Peter Lewis: Asia business correspondent on China's export and import markets missing expectations

China’s exports and imports both missed expectations in September, raising concerns about one of the few bright spots in the world’s second largest economy.

Plus, the world’s largest chipmaker has announced a US$10 billion profit for Q3.

And, Hong Kong is making alcohol cheaper to boost the domestic economy.

Asia business correspondent Peter Lewis joins Heather du Plessis Allan.

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Episode Transcript

Speaker 1 (00:00):
Seven hither duper Peter Lewis our Asia business correspondents with

(00:04):
US had Peter.

Speaker 2 (00:05):
Good evening head.

Speaker 1 (00:06):
Yes, so a bit of a bummer about the imports
and exports numbers out of China.

Speaker 2 (00:09):
Yeah, yes, And it's important for China because trade has
really been one of the few bright spots in the
economy overall over the last few quarters, but it's slowed drastically.
Exports who a up two point four percent and that
compares to almost nine percent in the previous month. Imports

(00:30):
have almost completely stored. They barely barely rose at all.
Not too difficult to find. Where the culprit for this
is Exports to the European Union and the US marks
their slowest rise in at least four months, and that's
because of tariff's. Tariffs are having their effects. The model
at the moment for China's economy is to direct a

(00:53):
lot of resources into what President Chi Jinping caused new
productive forces, and he means by that things like electric vehicles,
solar panels, batteries and so on. A lot of money
being poured into companies in those sectors and the result
is they're producing far more than the Chinese themselves can consume,

(01:14):
so that excess needs to be exported overseas. Now, in
previous years that would have been welcomed because it helps
keep prices down, not welcome anymore. The EU and the
US are pushing back mightily against that with tariffs. Donald
Trump has said he doesn't want to see one single
Chinese car sold in the US, and he's going to

(01:35):
put tariffs on them so high to make sure that
that happens. So this is having an impact on the
overall economy. We just had, in fact, this morning China's
GDP figures out for the third quarter and they slowed
from four point seven percent to four point six percent,
so already signs that it's having an impact. And this

(01:55):
is why we're seeing this raft of announcements from all
sorts of government departs about stimulus and money being used
to try and support the Chinese economy, to try and
revive the property market, which has been in a slump
for over three years now, and to try and also
deal with all the bad debts that are on the

(02:17):
balance sheets of local governments because they bought they've taken
on so much in the property sector. So it's having
an impact throughout the Chinese economy.

Speaker 1 (02:29):
What do you make of there some profit number that's
just come out of TSMC.

Speaker 2 (02:34):
Oh, it's very very good, isn't it. Nurged fifty four
percent reported a net profit of ten point one billion
US dollars. What this shows is just how important Taiwan
is in the global supply chain these days because it
is the largest chip maker in the world. All the

(02:57):
big chip designers and manufact like Navidia are clients of TSMC,
and it's making a huge amount of chips that are
driving all this investment in artificial intelligence, and it's really
been supported by chips that are needed for this AI boom,

(03:18):
and TSMC is the leading manufacturer of these chips. And
the results have come at an important time because there
has been some fears that the AI boom is slowing,
particularly after we had results earlier last week from ASML,
which is the Dutch company that supplies the machines that
are used to make the world's most involved ships. They

(03:39):
reported orders that were about half of anlysts expectations, So
there was a fear that the semiconductor boom was slowing,
but these results from TSMC have rather allaid those fears.
It's also I'm sure going to attract the attention at
some point to Donald Trump, because he doesn't like things

(04:01):
being exported from overseas that are made overseas. And of
course Taiwan is a massive exporter of these chips. Although
it is investing a huge amount of money in Arizona
to build up some plants there. It's got three that
it's building at the moment that I suspect Taiwan is
going to fall at some point into the cross hairs
of Donald Trump.

Speaker 1 (04:22):
Well probably undoubtedly. Hey, this idea from Hong Kong of
boosting the domestic economy by making alcohol cheaper, is it
actually work?

Speaker 2 (04:32):
Yes, well, we wonder can Hong Kong drink any more? Already?
What this is about is about a tax on liquor.
There is a one hundred percent tax on liquor at
the moment that is going to be cut so that
it's just fifteen percent, So it takes it back to
levels of about ten or more years ago. But it's

(04:58):
only on liquor where there's a price of two hundred
Hong Kong dollars of an import price of two hundred dollars.
So the Financial Secretary said, it means that eighty five
percent of duties are going to be unchanged. But nevertheless,
the hope is that this will help boost tourism, which
has been decimated since the pandemic, and about seventy percent

(05:23):
of bar owners have reported very sharp drops in revenues
because tourists aren't coming and locals aren't going out anymore.
There's been a huge number of bars in Hong Kong
which have closed down in the last couple of years.
So the hope from the Chief Executive in his policy
address this week where he announced this is that it's

(05:43):
going to give a boost to the tourism sector. That
the problem is Hong Kong needs to find some new
areas where it can boost growth because these traditional areas
like property, like shipping, like tourism and retail are just
not working at the moment. The economy has changed. Hong

(06:06):
Kongers aren't spending as much in Hong Kong. They're going
over the border to Shenzen to spend their money where
it's far cheaper. So Hong Kong can't rely on these
traditional sectors anymore to be a driver of growth in
the way they used to be in previous years.

Speaker 1 (06:21):
It's fascinating. Peter thanks so much man. We'll talk to
you in a week's time. Again, it's Peter Lewis as
your business correspondent. For more from Hither Duplessy Alan Drive.
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