How is China going to hit back in the US trade war?
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Hello and welcome to World Business Report on the BBC World Service. I'm Will Bain. Great as always to have your company on the programme. Coming up today, the heat seems to be back under those trade tensions again between the US and China. We'll hear why Beijing has accused the United States of seriously violating...

the trade truce between the pair and look at how it might plan to respond. That'll come up in just a moment. Also on the programme today, plans to boost internal trading and turbocharge the Canadian economy. That's on the agenda as the country's provincial leaders meet with the central government against perhaps the most difficult economic backdrop Canada has ever faced in its own trade dispute, of course, with the US.

And we'll hear how the city of Lagos hopes to persuade commuters out of their cars and onto the water. So what we're expecting, 70 electric ferries. And then we're going to upgrade 20 jetties and terminals. We're going to be channelising 140km of the inland waterways in Lagos State. Yeah.

Yep, the man charged with making ferries the commute of choice in one of the world's most popular cities will tell us how he aims to make the vision a reality a little bit later on here on World Business Report. Good news for all of us. Apparently the radio features prominently in there, which is good news for all of us and our job prospects, isn't it?

more on that story to come but we're going to kick off today with a furious response from China to comments made by President Trump over the weekend about the current trade truce between the two world's most important economies. Beijing has accused the US of seriously violating a trade truce between the two powers and have vowed to take strong measures to defend its interests as tensions reignited over the supply of critical minerals in particular. The BBC's

Kerry Allen has been monitoring those responses for us and told us more. State media really want to enforce that they feel that the US has been exactly what it's accusing China of. So there's been this very strong message that's come out from China's Ministry of Commerce that's been everywhere Chinese people look today. It's been on official broadcasters, in newspapers, very much saying that

Washington has committed multiple disciplinary restrictive measures against China that seriously undermines the consensus reached during the trade talks in Geneva. They've said that it's exacerbated uncertainty and the instability of bilateral economic and trade relations and that China will retaliate. It will defend its own interests.

It will safeguard its own interests in response to what it calls the wrongful practices of the US. Let's come to how it might respond, but just in terms of what they see as some of those violations, what are some of those areas where they think the US has breached what they had agreed in Geneva? Well, what there's been a lot of media coverage on is the export controls on AI chips.

them revoking Chinese student visas and stopping the sale of chip design software to China from the US. So these are the three things that state media have said the US has been doing towards China. And they've said that it's done nothing in response. Beijing has abided by the joint agreement between the two countries.

So they feel that these three things, there has been constant media messaging gone and they really wanted to enforce that that's been the problem. But you talked about potential responses, Kerry. What might some of those look like? What sort of areas have been mentioned? Have any areas been mentioned yet? Well, no areas have been mentioned, but...

Chinese media have said long term that they're prepared to go to the end with the US if it comes to a trade and tariff war. So it might be that the tariff truce that's in place at the moment, the 90 day one, that may fall apart. Obviously, that would impact China itself. But China feels that it's going to impact all nations around the world. And there's been this strong message that's been coming out in media, that China has the resilience to be able to

to kick back against that. So it's got its own very strong domestic economy. It's got a huge population of 1.4 billion people. So there is the possibility of being able to direct trade more internally and carve out relations with Europe. That's a message that comes up again and again. The BBC's Kerry Allen there. Well, Ivy Yang joins us live from New York City. Ivy, a China tech analyst there. Ivy, great to have you back on World Business Report. Thanks for being with us.

Thank you for having me. And chips in sort of both directions or components that go into them seem to be right at the centre of this boiling up of tensions again, doesn't it? President Trump, very frustrated at the pace, he said at the weekend that China was changing restrictions on exports of kind of rare earths that are really important for chip making in particular. And in response today, Beijing pointing to restrictions on one of its big companies, Huawei, and US restrictions on sort of chip making materials being sold to

to China as well. Tell us quite a bit about where people think the sort of centre of the global economy is going.

For sure. And I think this has been really taken seriously on the China side. And you could see from the statement from the Commerce Ministry and how strongly they've worded their statements that the U.S. has unilaterally provoked new economic and trade friction, exacerbating the uncertainty and instability of the bilateral economic and trade relations, while China, as it claims that it's

by this commitment. For China, the chip industry has always been something that is sensitive because it's

It perceives that U.S. is trying to put on chokehold on its innovation and its advancement in competing in terms of the tech competition that is currently happening and happening for a while. So I think the chip narrative, it's something that the Chinese government will be very strong. And as the previous guest has said, that China will go all the way.

Did we not see, though, a little bit with DeepSeek and the explosion of that, that Chinese tech could flourish without a full supply, not just from the US, but a restriction on kind of other US partners like Europe and other East Asian nations in terms of getting hold of some of that equipment, that China actually can do it on its own already in that sector?

I think the deep-seek moment is interesting in that it really shows that scarcity is the mother of all inventions. And I think a lot of media coverage has focused on how deep-seek, while it was operating under a scarcity kind of environment with limited resources, it was still able to achieve what it was. And that's why I think China has really made deep-seek one of its kind of most well-known and key kind

kind of winning strategy at the moment. It's becoming kind of this very politically important, you know, exhibit A of how it could be done. And does it show how much of a kind of sticking plot are those talks, those sort of tentative agreements were in Geneva at the beginning of last month?

I think, you know, we had that moment where there was this light, maybe that was the end of the tunnel because there was this discussion that was going on and it would start to de-escalate. But because the U.S. has tightened export control and AI chips and now threatening to revoke student visa for Chinese international students in quote unquote sensitive fields, I think that's kind of reignited this tension that we're all feeling at the moment from the rhetoric outside

and the very strong language coming from the China side and the U.S. side, particularly President Trump's, you know, incessant tweets on this issue. I think also, you know, Marco Rubio, the press release that came out was also very strongly worded. New visa policies put America first, not China.

So it feels like this new student visa policy, along with all of the export control and new limitations, are really meant to target China. And that's something that from the China side, they're not going to stay idle. Yeah. Ivy, thanks always for your time. Ivy Yang there, China Tech.

analyst in New York City. And I've been mentioning Marco Rubio, of course, the Secretary of State, the most senior foreign official in the Trump administration. So significant what he says. So significant, in fact, that it's moved markets today. Or certainly this row has. Bill Diddings with us, Chief Investment Officer at Waverton here in London. Bill, great to have you back on the program. How are you? Very well, thank you. Yeah, markets moving. How much of that is...

kind of the wider economic backdrop and what we've seen in kind of government borrowing markets, how much is it about, oh my goodness, these tensions seem to be boiling up again? Yeah, well, I think certainly there's a sort of geopolitical angle today. I think the tensions between the US and China, the whole issue of tariffs is still very much front and centre. And I think markets are probably having a day when they're focused a bit on that.

Also, there was a useful economic data point in the US earlier, what we used to call the Purchasing Managers Index, which is a very good sort of real-time snapshot. These are people who are sort of buying, yeah, manufacturers, isn't it, factories, what they're buying, how much product they're buying, that kind of stuff. Yeah, and obviously manufacturing is sort of at the heart of what Trump's trying to do. He wants to get manufacturing flourishing, but at the moment that's not happening. In fact, that index came in a bit weaker than normal, so that implies that

The manufacturing sector isn't seeing much of a bounce. I thought it was really interesting, actually, that they do a sort of part of the survey is how much is being imported into American manufacturing companies. And that index is at the lowest level since 2009. So you haven't even seen people ramping up their imports ahead of tariffs. I think there's just been a slowdown.

So we need to keep an eye on that. And things to keep an eye on for the week ahead, Bill. Look ahead. We've got some potential interest rate decisions in Europe as well, haven't we? The latest, the kind of the big ones on those that could shape kind of outlooks. Yes, I think the market's expecting the ECB to cut. So let's see if they follow through on that.

And then at the end of the week, we've got US unemployment data, which is always an important indicator for the market. I think everybody's expecting there to be a slowdown in the number of jobs created in the States, but still a positive number as expected. Yeah, every single bit of that data in particular, though, isn't it? It's being poured over for political as well as economic reasons at the moment as well. Sure, we'll chat about that as the week goes on. Bill, thanks as always for your time. Bill Dinning there, Chief Investment Officer,

at W1M, as they are now. Sorry, Bill, as of today, in terms of the name change from Waverton to that, they're looking at our markets news. You're with World Business Report on the BBC.

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How many great bosses have you had? Try counting them on your fingers. Your hand may well remain balled into a fist. It doesn't have to be this way. From The Economist, I'm Andrew Palmer, and I'm back with a second season of Boss Class. We've gathered management tips from the world's best performing companies, from Levi's to Lego to Google. To hear all of Boss Class, you'll need to be a subscriber. Search Economist Podcasts Plus for our best offer.

Well, in the backdrop to all of this, Canada facing arguably the biggest economic threat in its history from those tariffs and tensions with the United States, its nearest neighbour, of course, completely upending supply chains, businesses and communities too. Today, a meeting of the country's state leaders with key government figures, including the Prime Minister Mark Carney,

in the central city of Saskatoon carries an unusual urgency then and lofty goals too for the Canadian economy as Mr Carney told our colleagues on CBC's Power and Politics programme.

This is about investing in Canada. This is about building Canada, about making one Canadian economy out of 13. It's about nation-building projects. Each of those and those together give us much, much more than could ever be taken away by trade action. This is a confident country moving forward, and it's an exciting time.

What could those look like then? Ports, pipelines and mining was the headline in one Canadian newspaper today. So we thought we'd better ring up one of those sectors. And Craig Bell Eastbrooks is the president and chief executive of one of Canada's biggest ports, the Port of St John on the Atlantic coast in the state of New Brunswick. First of all, tell us a bit about this port.

We're one of Canada's major seaports. We handle four main business streams. One would be liquid bulk. So the Port of St. John imports crude. It's refined at Irving Oil, Canada's largest oil refinery, and then refined petroleum is shipped out. We have a large bulk facility that exports potash. We're one of the largest cruise ports, so we welcome passengers. And then the major investments that we've made have been in our container terminal. So DP World, global operator, operates a very large container terminal here in St. John. Right, so you're seeing a bit of absolutely incredible

Take us to today, then. The Prime Minister, Mark Carney, has talked about big nation-building projects. What could those look like? What should those look like, do you think, from your point of view? And how do you think you in the sector can fit into that? Yeah.

Yeah, I'll start by saying I love the boldness of this. So as port authorities through the years, we've been talking a lot about this. We need to stimulate the economy through bold measures. We offer great import export routes for all sorts of different commodities. And if we can be bold and connect the country and have our regions working together, we're stronger. The potash story is a bold nation building endeavor that we've been on today. We don't have a mine in the province of New Brunswick.

We don't have potash being extracted from the land here. It comes from Saskatchewan. It's a five-day rail journey on CN Rail from Saskatchewan to St. John and then exported to global markets. So if we can get bold across a number of different sectors, I'll point out to LNG for a second.

I didn't mention it earlier because it really doesn't have many vessels today. We have an import LNG facility at this port that was put in place a number of years ago when North America thought they would have to be a net importer of liquefied natural gas. Well, the market's totally changed. Marcellus and the shale gas boom. And now North America is viewed as a very strong export point. But today, the company Repsol that operates does not have access to gas to export.

So if we could get bold and have nation building projects that would allow more natural gas to service New Brunswickers, Atlantic Canadians from Western Canada, for example, we could then be a net exporter and convert that facility. So we think there's tons of opportunity. So it sort of begs the obvious question a little bit. What has been blocking up? What has been stymieing that?

opportunity to this point? Yeah, I mean, there's been lots of talk of pipelines, obviously, would be the key, getting access to those commodities. So today, we don't have that access to, you know, Central Canadian or Western Canadian natural gas going this way. So we wouldn't be able to export something that can't reach the terminal. For example, Energy East pipeline project that was pitched about 10 years ago, that was a project to get Western crude

to the oil refinery operated by Irving Oil in St John so that the refinery could have access to that crude but also the excess would go to the export market and that was a major project we helped champion with Irving Oil that was blocked because there wasn't the buy-in for these nation building projects at the moment. And when you say that is that that there wasn't the willingness to put up the cash for that or that because people were concerned about the environmental impact?

or both? I would say I think it was just the willingness to have a pipeline go through multiple provinces. The coordination that that takes, much like what's hopefully going to happen today when they decide what projects could be proposed, it's very difficult from a regulatory standpoint to have your federal approval processes, your provincial government, and I think the proponents of it really just timed out

So some of this is about money, but some of this is actually not about money really at all. It's about simplification of rules and regulations and things like that. That's 100% it. In terms of the urgency for that then, Craig, as well. I know you were mentioning the port going well at the moment because you've got such a diversified network of ingoings and outgoings. But for the country...

more broadly, do you sense that there is, you know, a real urgency to this this time to get something done rather than it just be a talking shop? I do. And I think there's a number of different factors. I think it's easy to point to the tariffs as being that moment where Canadians and governments are looking to be bold and looking to unite the country. I think that is the primary point. But I also think the pandemic

And the supply chain disruption of the last five years is a part of this. I've worked at the port for 13 and a half years. I never had a colleague or a friend, family member, ask me about what I did until the pandemic because ports and supply chain became interesting because there wasn't enough food during the pandemic on shelves and there was panic and a run on nap

and different commodities, different things that you never thought you'd run out of in your corner store. I think supply chain is top of mind and how we, and what goods we purchase and where they come from. People are being, I think, a lot more mindful of this. And I think that has contributed to this moment that if we want to be a true, free, strong country, we need to be looking inward and outwards as well. And I think that's what's contributed to this moment.

Is this a one-off moment, do you think? I hear what you were saying about people being refocused really by the pandemic, but...

do lots of different interests align right now because of what's been going on with the United States? Yeah, I hope it's not a one-off moment, but I think if we can do this well, it should have a lasting legacy. We may never have quite a moment like we're experiencing right now. Not all of them are going to happen and not all of them, you know, should happen. If truly we're being bold and we're whiteboarding, to me, success is throwing 10, 15 ideas on the board and you land on the two or three that are the best.

I mean, I think that's important, too. People shouldn't look at success and failure by, you know, if there are 15 projects and, you know, only a few of them get chosen. It doesn't mean the others are bad. It may just not be the right time. Our thanks to Craig Bell, Esther Brooks there, the chief exec of the Port of St. John in Canada.

Well, from Canada to South America and the nation of Paraguay, because it's got big ambitions to become a tech and innovation hub. It has a reliable source of renewable energy, thanks to a huge hydroelectric dam on its border with Brazil, which politicians and business leaders hope will be a selling point to those tech businesses. Jane Chambers has been meeting the people hoping to turn the country into the Silicon Valley of the region.

I'm surrounded by greenfields, buildings and uniformed officers. This is currently an army barracks in the capital of Sancion, but the government's planning to build a digital park here.

What the president wants is to transform the country, transform it into a place where the innovation grows with some ingredients that we have here that is not common in every place. Gustavo Villate is Paraguay's Minister of Technology and Communication and he's passionate about the opportunities the site could provide and what the country can offer digital industries.

We have the youngest population. We have a lot of green and renewable energy. We have lower taxes. They were unwrapping maps in front of us with some plans. The idea is to have the students, the public sector and the private sector all in one place. The minister thinks the private and public sectors working together is a key ingredient to help the country grow as a digital hub.

And there are plans to build the technology university to train young workers. But Yate thinks the digital part will be ready in the next two years. So how much will it cost and how will it be financed? We are planning right now to invest here in this area around $20 million for the first stage. But the idea is that the private company to come here to invest. Paraguay's natural resources are another unique selling point for the country.

The Itaipu Dam is a huge hydroelectric dam between Brazil and Paraguay. This abundant and affordable energy is an important consideration for tech companies looking for sustainable and low-cost energy solutions for the massive energy demands used in AI and computing.

I've come to meet Paraguayan-Italian Sebastián Ortiz Chamorro, the director of emerging industries for Tiberi Corporation, a Finnish software and service company. If you want to install a technology investment like AI data centers, that source of renewable energy is very steady.

Keep in mind that the hydroelectric power is both renewable and steady. That, comparing to other renewable energy sources like wind or solar that have its ups and downs, makes it much more attractive for creating data centers or any other electro-intensive activity that requires a steady electricity source.

He thinks Paraguay's quest to be South America's Silicon Valley needs to be part of a wider collaboration across the region. I think it's very important to look at Paraguay not as an isolated entity. What you have is different countries that are not necessarily competing with one another, but that have different strengths and that complement each other. Gabriela Sibles manages the venture capital division for Cybersons.

a global investment and technology group founded by her parents in Paraguay. She worked for various start-ups in Silicon Valley after graduating as a computer and neuroscientist from nearby University of California, Berkeley. In Latin America, because there still are a lot of infrastructure problems in the region, you don't necessarily have to build this super revolutionary technology or app. But because so many industries are still developing

managed in a very traditional way. There are a lot of opportunities where by adding a small layer of technology you can have an impact. The people I spoke to are pragmatic and accept that Paraguay has some way to go to build the necessary infrastructure and training for their young workforce in order to put their country on the map. But they're united in their determination to capitalise on their assets and attract opportunities to the country.

Jane Chambers there and there's more of Jane's report on the Business Daily podcast should you wish to hear a bit more.

Now, how was your commute today? Stuck in long lines of traffic, wishing you were anywhere but sat behind the wheel? Well, in Nigerian economic hub of Lagos, the city's hoping to come up with a solution to that problem by getting commuters out of their cars and onto electric ferries. The ambitious project could cost in excess of $450 million, but those behind it believe it will boost productivity with less time lost in traffic.

named to have the project linking up with other forms of public transport too. Azola Walla Damilola Emmanuel, General Manager at Lagos State Waterways Authority told us. Lagos is like every other congested city all over the world, like New York, London, constantly growing population. And so what the state government is trying to do is ensure that we have alternatives to road transportation in Lagos. Yeah, it's quite the problem in Lagos, isn't it, in particular? And it can actually have quite a big business impact, can't it?

No, absolutely. Absolutely. You can spend, you know, two, three hours sometimes on the roads. But of course, you have to definitely provide alternatives for people, which is why water transportation is coming up at the moment and rail transportation as well. Yeah. So what's the pitch with the water side of things? Because that's where you guys come in. Tell us about your plans.

All in a bid to diversify transportation in Lagos and make sure people can get from one point to another point easily. And so we're ensuring that we were able to build and increase water transport infrastructure, which has to do with ferries, which has to do with jetties, which has to do with personnel development as well. And of course, navigable waterways.

And so where are you with the project now? These are just plans at this stage, right? Yeah, just plans. We're about to start implementation. We've just finalized signing the documentation, dotting the I's and crossing the T's with the documentation. And then we're set to roll in the third quarter of this year, which starts any time from now. So in your kind of mind's eye, you know, when you're dreaming up the end project, I guess, what it would look like, ferries of what kind of size, carrying how many people? Fantastic, yes.

Yeah, so let me go through that really quickly. So what we're expecting, 70 electric ferries, and then we're going to upgrade 20 jetties and terminals. We're going to be channelizing 140 kilometers of the inland waterways in Lagos State. We're also going to do a lot of capacity building for the implementing agency, which is Lagos State Waterways Authority. And for us, that's to ensure that we can now monitor

move three times the current amount of people we move on the waterways and also further build the intermodal transport system which is being built in Lagos between the road the rail and the water right so that everything links up um

Quite a project, quite an undertaking then. What's the kind of timescale do you think? And also talk to us about the cost because it doesn't sound like either of those things are going to be quick or cheap. It's a 410 million euros. It's a mixture of a loan and a grant. Several partners involved is AFD, which is the Agency for Friendly Development. There's the European Investment Bank as well and the

EU is giving a grant which is the largest grant they've ever given to any project in the world and then there's also of course counterpart funding from the side of the state so it's a mixture of a loan and a grant which comes up about 410 million euros actually started from last year because we started to shortlist the consultants who

would define the terms of reference for all of the different projects. So it goes from 2020 all up until 2030. But we're looking to launch the first phase in 2027, which will see the first part of things kicking off. Wow, that's quite ambitious.

Yes, very ambitious. Realistic. That's why we're Legos. Realistic, yeah. Legos always does, always the first, especially in Nigeria, to embark on big projects, especially because we want to improve the lives of Legosians. And how do you persuade people out of their cars though as well? People are creatures of habit, aren't they? They like being in the car with their favorite radio station on, all that kind of stuff.

how are you going to make it attractive to them? Well, we're going to ensure that there's radio station on the ferries. That's the first thing. But also, to be honest, the reason why they'll probably want to get on this as well is because they've seen better ferries. They've seen the kind of standards you travel abroad to also be able to get into. So we believe that that will be a major pull for them as well. And of course, the fact that it's all interconnected. A lot of the times, some places you want to go to, you might not be able to get there quickly on time. And we have 15 out of our 25

city counts which are connected by water so really it's a very ambitious project but of course very attractive as well. Oluwadamilola Emmanuel there the general manager at Lagos State Waterways authority on that project always good to hear the radio is going to be involved isn't it keeps all of us in business as well all of us is in fact our team today Victoria Hannah who have been in charge of the program today and to Ben who's been driving it making sure you hear it thanks so much for listening.

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