CGTN Europe looks back at the explosive week of trade tariffs announcements with Xiaolin Chen, Head of International at KraneShares.
Category
🎵
MusicTranscript
00:00China's 125% tariff on U.S. imports has now officially begun.
00:06It comes after Washington raised levies on goods from China to 145%.
00:11Beijing has called Trump's tariffs unilateral bullying and coercion.
00:16China says that it will not consider further tariff hikes, but may consider non-tariff countermeasures.
00:22Let's get more on this with Shaolin Chen, who's head of international at Crane Chairs.
00:26Welcome back to CGTM.
00:28So how would you describe this past week?
00:31I mean, what a week.
00:32And what's the state now of Donald Trump's tariff strategy, his trade strategy?
00:38Indeed, what a week.
00:40What a crazy week.
00:41We have not seen this probably in history ever.
00:44In my opinion, this whole chaos, if we may call them, is very disorganized, is very disrespectful, is also very disruptive.
00:53When they first introduced this tariff with all the whole world of U.S. versus the whole world, everyone thought the U.S. was with the clear agenda to make a deal with all this country.
01:06But when Vietnam called President Trump, he literally said, I'll call you back.
01:12Even you offered zero tariff on U.S.
01:15Clearly, there's no clear agenda.
01:17There's no agenda whatsoever from the United States.
01:19What they aim to achieve, at least not publicly known knowledge.
01:23No one knows, so alleged, 50 or 75 countries call them, what's the progress they have made.
01:29Are they making deals or not?
01:31Very unclear, very disorganized in this whole situation.
01:36Clearly, it has created very disrespectful comments around the world from the United States, even to its counterpart of other countries' leaders, so on and so forth.
01:46And look at the market, 10 trillion get wiped off from the markets and still counting.
01:51In this instance, any look at the bond years, you look at the mortgage rates in the United States sold to 7%.
01:57Trillions of trillions of dollars invested in money get wiped off.
02:01This tariff introduces nothing but noises, chaos, volatility to the market that we have never seen before.
02:07A lot of investors have no clear pathways to understand what we are dealing with, how this will get resolved,
02:14even what is the end goal.
02:17And how exposed are Chinese companies to these massive U.S. tariffs?
02:22And how determined is Beijing to continue to face up to Washington on trade?
02:27I have to say, this time around, we've got to give the leaders in Beijing a huge credit for being mature,
02:34to being ready for this kind of chaos and being really rational to deal with all this situation.
02:40And China is very ready to deal with this time around, with this trade tariff.
02:45Clearly, a lot of the Chinese companies, every investor said, like, let's sell first, ask questions later.
02:50But all these Chinese companies, particularly the big companies that we know worldwide, need no introductions,
02:55the e-commerce companies, at least in the United States,
02:58they have very little to nothing of the exposures in the United States of exports whatsoever.
03:04They're very self-focused, they're very domestic-orientated in terms of generating revenue.
03:09Use the CSI China Internet names.
03:12Those include Alibaba, Pinduoduo, JD, Tencent, all these big companies you know that giants,
03:18you know, hires hundreds of millions of merchants on their platform to do business in China.
03:22Them collectively have 1.87% of their revenue generated outside of China.
03:28That's how little it is, Paul.
03:30So to this company, it does not matter.
03:33And also, United States exports, it's only 2.3% of China's GDP.
03:39That's why China is very ready to counter these measures and stay, you know,
03:45very fair to its own exporters in the country.
03:48And the measures they introduce, quarter over quarter,
03:51are very focused on how they're going to stimulus their domestic economy,
03:55which is ready to do so.
03:56That's 30%, 40% of their GDP.
03:58Can they find more stimulus package?
04:00Can they front-load more stimulus package to help this 2.3% of their GDP,
04:05which is U.S. exports?
04:06I think the answer is very straightforward.
04:08It's definitely yes.
04:10So you talk about the chaos, the disrespectful, destructive nature of what's been happening.
04:15Just how concerned are global investors?
04:18Is there any end in sight to the volatility?
04:20And are safe havens even safe anymore?
04:24That's a great, great question, Paul.
04:27It used to be the safe haven currency like U.S. dollar.
04:29You see dollar be weakening for, you know, days, if not now, into weeks now.
04:35Investors are clearly not buying the sole traditional safe haven U.S. dollar anymore.
04:40Investors are concerned because this is the number one largest economy
04:44and number two largest economy in the world having some differences.
04:48Clearly, both sides need to sit down and work this through for a very strategic plan,
04:53how are we going to resolve this?
04:54But if you ask me, look at the domestic situation of the two economies.
04:59In the United States, Michigan indexes released on Friday
05:02shows United States' sentiments, investor sentiments, plumbed by 11 percent.
05:09Mortgage rates is 7 percent high today.
05:12And they expect the inflation to go up by another 6 percent.
05:16All this data shows that one side is going to blink or if not break first to ask for a deal.
05:22Global investors definitely hope that both countries can come to a deal,
05:26which I am also still hopeful that they will come to a talk, a dialogue, a deal soon.
05:33For a very simple reason.
05:35United States does not, does not want it or need it.
05:39Those industries, they outsource to China and the rest of the world for decades now
05:44to back to the United States, to make the United States a greater game.
05:47Because you simply don't want an iPhone to be three times more expensive than they are today.
05:53So at the end of the day, I think investors are a little bit worried.
05:57That's why you see market are acting first.
06:00But at the end of the day, we've got to differentiate which economy is more resilient,
06:03which country has more self-resiliency of toolkits in terms of monetary, physical,
06:11to help the domestic ground, I think, in United States and China.
06:14Well, let's see what the next week has to bring us all.
06:18As ever, we really appreciate your input.
06:20Shaolin Chen from Crane Ches, thank you so much.