How has China reacted to Donald Trump's threat to put a 10% tariff on China as early as February 1st?
Is China warming up to allowing TikTok to be sold as part of a deal with the US? Who is in the running to be the app?
And Donald Trump and Xi Jinping talked on the phone this week, what did they discuss?
Asia Business Correspondent Peter Lewis joins the show.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Let's go to Asia. Peter Lewis joins us.
Speaker 2 (00:03):
Hello Peter, Hello Andrew.
Speaker 1 (00:06):
Let's go to Donald Trump and China. So how is
China reacting to the Prison's threat that he might put
a tim percent tariff on China as early as the
start of next month, which is early days away.
Speaker 2 (00:20):
Very calmly so far, and in fact, they've said very
little about it, other than their Vice Premier, who was
speaking at Dabos earlier in the week, was saying that
there will be no trade, no winners in a trade war,
and that was repeated by China's Ministry of Finance. They
did say they would look after their own interests, but
apart from that, they really said nothing at all. And
(00:42):
I think there's several reasons for that. The first thing
is actually Donald Trump hasn't put any tariffs on anyone
just yet. It's threatened to, and clearly we'll have to
see what happens on February the first, and everything could
change then. But so far these are just threats, and
a lot of people think that maybe this is a
(01:03):
tactic to get countries that come to the negotiating table.
But also there is a feeling that so far China
is coming out of this quite well. Donald Trump seems
to be saving the worst of his threats in his
if elsewhere. If you remember back in the election campaign trail,
(01:23):
he was talking about sixty percent tariffs on China from
day one, the first day he was in office. Well,
so far all is talked about is ten percent, and
they're still not there yet. And this is less also
than the twenty five percent is threatening Canada and Mexico wins.
So there is a feeling that he's backtracking a little
(01:45):
on China. He doesn't really want a trade war and
he would rather find a way in which he could
do a deal, and the only way. The numbers we
are talking about here are not huge. China's trade surplus
with the US last year it was about three hundred
and sixty billion dollars. Now, even if Donald Trump imposed
(02:05):
ten percent tarots on that, and even if you assume
China responded in kind, Chinese GDP over the four years
will be about one hundred and twenty eight billion dollars less.
So that's thirty two billion dollars a year. When you
take into account that China's economy is about eighteen trillion dollars,
(02:26):
you're only talking about a loss of zero point two
percent of GDP, So these numbers aren't enough really to
get China excited, and they're not likely to make a
huge difference even if they were to come to pass.
Speaker 1 (02:40):
And of course the tariffs will be paid by Americans
for who will have to pay a higher price for
their products as opposed to China actually having to pay it.
But I did actually talk to a Republican strategist during
the week who said, the thing about Donald Trump you've
got to remember is that he's a businessman, and when
it comes to negotiations, he starts high, but he often
ends out low or even sometimes nowhere at all. So
(03:02):
you're quite right, it's the opening salvo, and well done
to China for keeping calm so far. But meanwhile, in
the battle between China and America, we've got the whole
issue of TikTok. So where are we at with that?
Speaker 2 (03:15):
Well, this is interesting because TikTok and now appears to
be key to doing some sort of trade deal. As
we know, they've be given us a seventy five day
reprieve from having the law which would have forced them
basically forced bike dance. The Chinese owner of TikTok to
divest it and either sell it to an American owner
(03:37):
or be banned. Now sort of, Trump is of the
view that somehow America has ownership of this or should
have ownership of it. He talks about a permit that
in effect, bike Dance needs a permit to operate in
the US. Without that permit, TikTok is worthless, and therefore
(03:57):
the US should have fifty percent of byte Dance. Now
it's an odd way of thinking, because, of course you
could argue that's true of every single company that operates
in the US. They need ultimately government permission to do so.
But nevertheless, it seems to feel that there is an
ownership issue here and that for Chinese media companies to
(04:18):
be able to operate in the US they need to
be able to have some sort of deal with the
US government. Now, of course, you could say, well, China
would never allow this in reverse, they would never allow,
for example, Google under complete American ownership to operate in China,
and it doesn't indeed. But nevertheless, maybe there is a
(04:41):
deal that could be done here that encompasses a number
of things together. It could resolve the TikTok issue and
China seems that even there has softened its approach. It's
always in the past said it would never allow TikTok
to be sold. It's now saying that this is a
matter for the company should be left basically as a
(05:02):
business decision. So the deal could perhaps involve TikTok, it
could include tariffs, it could include export controls, and maybe
even in some sort of dream scenario for Beijing, even
US policy towards Taiwan and the South China Sea could
be thrown into this all encompassing deal that Donald Trump
(05:22):
does with China.
Speaker 1 (05:24):
And here's the thing, who might buy it?
Speaker 2 (05:27):
Well? And that's interesting. He has mentioned before Elon Musk.
Elon Musk is a little bit peeved at the moment
because he's already started to complain about the fact that
x Twitter isn't allowed to operate in China and therefore
there isn't a level playing field now. In the past,
he's always been very very careful about criticizing China, so
(05:50):
this is quite unusual for him. And nevertheless, he is
a supporter of Donald Trump. Oracle has been mentioned. Larry
Ellison is also a porter of Donald Trump. But there
potentially could be several companies certainly big enough to be
able to strike a deal and would have the money
to do this. And TikTok is a very valuable asset.
(06:14):
It's valued at maybe something like thirty billion dollars. It's
got one hundred and thirty million US users. So certainly
there should be companies that, if they were allowed to,
if China agreed, could do a deal there.
Speaker 1 (06:28):
It's also got an awful lot of American content creators
who make an awful lot of money from it and
awfully peeved about the fact that they might have their
income cut. So we wait to look at that. And finally,
Donald Trump and Jesiping as She had a chat on
the phone this week. And do we know what they
talked about.
Speaker 2 (06:43):
Well, they say in their readouts that they spoke about
a lot of issues. They did talk about TikTok, They
talked about trade, They talked about fentanel, which is the
reason why Donald Trump is imposing these ten percent tarifts
on China in the first place. And again there there's
reason to be optimistic because the readout from both sides
(07:04):
was quite positive. On this call, President g said that
you know they can work together. He wants to do
everything possible to wait and make the world peaceful and
safe that he can work with President G on that.
President G said after the call that they both hoped
for greater progress on US China relations, and Chinese State
(07:25):
TV also painted a positive picture of the call. The
one red line really and the one warning that was
made was that the US has really got to take
the Taiwan question with prudence. That's what Jinwil News agency
said there. So clearly China is laying out where its
(07:45):
red lines are. But all the vibes from that call
tend to suggest a gain that there's a bit of
a thawing of relations. It's not as bad nowhere near
as bad as maybe people feared during the election campaign.
And perhaps they're moving slowly through all sorts of back discussions,
which for sure will be going on now towards some
sort of deal.
Speaker 1 (08:06):
That is a very good point. People get very energized
and exercise about Donald Trump, and many of their worst
fears never come to pass. So Peter Lewis from the Asia,
I thank you so much for your time today.
Speaker 2 (08:16):
For more from Hither Duplessy Allen Drive listen live to
news talks.
Speaker 1 (08:20):
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio
Let's go to Asia. Peter Lewis joins us.
Speaker 2 (00:03):
Hello Peter, Hello Andrew.
Speaker 1 (00:06):
Let's go to Donald Trump and China. So how is
China reacting to the Prison's threat that he might put
a tim percent tariff on China as early as the
start of next month, which is early days away.
Speaker 2 (00:20):
Very calmly so far, and in fact, they've said very
little about it, other than their Vice Premier, who was
speaking at Dabos earlier in the week, was saying that
there will be no trade, no winners in a trade war,
and that was repeated by China's Ministry of Finance. They
did say they would look after their own interests, but
apart from that, they really said nothing at all. And
(00:42):
I think there's several reasons for that. The first thing
is actually Donald Trump hasn't put any tariffs on anyone
just yet. It's threatened to, and clearly we'll have to
see what happens on February the first, and everything could
change then. But so far these are just threats, and
a lot of people think that maybe this is a
(01:03):
tactic to get countries that come to the negotiating table.
But also there is a feeling that so far China
is coming out of this quite well. Donald Trump seems
to be saving the worst of his threats in his
if elsewhere. If you remember back in the election campaign trail,
(01:23):
he was talking about sixty percent tariffs on China from
day one, the first day he was in office. Well,
so far all is talked about is ten percent, and
they're still not there yet. And this is less also
than the twenty five percent is threatening Canada and Mexico wins.
So there is a feeling that he's backtracking a little
(01:45):
on China. He doesn't really want a trade war and
he would rather find a way in which he could
do a deal, and the only way. The numbers we
are talking about here are not huge. China's trade surplus
with the US last year it was about three hundred
and sixty billion dollars. Now, even if Donald Trump imposed
(02:05):
ten percent tarots on that, and even if you assume
China responded in kind, Chinese GDP over the four years
will be about one hundred and twenty eight billion dollars less.
So that's thirty two billion dollars a year. When you
take into account that China's economy is about eighteen trillion dollars,
(02:26):
you're only talking about a loss of zero point two
percent of GDP, So these numbers aren't enough really to
get China excited, and they're not likely to make a
huge difference even if they were to come to pass.
Speaker 1 (02:40):
And of course the tariffs will be paid by Americans
for who will have to pay a higher price for
their products as opposed to China actually having to pay it.
But I did actually talk to a Republican strategist during
the week who said, the thing about Donald Trump you've
got to remember is that he's a businessman, and when
it comes to negotiations, he starts high, but he often
ends out low or even sometimes nowhere at all. So
(03:02):
you're quite right, it's the opening salvo, and well done
to China for keeping calm so far. But meanwhile, in
the battle between China and America, we've got the whole
issue of TikTok. So where are we at with that?
Speaker 2 (03:15):
Well, this is interesting because TikTok and now appears to
be key to doing some sort of trade deal. As
we know, they've be given us a seventy five day
reprieve from having the law which would have forced them
basically forced bike dance. The Chinese owner of TikTok to
divest it and either sell it to an American owner
(03:37):
or be banned. Now sort of, Trump is of the
view that somehow America has ownership of this or should
have ownership of it. He talks about a permit that
in effect, bike Dance needs a permit to operate in
the US. Without that permit, TikTok is worthless, and therefore
(03:57):
the US should have fifty percent of byte Dance. Now
it's an odd way of thinking, because, of course you
could argue that's true of every single company that operates
in the US. They need ultimately government permission to do so.
But nevertheless, it seems to feel that there is an
ownership issue here and that for Chinese media companies to
(04:18):
be able to operate in the US they need to
be able to have some sort of deal with the
US government. Now, of course, you could say, well, China
would never allow this in reverse, they would never allow,
for example, Google under complete American ownership to operate in China,
and it doesn't indeed. But nevertheless, maybe there is a
(04:41):
deal that could be done here that encompasses a number
of things together. It could resolve the TikTok issue and
China seems that even there has softened its approach. It's
always in the past said it would never allow TikTok
to be sold. It's now saying that this is a
matter for the company should be left basically as a
(05:02):
business decision. So the deal could perhaps involve TikTok, it
could include tariffs, it could include export controls, and maybe
even in some sort of dream scenario for Beijing, even
US policy towards Taiwan and the South China Sea could
be thrown into this all encompassing deal that Donald Trump
(05:22):
does with China.
Speaker 1 (05:24):
And here's the thing, who might buy it?
Speaker 2 (05:27):
Well? And that's interesting. He has mentioned before Elon Musk.
Elon Musk is a little bit peeved at the moment
because he's already started to complain about the fact that
x Twitter isn't allowed to operate in China and therefore
there isn't a level playing field now. In the past,
he's always been very very careful about criticizing China, so
(05:50):
this is quite unusual for him. And nevertheless, he is
a supporter of Donald Trump. Oracle has been mentioned. Larry
Ellison is also a porter of Donald Trump. But there
potentially could be several companies certainly big enough to be
able to strike a deal and would have the money
to do this. And TikTok is a very valuable asset.
(06:14):
It's valued at maybe something like thirty billion dollars. It's
got one hundred and thirty million US users. So certainly
there should be companies that, if they were allowed to,
if China agreed, could do a deal there.
Speaker 1 (06:28):
It's also got an awful lot of American content creators
who make an awful lot of money from it and
awfully peeved about the fact that they might have their
income cut. So we wait to look at that. And finally,
Donald Trump and Jesiping as She had a chat on
the phone this week. And do we know what they
talked about.
Speaker 2 (06:43):
Well, they say in their readouts that they spoke about
a lot of issues. They did talk about TikTok, They
talked about trade, They talked about fentanel, which is the
reason why Donald Trump is imposing these ten percent tarifts
on China in the first place. And again there there's
reason to be optimistic because the readout from both sides
(07:04):
was quite positive. On this call, President g said that
you know they can work together. He wants to do
everything possible to wait and make the world peaceful and
safe that he can work with President G on that.
President G said after the call that they both hoped
for greater progress on US China relations, and Chinese State
(07:25):
TV also painted a positive picture of the call. The
one red line really and the one warning that was
made was that the US has really got to take
the Taiwan question with prudence. That's what Jinwil News agency
said there. So clearly China is laying out where its
(07:45):
red lines are. But all the vibes from that call
tend to suggest a gain that there's a bit of
a thawing of relations. It's not as bad nowhere near
as bad as maybe people feared during the election campaign.
And perhaps they're moving slowly through all sorts of back discussions,
which for sure will be going on now towards some
sort of deal.
Speaker 1 (08:06):
That is a very good point. People get very energized
and exercise about Donald Trump, and many of their worst
fears never come to pass. So Peter Lewis from the Asia,
I thank you so much for your time today.
Speaker 2 (08:16):
For more from Hither Duplessy Allen Drive listen live to
news talks.
Speaker 1 (08:20):
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio
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