Peter Lewis: Asia Business Correspondent on the impact of the trade war on China

The first real indicator of the impact of the trade war is coming out of China.

The country cut their key lending rates by 10 basis points on Tuesday in an effort to boost the economy.

The People’s Bank of China (PBOC) trimmed the 1-year loan prime rate, which influences corporate and most household loans in China, to 3.0% from 3.1%.

Asia Business Correspondent Peter Lewis talks to Heather du Plessis-Allan about what it means.

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Episode Transcript

Speaker 1 (00:00):
Here a duper clan. Peter Lewis Asia Business Correspondents with US.
Hello Peter, Hello Heather, Peter. Now I'm looking at all
of this data that's coming out of China and it
just looks like a raft of bad news.

Speaker 2 (00:12):
Is there anything good on there?

Speaker 3 (00:14):
Well, it is a lot of data, and it's important
data as well, because it's for April. And you'll remember
back on the second of April, that's when Donald Trump
declared Liberation Day and that announced all these reciprocal tariffs
which went at one stage on China as high as
one hundred and forty five percent before they were withdrawn
back down to about thirty percent. So the data gives

(00:38):
us an idea of what what's happening. A couple of things.
First of all, the impact of tariffs hasn't been as
bad as initially feared. An industrial production, which is a
measure of manufacturing and factory output, did better than what
put people some thoughts. Manufacturing was up about six point

(00:58):
six percent year on year, not a bad number, slowing
still in the collapsed exports have collapsed to the US
in that data. But what has happened is it's sort
of been offset by exports elsewhere, in particular Southeast Asia,
some of the emerging markets the Middle East. So what

(01:18):
we're seeing is that although shipping, shipments and exports to
the US are definitely slowing as you would expect with
those high tariffs, there are new markets that China is
finding to help offset that. And it just shows that
really President Eujinping's strategy is probably the right one, which

(01:38):
is basically working on a new global trading system that
just doesn't involve the US. If the US doesn't want
to trade with China fair enough, we'll go and trade
elsewhere and build up an alternative trading system.

Speaker 2 (01:52):
How much appetite do you think there is amongst other
trading countries like ourselves, like Australia blah blah blah, to
actually lock in with with she on met.

Speaker 3 (02:02):
I think there is some. I think have to be
careful about how far that will go, because countries like Australian,
New Zealand, Japan, South Korea and not natural political allies
of China, but at the same time that there are
big power in the Asian economic zone, in the in

(02:24):
the global zone, and therefore these countries do want to
trade with them and do need to trade with China
if it can, but it would also like to trade
with the US as well, which is more of a
natural political ally for for those countries. So they try
to tread a careful line between appeasing both and not

(02:44):
upsetting either. And perhaps the master of doing that, of
being able to trade with everyone is is India Uendo
Modi has you know, built up a you know, the
sort of the handbook of how to do this and
that and how to sort of get trade deals done
with almost everyone.

Speaker 2 (03:03):
That it's a fair point listen I see g has
been stepping up this call for industrial self sufficiency. Is
this falling on diffis or is it actually working well?

Speaker 3 (03:13):
It's working to a certain extent. There are things that
China can do to protect itself from these tariffs and
also not just twists, but from the blacklists that America
has put in Chinese companies. On companies like Lwei, for example,
they're not allowed to export their chips to the US.

(03:33):
Navidia is not allowed to sell its chips into China.
So there are certain things that China is good at.
So it needs to catch up. On semiconductors. It's nowhere
near as advanced as the US, but it is catching up.
It's taken the lead in certain areas. Electric vehicles stands
out really, they are the world leader now in electric

(03:57):
cars and they have stolen a big march we just saw,
and that they yesterday that BYD now sells more cars
electric vehicles into Europe than Tesla does, so they are
really doing very well. Green energy is another area where
China is doing good ats but there are still plenty
of areas where it needs to sort of catch up

(04:19):
and it needs to modernize and it needs to become
self sufficient. But it's certainly making the right steps and
doing the right things to try and get there.

Speaker 1 (04:28):
Fascinating stuff. Peter, thanks very much, look after yourself. We'll
talk to you in a week. That's Peter Lewis, our
Asia business correspondent. For more from Hither Duplassy Alan Drive,
listen live to news talks.

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