hub for trading with the US, right?

For that we have different hubs globally, right? So again, it's actually the global producers, they're trying to find new markets, new markets around us then.

somewhat again, this increases the interest in AFC and in the region. I mean, AFC is just a point of entry, right? The infrastructure we created. So you see business world are becoming ever more creative in finding their own solutions as a result linking to you, right? Finding new market but also new financial solutions including digital solutions as I said. Again, the challenges push you to be more creative.

That is Renat Bektarov, governor of the Astana International Financial Center, speaking with my colleague Tian Wei. 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 Jiao Ying. Thank you so much for listening. See you next time.

♪