November 1, 2024 • 6 mins
China is said to be considering approving an additional $1.4 trillion in borrowing to boost the economy.
Plus, Asia Business correspondent Peter Lewis shares how the US election is being discussed in China.
LISTEN ABOVE
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Here the Duplessen Peter Lewis Asia Business corresponding with us
now Hi Peter.
Speaker 2 (00:05):
Good evening headther So even.
Speaker 1 (00:06):
More stimulus coming from China.
Speaker 2 (00:08):
A huge amount of stimulus coming down the pipes, if
we believe the media reports something along the lines of
one point four trillion dollars to try and shore up
basically China's economy and also deal with all the debt
that's been accumulated by the local governments, particularly in the
property market. There needs to be a complete shakeup of
(00:32):
how local governments raise money because they can't raise it
from taxes on land sales anymore because the property developers
are either bankrupt or they've built too many houses already,
and there's far more houses that are unfinished than there
are people to live in them. So this stimulus is
going to be directed mainly at the local governments to
(00:55):
try and help them swap what is in effect local
government debts that's hidden off balance sheets with central government debt,
and the hope that this sort of unclogs the pipes
and starts getting money flowing again to local businesses because
there's lots of people who haven't been paid. There's suppliers
who haven't received their money either to try and get
(01:17):
that whole process up and running again, and Beijing is
relying very heavily on this to try and stimulate the economy.
I'm not so sure. I think what tends to happen
with things like this is they have a temporary boost,
particularly when you're borrowing a lot of money to try
and stimulate your economy, as maybe the UK is about
to find out. But that economic impact wears off very
(01:40):
very quickly unless you deal with the underlying fundamental problem.
And the underlying fundamental problem in China is very difficult
to deal with because of the demographics, because there are
far less people who want to buy homes at the moment,
So the whole property market is going to take many
(02:01):
years to be resolved, and it's going to take a
long time before prices start moving up again.
Speaker 1 (02:06):
Yeah, how long do you reckon? I mean, if we're
talking about demographics where you have to wait for people
to want to buy houses, I mean you're talking about
potentially decades or a decade.
Speaker 2 (02:15):
Yes, absolutely, I mean this could take many years to resolve.
We're not going to see house prices in the meantime.
Moved back to previous levels. The risk is that they're
actually going to move even lower in the meantime, And
we don't really know what is the true value of
these homes because the Chinese government won't let us find out.
(02:36):
They have a lot of controls whether or not local
authorities can raise or lower prices, whether the developments developers
can do that. So we don't really know what is
the clearing price of all this unfinished, unsold property in China.
All we do know is that there is way way
too much of it, and the clearing price, the true
(02:56):
price of these homes is probably a lot lower.
Speaker 1 (02:59):
Yeah, very good point that you make there. Now listen,
tell me, how are you guys witnessing the US election?
What do people think of it?
Speaker 2 (03:06):
Well, they're waiting with some trepidation for the results next week,
because all American elections tend to be consequential, but this
one is going to be more consequential than any we've
seen for quite a long time, particularly if Donald Trump wins.
I mean, here's the self proclaimed tariff man. He says,
tariff is the most beautiful word in the English language,
(03:30):
and we have to remember that it's threatening blanket tariffs
of twenty percent on all exports into the US and
sixty percent on Chinese ones. Now, if people think he's bluffing,
I think that he intends to carry this through. I
think he feels that one of these big mistakes when
(03:50):
he was last president was not having people around him
who were supportive enough of his agenda. So he doesn't
want to make that same mistake twice. He's throughound the
himself with people who are going to absolutely carry out
that agenda, and Harris is going to be a very
big part of that. So the risk is that this
could totally reorder the global trading system with consequences for
(04:14):
the global economy. The IMF says it could wipe out
the equivalent of the GDPs of France and Germany off
of global growth if he goes through with this, So
it is very consequential. He's already been attacking, and he
doesn't distinguish between friends and enemies. So Japan, for example,
which is trying to get around this problem by investing
(04:36):
an enormous amount in the US in terms of opening
plants there over the past years and decades, could be hit. Taiwan. Certainly,
he was accusing Taiwan over the weekend of stealing the
US chip business. He didn't explain how exactly Taiwan had
done that, but he said they've stolen basically American business
(04:58):
from companies like Intel and is going to put tariffs
on Taiwan's semiconductor or taiwan semiconductor manufacturing makes ninety percent
of the world's advanced chips has huge clients like Navidia, Apple, Microsoft,
So this would have enormous implications for the global supply
chain if he goes ahead with it.
Speaker 1 (05:21):
Does China have a preference? Do you think as to
with it's Trump or Kamala who wins.
Speaker 2 (05:25):
Well, that's what we've been wondering. It's hard to know
because Kamala Harris isn't going to be that much better
for China because that signals are more a continuation with
Biden's policy, and Biden has hardly been friendly to China.
Are there either mean some of his tariffs have been very,
very damaging to Chinese exporters and also damaging to China's
(05:50):
ability to develop its own high tech industry. So a
continuation of that is not going to be particularly good
for China. At the same time, it could get ramped
up in a very specific way in terms of a
lot more tariffs if Donald Trump is in power. So
we have been wondering what Beijing prefers. Of course we
(06:12):
don't know. They're not going to say, so we can
only speculate. But I think that they see this as
whoever wins, it's not going to be particularly good for Beijing.
Speaker 1 (06:22):
No, probably not. Hey, Peter, thank you very much. Enjoy
the last weekend before the election. That's Peter Lewis, our
Asia Business correspondent. For more from Hither Duplasye Alan Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio
Here the Duplessen Peter Lewis Asia Business corresponding with us
now Hi Peter.
Speaker 2 (00:05):
Good evening headther So even.
Speaker 1 (00:06):
More stimulus coming from China.
Speaker 2 (00:08):
A huge amount of stimulus coming down the pipes, if
we believe the media reports something along the lines of
one point four trillion dollars to try and shore up
basically China's economy and also deal with all the debt
that's been accumulated by the local governments, particularly in the
property market. There needs to be a complete shakeup of
(00:32):
how local governments raise money because they can't raise it
from taxes on land sales anymore because the property developers
are either bankrupt or they've built too many houses already,
and there's far more houses that are unfinished than there
are people to live in them. So this stimulus is
going to be directed mainly at the local governments to
(00:55):
try and help them swap what is in effect local
government debts that's hidden off balance sheets with central government debt,
and the hope that this sort of unclogs the pipes
and starts getting money flowing again to local businesses because
there's lots of people who haven't been paid. There's suppliers
who haven't received their money either to try and get
(01:17):
that whole process up and running again, and Beijing is
relying very heavily on this to try and stimulate the economy.
I'm not so sure. I think what tends to happen
with things like this is they have a temporary boost,
particularly when you're borrowing a lot of money to try
and stimulate your economy, as maybe the UK is about
to find out. But that economic impact wears off very
(01:40):
very quickly unless you deal with the underlying fundamental problem.
And the underlying fundamental problem in China is very difficult
to deal with because of the demographics, because there are
far less people who want to buy homes at the moment,
So the whole property market is going to take many
(02:01):
years to be resolved, and it's going to take a
long time before prices start moving up again.
Speaker 1 (02:06):
Yeah, how long do you reckon? I mean, if we're
talking about demographics where you have to wait for people
to want to buy houses, I mean you're talking about
potentially decades or a decade.
Speaker 2 (02:15):
Yes, absolutely, I mean this could take many years to resolve.
We're not going to see house prices in the meantime.
Moved back to previous levels. The risk is that they're
actually going to move even lower in the meantime, And
we don't really know what is the true value of
these homes because the Chinese government won't let us find out.
(02:36):
They have a lot of controls whether or not local
authorities can raise or lower prices, whether the developments developers
can do that. So we don't really know what is
the clearing price of all this unfinished, unsold property in China.
All we do know is that there is way way
too much of it, and the clearing price, the true
(02:56):
price of these homes is probably a lot lower.
Speaker 1 (02:59):
Yeah, very good point that you make there. Now listen,
tell me, how are you guys witnessing the US election?
What do people think of it?
Speaker 2 (03:06):
Well, they're waiting with some trepidation for the results next week,
because all American elections tend to be consequential, but this
one is going to be more consequential than any we've
seen for quite a long time, particularly if Donald Trump wins.
I mean, here's the self proclaimed tariff man. He says,
tariff is the most beautiful word in the English language,
(03:30):
and we have to remember that it's threatening blanket tariffs
of twenty percent on all exports into the US and
sixty percent on Chinese ones. Now, if people think he's bluffing,
I think that he intends to carry this through. I
think he feels that one of these big mistakes when
(03:50):
he was last president was not having people around him
who were supportive enough of his agenda. So he doesn't
want to make that same mistake twice. He's throughound the
himself with people who are going to absolutely carry out
that agenda, and Harris is going to be a very
big part of that. So the risk is that this
could totally reorder the global trading system with consequences for
(04:14):
the global economy. The IMF says it could wipe out
the equivalent of the GDPs of France and Germany off
of global growth if he goes through with this, So
it is very consequential. He's already been attacking, and he
doesn't distinguish between friends and enemies. So Japan, for example,
which is trying to get around this problem by investing
(04:36):
an enormous amount in the US in terms of opening
plants there over the past years and decades, could be hit. Taiwan. Certainly,
he was accusing Taiwan over the weekend of stealing the
US chip business. He didn't explain how exactly Taiwan had
done that, but he said they've stolen basically American business
(04:58):
from companies like Intel and is going to put tariffs
on Taiwan's semiconductor or taiwan semiconductor manufacturing makes ninety percent
of the world's advanced chips has huge clients like Navidia, Apple, Microsoft,
So this would have enormous implications for the global supply
chain if he goes ahead with it.
Speaker 1 (05:21):
Does China have a preference? Do you think as to
with it's Trump or Kamala who wins.
Speaker 2 (05:25):
Well, that's what we've been wondering. It's hard to know
because Kamala Harris isn't going to be that much better
for China because that signals are more a continuation with
Biden's policy, and Biden has hardly been friendly to China.
Are there either mean some of his tariffs have been very,
very damaging to Chinese exporters and also damaging to China's
(05:50):
ability to develop its own high tech industry. So a
continuation of that is not going to be particularly good
for China. At the same time, it could get ramped
up in a very specific way in terms of a
lot more tariffs if Donald Trump is in power. So
we have been wondering what Beijing prefers. Of course we
(06:12):
don't know. They're not going to say, so we can
only speculate. But I think that they see this as
whoever wins, it's not going to be particularly good for Beijing.
Speaker 1 (06:22):
No, probably not. Hey, Peter, thank you very much. Enjoy
the last weekend before the election. That's Peter Lewis, our
Asia Business correspondent. For more from Hither Duplasye Alan Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.