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odo .com. Hello and welcome to World Business Report from the BBC World Service.
Namaste I am Dewina Gupta and I am joining you from Delhi.
On this edition, two economies and a trade war.
As the US and China clash over tariffs on goods, we find out how it is impacting their economies and global businesses.
And what if your country ran out of workers?
With birth rates hitting record lows, South Korea is scrambling to find people to work in their industries.
The Korean economy will not survive even a day if there's no immigrant workers.
The real question is whether we should have even more immigrant workers or less.
More on that in just a bit but let's dig in.
It's a high -stake standoff between the world's two biggest economies and it's getting personal.
Here's the story so far just months into his presidency US President Donald Trump hit the ground running with more tariffs on Chinese imports.
Last week China hit back with tit -for -tat levies on US goods but President Trump didn't like that.
With China, as you know, against my statement, they put a 34 percent tariff on above what their ridiculous tariffs were already.
And I said, if that tariff isn't removed by tomorrow at 12 o 'clock, we're putting a 50 percent tariff on above the tariffs that we put on.
Well, that's got to hurt, because Mr. Trump says he may impose an additional tariff on China, which could mean some Chinese companies will have to pay up to 104 % of the product cost in tax to enter the US market.
China says it will fight to the end.
Here's Lin Jian, spokesperson of China's Foreign Ministry.
It is a typical move of unilateralism, protectionism and economic bullying.
Let me stress once again that trade wars and tariff wars have no winners.
Pressuring, threatening or extorting China is not the right way to engage with us.
If the U .S. insists on waging the tariffs war and trade war regardless of the interests of both countries and the international community, China will play along to the end.
That spokesperson of China's Foreign Ministry Lin Jian, not mincing his words there.
Let's get in BBC's Kerry Ellen, who is a media analyst in BBC's China Monitoring Team and she's joining me right now.
Kerry, you've been going through all of it in China, covering the media there, noticing what's been reported.
Tell us about, what are people feeling there?
How are businesses reacting to this kind of war of words, leading to an ultimate trade war?
Well, it's difficult to know because China has a very tightly controlled media environment.
So the government very much wants to lead messaging on this and to reassure businesses that they're not going to be heavily impacted.
I mean, obviously there's a lot of media internationally at the moment saying that this is going to have global repercussions.
but China's very much been wanting to tell businesses through its media that they will, through its own domestic economy, be able to soften the blow.
So, there's very much been a message of reassurance that China has very quickly moved with a series of measures to stabilise its own capital markets and restore investor confidence.
And today, if you look on social media platforms, the equivalent of a platform like Facebook or X, something called a Weibo, you'll see a lot of comments that might not be from authentic users, because China does have click farms to very much promote patriotism and to support government messaging.
But very much saying that people are happy and reassured that the government's doing the most that it can.
So for your average Chinese person, if they're logging into social media platforms today, or they're turning on the television, opening newspapers, they're seeing a message generally that's saying the government has things in control.
and it doesn't matter how far this can go.
China believes that it can win.
Well, so things are under control is what the message is from China.
Kari, be with me because let's get in our expert as well.
We have first Fiona Cenkota, Senior Market Analyst of Citi Index joining us.
Fiona is that message also translating into the Asian markets?
Are you seeing that there's been some sort of breather today after those panic selling modes that stock markets have been witnessing here for the past few trading sessions?
Yes, we have seen a calmer sense in the markets today.
We've also seen Chinese state holding companies vowing to increase share investments as well as a slew of listed firms that have announced share buybacks as they sort of step up efforts to stabilize the markets.
And it has work. Chinese stock markets rebounded.
The Chinese Blue Chip CSI300 was up 1 .7 % today and the Shanghai Composite Index was also up 1 .6 % as well as the Hang Sen being up.
But this is after very steep slumps at the start of the week.
Well, there was another report from Citibank which has cut China's GDP or growth forecast to 4 .2 percent from 4 .7 percent for 2025.
Now this means that the fundamentals are still weak for the economy, which was on a brink of a slowdown as well.
There were efforts to stimulate economies by the Chinese government to pump in some extra cash.
Now how far does this trade war now get the Chinese economy?
How much of a setback will it be?
Yeah, I think if these planned tariffs and the threats that we have from Trump do actually go ahead, then this will have a very serious impact on the Chinese economy.
This is a Chinese economy that if we remember was in quite a difficult situation, anyway, it was already dealing with weaker domestic demand, it was already dealing with a property sector in crisis and so was leaning on exports to sort of prop up the economy.
So, if you then sort of put on those very, very strict or harsh, aggressive tariffs from the US that will have a serious impact, yes.
So, would you agree with what Kerry said earlier, the Chinese government messaging that things are under control as of now?
Is there what investors are feeling as well for this economy or is just a brief pause for now?
Yeah, the sense that I have and what we've seen, I mean, if we look at the extent of sell -off that we have seen at the start of the weeks.
We saw you know stocks in China slump 7%, we saw the Hang Seng down 13%.
We have seen that slight recovery today but I think you know it's a very modest recovery which suggests there's still a lot of fear there.
All right Fiona, stay with us because let's get in.
Dr. Ji Yu, Senior Research Fellow on China Chatham House, who's joining us.
Dr Yu, same question to you, how are you assessing things from here, because how much is China's economy dependent on the U .S. trade for now, to feel the impact of this trade war?
Thank you for having me.
Obviously, Chinese economies, particularly Chinese export, are particularly dependent on U .S. market.
However, that proportion has really come down, I think, judging from back to 80 years ago, where China already had a first round of trade war with Washington.
In the past, it was around 20 % of total Chinese export, depending on US market.
But I think the number now has come down to 13 % instead.
So, obviously, China has already begun that process of diversification of its export market.
But having said that, I think what really the signal from yesterday's 50 % or even the 34 % from the last week is irrelevant, is completely irrelevant.
I think the key thing in here is the United States is a charter, or a hard way of looking to a hard decoupling between China and the United States and that is really I think a terror.
It's only a reflection of extremely difficult bilateral relationship between the two.
Gary, let me get you in.
Do you get a sense that companies which are operating out of China including American companies are now looking at China plus one, when it comes to establishing their supply chains away from China.
Is that what they're going for in this environment?
Well, there have been voices from American businesses within China that have expressed concern about these Trump tariffs, but one of the messages that Chinese media wants to make clear is that there are no...
I mean, this is something that's been coming up in government messaging again and again.
And there are no winners when it comes to either trade or tariff wars.
And one of the things that we've seen is that Chinese companies that were impacted in 2018 by the trade war that went overseas to areas like Vietnam, they're still feeling the impact by these fresh tariffs.
So there's this idea that's penetrating in state media that's saying it doesn't matter where you go now.
These tariffs affect everybody.
But China's got a large market.
it's got a large population, it's innovating at a very quick speed, it's saying that it can basically soften the blow of these tariffs compared to other countries and there's going to be a real issue with this and the only way to deal with that is to fight back which is what Canada, China and the EU are doing.
And Dr Yu, what could be that scenario where where we see the end game of it all.
Who do you think will blink first between the US and China?
What seems to be the endgame here?
Well, I mean, we're not sure at this stage, I think Kelly was absolutely right in here is really the politics rather than economic rationality that both side is playing right now.
presidency cannot afford to look weak domestically, because the Chinese public opinion towards the United States become less favorable than compared with eight years ago, to put it mildly.
So here, have to come up with rather defined approach, but also measured approach to targeted US companies, and particularly in the tech sectors that operate within the Chinese market.
But also, American agriculture import into China, which again, really comes from the hotland of the Republican Party, something that would hurt American farmers.
So that is a way that Beijing is really aiming at.
So all this added together, I would say, is both sides are doing some sense of mutually destruction in order to gain much harder bargaining chips when it comes to the trade negotiations.
So we're going to see very strong and robust responses from both sides for several rounds a several diplomatic wrestling and a war on words.
And then we will probably will come back to the negotiation table when both Beijing and Donald Trump realize how much damage they both have done.
So no winners here for now.
And we'll have to see who comes to that negotiation table and how, but thank you so much for joining us, Dr. Ziyu, Senior Research Fellow on China at Chatham House.
You're with World Business Report from the BBC World Service.
Moving now from the talks China is having with the US to the one it's having with Europe.
On Tuesday the EU Chief Ursula von der Leyen had a call with China's Premier Li Qian, where they discussed how the two countries can work together in light of the new US tariffs.
Kerry Allen is still with us.
Kerry, this seems to be a different kind of development where after the snap from the US, it seems China is willing to sit down with Europe, with which it has had tariff and retaliatory tariff kind of issues as well.
Yeah, absolutely. And this is a message that's really gone back to when Trump returned to the White House.
I mean, China was putting messaging out saying that there was a whole opportunity for a reset of ties.
And with regards Europe, I mean, one of the things that Chinese businesses really value is those face to face talks, so there was the, when there were these tariffs in the auto industry, there was this, you know, there was this messaging saying, well, we can sit down and we can talk about this, and especially with the introduction of these new tariffs.
I mean, this is something that state media did expect.
They thought for sure there's going to be a return to a trade war when Trump comes to power.
It was an opportunity early on to start establishing a good relationship with European nations and the EU as a whole.
And there has been a lot of messaging in state media saying that there's an opportunity for China and the EU to work more closely together and write a new narrative for a multi -polar world.
At the same time, though, China does perceive the West as having prejudices against China.
So you'll often see messaging on human rights where Europe and the US align.
And China is very critical of that.
So it's looking at this sincerity under a microscope and very much saying that it does want to work closely with the EU and there are opportunities, but at the same time, it comes with caveats.
BBC's Kerry Allen, thank you so much for joining us.
We'll let you go back to what I'm sure what's breaking news every hour it seems coming on this particular subject.
But keeping up with what Kerry had said as well about this newfound opening of doors between the European Union and China, let's get in someone who's got all the details from the inside because joining us from Brussels is Olof Gil, European Commission spokesperson for economic security and trade.
Thank you so much for joining us all of at this time.
Now it's a simple thing.
Have the Trump policies fundamentally shifted now how the EU needs to think about trade with China?
Good afternoon and thanks for having me on.
I wouldn't say that there's any fundamental shift per se.
The EU's position vis -a -vis China has been very clear and consistent for a made very clear that we want to grow the EU -China trade and investment relationship for mutual benefits.
But we see many challenges particularly on the Chinese side that we would need to see addressed before we get to that stage.
These include level playing field issues.
These include some business environment difficulties that our companies perceive in China, issues like that.
So, in order for us to get to a stage where we feel we're getting towards stronger trade and investment relations with China.
We would need to see some movement on those issues first and certainly engage in this good step.
But China is saying that you need to meet half way.
It can't be that you're imposing tariffs on their electric vehicles at the same time trying to negotiate a resolution there?
It's fundamentally misleading to say that we need to meet them halfway when our European single market of some 450 million consumers is entirely open and rules -based for Chinese companies.
They can compete here on a fair basis with European companies provided they respect our rules.
Whereas we see clear evidence in China that our companies are not allowed to compete on a fair basis.
So this and many other issues would need to be addressed in a meaningful way by China before we can talk - So how do you address that?
About a reset? Yeah, so how do you address that?
Because that would be the basis with which you would move forward with a relationship which is different from the one you have with China right now.
So what are those different sectors or different proposals on the table?
Well, that's up to the Chinese government to address our long -standing concerns on these questions and should they demonstrate a willingness to do so then we can talk about other issues, including resolving the long -standing saga on electric vehicles.
You will recall that we, following a detailed and lengthy investigation, found that electric vehicles made in China were benefiting from massive amounts of unfair illegal subsidies.
And on that basis we impose tariffs on imports into the EU of battery electric vehicles made in China.
It has been our position all the time that we are willing to find a negotiated outcome to this provided that it has the same end goal i .e. eliminating the unfair competition and benefits from which those Chinese electric vehicles benefit.
But there's got to be a start somewhere right.
So if both the sides are wary of protectionism, how is it different from the kind of conversation you're having right now, especially with what the U .S. is being threatened with some more tariffs from the U .S. So how do you try and work out a middle ground with China?
Is there a realistic plan on the table?
I'm not sure what you're referring to when you say a middle ground with China.
As I said, we have been clear and consistent in our view that we want the EU -China trade and investment relationship to be as strong and beneficial for both sides it can be.
But there are some conditions that we need to see met.
Okay, so tomorrow now you will be voting on countermeasures against the US steel and aluminium tariff.
What's on table for that?
So, what's happening tomorrow is that the European member states will vote on the Commission's for a certain number of countermeasures against the tariffs on steel and aluminium imports announced by the US around a month ago.
We want to be very clear that we don't want to do this, we don't want to have to take this step of retaliating, but unless our US counterparts are willing to negotiate in a serious way to find win -win outcomes rather than this direction of travel we feel we have no course but to take this action to protect our industries and to protect our member states.
And briefly now, Donald Trump has said that the European Union could avoid the duties by purchasing more American liquefied natural gas.
Now if it comes to that, is there a discussion on it?
It's rather bizarre that President Trump flags this as something new and we've been saying since the day of his inauguration that LNG is one area that we're willing to look at in terms of finding deals and win -with outcomes with our American counterparts and we're still willing to do so but it takes two to tango and right now there's no meaningful engagement from the US to try and find the type of deals we're talking about.
We leave it there, thank you so much for joining us, Olof Gill European Commission spokesperson for economic security and trade joining us there.
Now to the country with the world's lowest birth rate its South Korea.
With declining fertility rates businesses are facing a serious shortage of workers.
So the government is now looking at increasing immigration, a move that is not exactly popular with locals.
My colleague David Kan visited South Korea to find out more.
Osan in Gyeonggi -do, South Korea is a city with amongst the highest percentage of foreign workers in the country, mainly from other parts of Asia.
And it's here where I meet Jones Galang.
a Filipino missionary who is also the head of the Osan Migrant Workers' Center.
Compared to other countries Korea is very popular, why?
It's very new to Asian people and the salary is more compared to other countries like Saudi, Hong Kong, UAE, like that, especially the non -skilled workers.
Second, of course, it is a force from their own countries, because no jobs and poverty.
So for example, the Filipinos, nobody will come here if we can find work in our country.
It is been a shame.
And then of course the third one is, Korea needs workers, Korea needs workers to maintain his image in the international market and then to maintain the economy afloat.
So they need workers and then for the workers Korea is like a heaven Korea does really need its workers especially young workers Jeonwoo is a professor of social welfare studies at Gachon University in South Korea He also sits on the advisory board for the presidential committee on aging society and population policy South Korea now has more job seekers in their 60s than those in their 20s.
With the ongoing low birth rate, fewer teenagers are transitioning into adulthood.
It's inevitable that the working age population will drop significantly, that is unless we have immigration.
It'll take time for the birth rate to increase and even if more babies are born, it will take 20, 30 years for them to enter the workforce.
On the other hand, immigrants can make an immediate visible impact, quickly contributing to the economy.
And the South Korean government is keenly aware of this.
In August last year, Hye Myi Yu, senior secretary of low birthrate, spoke about immigration in an interview with the national radio station KBS.
One potential solution to address the rapid decline in working age population is to utilise foreign labour.
I believe we need to develop a medium to long term plan for this.
Foreign workers have already been contributing significantly by filling the short -term labour shortages, however, we need to look beyond this.
But with 95 % of the population identifying as ethnically Korean, racial discrimination is a major concern for many migrant workers.
Uda Yea -rai is President of the Seoul Gyeonggi Incheon Migrants' Trade Union.
He is originally from Nepal, and he told me about his experience of moving and settling here.
When I came to this country over 30 years ago, I was in my mid -twenties.
I couldn't speak any Korean and they looked down on me so much, telling me that I'm not good at the job.
They made me do more dangerous work than Korean workers.
They scolded me more for the same mistakes.
They made fun of my culture and food.
They would sometimes hit me and they didn't pay us properly either.
People treated me as an inferior, at least that's how I felt.
There was a manager called Mr. Kim, and he would scold me so much, calling me lazy all the time.
I think he felt threatened that foreigners would take over the industry and take his job away.
And even now, when I meet someone with a surname Kim, I feel uncomfortable." Wudaiya's concerns aren't falling on their fears.
Jung -hoon Cho is a member of Conservative People's Power, the ruling party at the National Assembly.
It's how attractive Korea is and more broadly, more welcoming and hospitable social environment toward migrants.
The Korean economy, even today, will not survive even a day if there's no immigrant workers.
The real question is whether we should have even more immigrant workers or less.
At the moment, the current signal is upward. almost all sectors are demanding more visa quota for immigrant workers.
While concerns remain, those wanting to move to South Korea have been steadily increasing, with the immigration application numbers almost tripling between 2022 and 2024.
A welcome increase for a country that's facing the population unprecedented anywhere else in the world.
That was David Kann reporting, and you can hear more from his report.
Just search for Business Daily wherever you get your podcasts.
Fiona Cinkota, still with us.
Fiona, very quick reaction from the US markets.
Now, they seem to have opened in green, a slight reprieve from the tariff market turmoil so far.
Yes, that's right, we've seen a strong open on Wall Street.
The stock indices are rising just shy of 4 % and that comes after falling around 10 % over the past three sessions.
So as you said, we are seeing a little bit of a bounce today but it remains to be seen whether that can be maintained.
I'm sure your fingers and two fingers are all crossed for this market to go ahead in the green.
But thank you so much for joining us.
Fiona Senkota, senior market analyst at Citi Index. This is also coming on the back of news that Treasury secretary Scott Besant has told a US network that around 70 countries had approached the US for tariff negotiations so far.
So hoping that negotiations would be the way forward for some sort of a climb down from the tariffs that have been proposed so far by US President Donald Trump.
You've been listening to World Business Report.
This is Devina Gupta joining you from Delhi with Isabel Isi and James Wickham on the show.
Thank you for being with us.
Asking the right questions can greatly impact your future, especially when it comes to your finances.
So if you're looking for a financial advisor you can trust, certified financial planner professionals are committed to acting in your best interest. That's why it's gotta be a CFP.
Find your CFP professional at Let'sMakeAPlan .org
