Putting China's economic figures in context
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How could a U.S.-Europe trade spat over Greenland affect global markets?
Will there be a trade war between the U.S. and Europe over Greenland? Live from the U.K., this is the Marketplace Morning Report from the BBC World Service. I'm William Lee Adams. Good morning. The dispute between European countries and the United States over Donald Trump's determination to annex Greenland continues to escalate. A full European Union summit will be convened on Thursday to consider a collective response as diplomats try to avoid a trade war with Washington. Speaking at a press conference in the last couple of hours, British Prime Minister Sir Keir Starmer said the use of tariffs against allies is completely wrong and warned that households, small businesses and working people are those who feel it first if supply chains are hit.
Here's the BBC's Katja Adler in Brussels.
We're looking at potentially a full-blown transatlantic trade war. That would affect all of us. And that will happen if Donald Trump goes ahead with his Greenland tariffs and if the EU, for example, retaliates strongly against the United States. So with so much at stake, that's why you're hearing strong pronouncements from European leaders. But they're really worrying about what action should they take.
What immediate market moves followed the threat of transatlantic tariffs?
That's why there's going to be this emergency summit of EU leaders here on Thursday.
OK, let's do the numbers. Markets have been reacting to the threat of a potential trade war between the U.S. and Europe. Spot gold surged to a record high near $4,070 an ounce. Elsewhere, shares in German carmaker BMW plunged 7%, while other European automakers, including Mercedes-Benz and Volkswagen, were also down. New data shows that China's economy grew by 5% last year, despite it being in line with government predictions. It's not anywhere near the stellar growth figures China has had over years past, and the economy faces a number of problems, not least a continuing weak housing market. The population also fell by just over 3 million last year. Let's speak to the BBC's Nick Marsh to put these numbers into context.
How much did China’s economy grow last year and why does 5% matter?
Hi Nick.
Hi William.
So Nick, the last year saw China staring down Trump's tariffs and the U.S.-China trade war. Presumably these numbers will be welcomed by Beijing.
Yeah, they certainly will. 5% is one of the slowest rates of growth that China has seen in a long, long time. We're used to spectacular growth from this very fast-growing economy. But you compare it to the 1%, 2% rates of growth, if that, that we see in most developed Western democracies, and it suddenly looks really, really big, doesn't it? Another reason that China's government will be happy with these figures is basically the year that China had last year, when you think about the Trump administration's campaign of tariffs, of tariff threats, of trade tensions, and so on. And in the face of all of that, Chinese exports still continued to explode. They announced a trade surplus of $1.2 trillion last week, $1.2 trillion more goods and services sold than were imported in China.
How did exports and new trading partners support China’s growth despite U.S. tariffs?
So yes, trade with the United States was down, but China found customers in places like Southeast Asia, Latin America, and Africa to sell to. And it actually accounted for a third of of China's GDP growth. So in spite of all these pressures from the outside, Chinese exports go from strength to strength and they are the main contributing factor to this 5%.
And this is all happening as the population of China is in decline. What long-term effects might that have?
The population shrinking is a long-term problem that China's going to have to deal with. It's not the only Asian nation that's going to have to deal with that. Right now, the biggest problems really are to do with domestic consumption, so basically households not feeling like they have much money to spend. That's been really exacerbated, created actually, by a property crisis in which property prices have plummeted. Lots of Chinese people have their money in property invested, so people are aren't spending as much as they want to. So even though China's selling a lot abroad, people domestically aren't spending.
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Chapters
7 chapters
1
How could a U.S.-Europe trade spat over Greenland affect global markets?
0:01–1:10
2
What immediate market moves followed the threat of transatlantic tariffs?
1:10–2:00
3
How much did China’s economy grow last year and why does 5% matter?
2:00–3:06
4
How did exports and new trading partners support China’s growth despite U.S. tariffs?
3:06–5:17
5
What long-term risks do China’s falling population and housing crisis pose for growth?
5:17–6:05
6
Why are wealthy individuals relocating to the UAE and how is Dubai changing?
6:05–7:41
7
Could Dubai’s luxury housing boom create affordability and planning challenges?
7:41–8:27