Weekend Edition: A pragmatic Trump and a determined China
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What is the opening overview of the US‑China tariff dispute and its current status?
It's a battle of bravado between the US and China. Who can withstand the impacts of tariffs the most? And who needs who in this global trade war, which has reached unprecedented heights, only to see the biggest backtrack ever? So is the art of the deal working against China, or does China hold more of the playing cards than President Trump? How does this tariff war play out? And can we see a future of cooperation? Just continued adversity between the two biggest economic powers on the planet. That's this week. The morning call from NAB with Phil Dobby. The weekend edition. Well, last time we spoke to Yan Wang, Chief Emerging Markets and China strategist at Alpine Macro in Canada. He said the Chinese authorities were missing a trick.
They were right to focus on new higher-tier income sectors like EVs. And since then we've also seen big strides in AI, of course. But he said there wasn't enough support for the demand side of the economy, although they did supposedly achieve their five percent growth. growth target last year. But we spoke uh to Jan in September last year. I mean the world is very different today. So we've got him back on to join us again uh from Montreal. So Jan, uh I mean the government is committed to a five percent target again this year as well, despite all the uncertainty over tariffs. So are they going to make that target this year?
I think they will have to make that because um Because for me this is a uh political and economic imperative. Um for the political r the economic reason is quite simple because you know, in in the past couple of years the Chinese economy has been pretty sluggish with deflation, with a very weak labor market. So we know unemployment rates among young people is very high. So they they Um they even kind of stopped publishing the real number. So I do believe the economic situation is very dire. Um so Um so they would have to reach some kind of minimal growth to maintain social stability. So I think that's the economic reason. And the political reason is also uh very uh real, especially f this year, because now we are in this trade war, um and uh China needs to show uh its economy is able to grow.
It's it's resilient, it's stable. Um
With
you
know, faced with the extreme pressure from the US. So who d who is it important that they show that to?
Domestically,
you mean? I I think globally.
So they need to show China Beijing keeps saying uh the Chinese economy is an ocean, not a pond. So they want to draw uh other countries to the um the uh spheres of influence uh to to China, right? So they need to show in this global trade war China is the stable, predictable trade partner and it's able to grow. Is able to withstand the extreme pressure from the US. So from that point of view, I think politic the um they have the political and economic reason to really stay um for to to to to grow this year. Uh whether or not they are able to achieve that, I do think they they will probably be able to achieve that. what number one reason number one is now um the trade war is is pushed forward uh by probably another two months um and in in qan they see the economy was was rising was able to grow uh because there was a lot of front loading of exports and then now we have the second quarter uh likely the Chinese uh exporter
and US importers are really working over time to try to frontload um shipboard uh uh orders before uh increase in in tariffs. So Q1, Q2, I think the G GP numbers will be pretty uh reasonably strong. And then uh if the trade war uh re escalates after the pause of the tariffs, then I think Beijing would have to ramp up very aggressively uh domestic policy support to to reach its growth target.
Right, but I mean that that policy support so far, you know, and we were spent a lot of last year, didn't we, saying when is the when is the big fiscal uh bonus gonna happen? When are they gonna put real government money into the economy? And largely, you know, it was monetary policy by and large, wasn't it? As though the government wasn't really too keen
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Chapters
7 chapters
1
What is the opening overview of the US‑China tariff dispute and its current status?
0:01–6:17
2
Why does China need to hit its 5 % growth target and what are the political‑economic drivers behind it?
6:17–12:27
3
How is Beijing using fiscal policy and public spending to achieve the growth target?
12:27–19:37
4
What impact did the 145 % tariff spike have on Chinese export patterns and how are new markets being diversified?
19:37–25:50
5
Can Trump’s trade demands be accommodated by China and what would a pragmatic US‑China deal look like?
25:50–29:38
6
How are US‑China negotiations influencing the Chinese yuan versus the US dollar this year?
29:38–33:28
7
What role does Australia play in the evolving China‑US trade landscape and commodity flows?
33:28–33:47