Coming up, on a visit to Vietnam, Chinese President Xi Jinping urges deeper cooperation between the two countries in building a community with a shared future.
How significant is the trip?
China's foreign trade started steady in the first quarter.
What's driving this resilience amid external uncertainties?
And Donald Trump suggests tariff exemptions for smartphones and other tech products imported from China are just temporary.
What's behind the back -and -forth in Washington's trade policy?
Chinese president Xi Jinping has pledged to work with Vietnam to map out a new blueprint for the building of a community with a shared future.
In a written statement upon arrival in Hanoi for a state visit, President Xi noted that this year marks the 75th anniversary of the establishment of diplomatic ties and the two countries have demonstrated the bright future of the socialist system.
He expressed wishes for long -lasting friendship and prosperity in Vietnam.
This is the first leg of President Xi Jinping's tour in Asia and will also take him to Malaysia and Cambodia.
Ahead of his departure, the president urged the two countries to contribute more to peace, stability, development and prosperity in Asia and the world at large.
In a signed article published in Vietnam's Nandang newspaper, the Chinese leader called for deepening strategic mutual trust, advancing socialist cause, continuing win -win cooperation and delivering more benefit to people of the two countries.
Meanwhile, Chinese newspaper People's daily carried a signed article of General Secretary Till Lem of the Communist Party of Vietnam's Central Committee.
The Vietnamese leader highlighted the history of friendship between the two countries and said closer economic and trade relations have brought tangible benefits to people of the two sides.
For more, we're joined by Rongying, senior research fellow at the China Institute of International Studies.
How significant is President Xi's visit to Vietnam at this particular geopolitical moment?
I mean, I think the visit coincides many important occasions.
As far as China is concerned certainly for President Xi himself, this is the first ever overseas trip this year, and for Vietnam interestingly it coincides with many important anniversaries.
The 19th anniversary of the founding of the Communist Party, Communist Party of Vietnam, the founding of the Vietnamese republic, and also I think the liberation of the South of Vietnam.
But the most important that I think this year marks the 75th anniversary of the established diplomatic relations between China and Vietnam.
So that took place, it's taken place in a very special sort of occasion.
Besides a part on the ongoing fast changing geopolitical situations.
So I believe that the significance most importantly is, I think, lies in the fact that China and Vietnam, particularly the top leadership, have a lot of things to talk about bilaterally, regionally, but most importantly I think how China and Vietnamese strategic partnership, the strengthening and boarding of the relationship, will provide a sense of stability and also impetus for further deepening the relationship between China and Vietnam.
Well, President Xi emphasized building a China Vietnam community with a shared future.
How do you interpret this concept and what does that suggest about China's long -term goals in its relationship with Vietnam?
Indeed, this is a very much important goal but also I want to say it's a very important vision for China and Vietnam, which, of course, it was first, I mean, agreed when President Xi vided to Vietnam last time, I mean back in December 2023.
And the vision of building a community of shared future have since then has served as kind of overarching goal and also a vision to guide the two countries to broaden and deepening their relationship, a strategic partnership, towards a kind of a community of a shared future with strategic importance.
And this significant, and the importance of this vision will certainly, I think, serve as a guiding principles for the years and decades ahead, as we are just discussing and looking at the significance of the pivot.
Well, President Xi also mentioned advancing the socialist cause.
So to what extent do you think this shared socialist ideals are shaping China -Vietnam partnership today?
Yeah, both China and Vietnam have adopted a kind of socialism with their respective characteristics.
And that has also been very unique and special in terms of the bilateral relation between two countries, if we are going to make a comparison or contrast with other relations.
So that aspect being the...
the two countries, two communist parties, pursuing the socialism with the respective relations...
I mean, with the respective characteristics as a very important part.
And as we know, and I think we are going to see, not only I think the exchange of views, experience of governance at the nation level, but the equally important, I would say even arguably more important at the party level, how to govern the party and how to ensure that the guidance of the party being the ruling party that would guide the two nations to pursue their respective sort of a development strategy and which in line with the changes and transformation of the party and also equally important of the nation as well.
And President Xi called on Vietnam to help safeguard the multilateral trading system that ensures stable supply chains.
And he also warned that trade wars and tariff wars produce no winners.
But how can China and Vietnam work together to really uphold that system, especially in the face of rising tariffs and economic pressures from the U .S.?
I think first and foremost the China and Vietnam are two sort of most important participants of this current international multilateral trading system and over the matter of fact I think since China's reform the opening up and the Vietnam's as well the progress and achievements that have been achieved at the economic and other aspect has largely benefits from that system.
And of course, other countries in the region and the world have the large, so it is, I think, of great utmost importance for China, for both China and Vietnam to ensure that system remains relevant and against the, I think, the abuses of tariffs for the United States and other, sort of, corresponding negative developed.
But most importantly, I think, as two countries share such a kind of benefits in working together, to safeguarding that system, the multilateral trading system, it is also, I think, serve the mutual interest to ensure the principles, the rules, the norms, that has been upholding this system, were remain sort of remain so that they will continue to enjoy a favorable international environment to pursue their respective.
So it is on the one hand for the self enlightened interest of both China and Vietnam but more importantly I think we're talking about where we are looking at the system looking at about the the the the rules and the rules of the games specifically related to the multilateral trading system.
President Xi highlighted cooperation in areas like 5G, artificial intelligence, and green development.
What opportunities do you foresee in these emerging sectors?
I think China and Vietnam have made great progress, indeed, at the very depth and wide breadth of cooperation in the traditional areas.
And I think we're going to see that more will be coming in terms of improvement of infrastructure, particularly railways and others.
But the emerging areas, the green tech, I mean, development, the digital development, and also I think development sector related to that is equally, if not more important to that.
This is an area where I think these emerging areas, emerging sectors are going to continuously so that providing impetus for the ever sustainable development of the two countries.
That is the vitality.
That is, I think the reason why the relationship between the two countries despite the differences, I mean, their differences, they have been able to maintain a steady and solid development over the past decade.
And also President Xi cited the successful delimitation of boundaries in the Baibou Gulf as a model for resolving maritime issues.
So does that signal a realistic path of toward deescalating tensions and fostering cooperation in the South China Sea?
Yeah, I think that's not a secret that China and the Vietnam, like, our neighbors.
So naturally, there are some differences, disputes, particularly related, the boundaries, maritime issues, and so on and so on and so forth.
And I think, thanks to the guidance, strategic guidance of top leadership, President Xi and the Vietnamese leadership, and also the great effort that has been done jointly by the two sides, these differences has been very much well under control.
And furthermore, I see the tendency that the two sides will continue to work along the line.
I think this is very much in line certainly with the political diplomatic regime, but more importantly, it's setting an example.
An exemplary example of how the two neighbors, because despite the differences, I think they share the commitment to manage that relationship.
I mean, these disputes, differences well, and more importantly, to work together to pursue a kind of a settlement that suits their mutual interest and mutually acceptable to them, and also equally important is for the peace and stability of the region.
In this case, I think that the South China Sea.
where she stressed strengthening cultural and people -to -people ties such as through tourism and youth exchanges.
How important are these soft power initiatives in solidifying bilateral relations?
That is again a very important area where China and Vietnam has seen, I mean the relationship has seen greater, great, making steady and greater progress.
And this year marks I think the year of P2P, people to people and cultural exchanges as one of the sort of other way to celebrate or to commemorate the 75th anniversary of the founding of diplomatic relation.
But the most important that I think that the relationship between two peoples have over the past decade is steady progress, despite, I think, the differences.
But all in all, I think China and Vietnam, the Chinese people in Vietnam too, share a lot of similarity and close affinities in terms of culture and people -to -people relations.
and I believe that with the continued care and nurture of the top leadership and also closer economic trade relation with practical cooperation, we're going to see Peter people relation, but we're continuously serve as a solid sort of ballast to support, to sustain that winding region strategic long -term cooperation.
for the fulfillment of our community and the future between China and Vietnam.
That is Rongying, Senior Research Fellow at the China Institute of International Studies.
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I'm Jiaoyang. China's foreign trade remained steady in the first quarter with exports showing strong resilience.
Official data shows foreign trade value rose 1 .3 % to over 10 trillion yuan or 1 .4 trillion US dollars.
Exports to over 170 countries rose nearly 7 % to 6 .1 trillion yuan while imports dipped 6 % to 4 .2 trillion yuan.
Private enterprises drove over half of all trade at 5 .9 trillion yuan with high tech product trade hitting record highs.
F .F. firms saw growth of a fourth straight quarter with active traders surpassing 67 ,000, the highest level in three years.
For more, we are joined by Dr. Yao Shujie, Qiangkong professor of economics at Chongqing University.
Dr. Yao, thanks for joining us.
Hi. So, despite external pressures, China's foreign trade grew by 1 .3 percent year -on -year in the first quarter.
What factors do you believe contributed to this resilience and how sustainable is this growth trajectory?
Yeah, China has become the most comprehensive and compete manufacturer in the world, and there's a strong demand for Chinese manufacturing goods, which is a fairly stable, high quality, with reasonable price.
So, the import and export figure in the first quarter actually reflects that because the exports grew by 6 .9%, how weight the import growth, which is actually contracting by 6%.
So overall, the volume of total trade is 1 .3%.
It actually reflects China's competitive advantage and competitiveness in the international merchandise trade.
Whether it is sustainable, it actually depends on a number of factors.
I think domestically, China is still doing fairly well because the industrial sector is quite efficient compared to the rest of the world.
But we can see that over the last few days, there's a lot of discussion and also turbulence triggered by Donald Trump of the U .S. one cited single -tariff rice to a label which is quite unreasonable.
So there is a loss of uncertainty for the near future to come.
Although, I hope the intensive discussion between China and the United States and also the both countries with the rest of the world will continue to point that people are able to make some compromise.
But if people are not able to make compromise, I think the future will be relatively risky.
So we have to see for the next couple of months of how the Chinese exporters deal with the uncertainty in the international market.
So exports surged by 6 .9%, but imports fell by 6%.
How would you interpret this divergence, and what does that suggest about China's domestic demand and industrial activity?
I think on the positive side it implies China's export is still fairly strong, but on the cautious side, it could reflect the weakness of domestic consumption because the domestic demand is probably weakening.
As you see, the import is declining, and export is expanding, so there are some over capacity in the producer sector that needs to be exported.
So, it is a mixed signal for these kinds of figures.
Ideally, we expect both import and export to grow in the same range, rather than have a divergent level at this situation.
I think on another positive note is that because China's surplus, trade surplus, is certainly rising, but maybe we don't need so much trade surplus.
We need a stronger domestic economy which can digest production and also import more goods from abroad.
So this will require some sort of market adjustment and also the industrial transformation, as as well as the stimulation of domestic consumption.
Okay. And notably despite these tariff measures from the Trump administration, China -US bilateral trade grew by 4 % in Q1.
But how sustainable is this growth and how is China adjusting its trade strategies to mitigate the impact of the tariffs?
Yes. The Sino -U .S. bilateral trade is still continued to rise despite so many years of trade convictions triggered by Donald Trump as well as maintained by Biden, and this time is even exhilarated by Donald Trump 2 .0 term.
So I think the domestic consumers in the U .S. market and also the intermediate producers.
They require a lot of high quality but lower price Chinese -made product to sustain the domestic consumption and production without causing too much domestic inflation in the US market.
So the mutual trade between the two countries certainly have benefit for the U .S. However, if the Donald Trump administration doesn't make any concession or further concessions, then the situation could be complicated in the second quarter.
Now, the first quarter is encouraging.
We should see the bilateral trade is certainly moving in the right direction despite the previous confessions.
I just hope that some further positive steps will be taken by the Trump administration so that the bilateral trade would not be highly devastated by the one -sided policy.
Yeah, and also we see that China's trade with Belt and Road partners actually accounted for over half of China's total foreign trade.
So does this signal a strategic pivot towards BRI markets?
Yes, I mean, the BRI, you know, country, you know, certainly become a fairly dynamic and fairly strong force with China's international trade investment and people -to -people exchange.
As you can see, the presidency just visited Vietnam and also going to visit Malaysia and Cambodia.
So these kinds of visiting at the state level is encouraging and stimulating China's investment in trade with the BRI countries.
Certainly, it's one of China's strategies to diversify the destination of foreign trade, rather than depending on a number of traditional countries, such as the United States, which may subject China to a high -risk situation like we see today.
So by diversifying into some other economic bloc in countries, especially the BRI countries and also ASEAN, the European Union, or also Argentina and Africa, which would be beneficial for China's long -term resilience in terms of international trade expansion.
And we are seeing growing optimism among foreign investors with trade by foreign invested enterprises on the rise.
What is driving this renewed confidence in the Chinese market despite ongoing geopolitical uncertainties?
Well, number one is China's gigantic domestic market, Chinese fairly complicated industrial and service economy, which provide a significant scope for falling investors to make profitable investment.
Secondly, China's political stability and China's determination to be open and also uphold the consistency of protection of falling investors' interest, unlike Donald Trump, which is highly unpredictable, this actually sent a very strong signal to falling investors that if you invest in China, you are invested for the future of your companies.
And this message is certainly penetrating into different major economies and also many multinational companies who would look China as a safe haven, rather than a risky investment place.
So, China will provide a fairly safe market environment, legal environment, and also consistent government's policy to make sure that foreign investors can make a reasonable profit and stable profit for their money.
And very briefly, we see the number of private enterprises engaged in foreign trade hit a record high.
So what policy changes have supported their competitiveness, especially for small and medium -sized enterprises, very briefly?
Yeah, the private enterprises have become a pillar of China's economic growth and also certainly in the falling trade, which accounted for over more than half of China's over, you know, falling trade, and also continue to expanding in the future.
This is because of the government policy support, because of industrial policy, which are more friendly to the private sector, encouraging for the investment and protecting the property rights and also the interests of entrepreneurs.
Thank you, Dr. Yao Shuji, Changkeng professor of economics at Chongqing University.
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I'm Zhao Ying. US President Donald Trump suggests tariff exemptions for smartphones and other tech products imported from China could be short -lived.
On Friday, the White House announced the exclusion of some electronic products from steep tariffs on China.
However, Trump wrote on social media that nobody is getting off the hook.
He said Chinese tech will still be subject to 20 percent tariffs and are just moving into a different tariff bucket.
Janna initially welcomed the tariff exemptions, describing them as a small step in the right direction, while calling on the Trump administration to completely cancel the tariffs.
For more, we are joined by Professor Liu Baocheng, Director of the Center for International Business Ethics at University of International Business and Economics.
Professor Liu, thanks for being here.
Thank you, it's a pleasure.
Well, the Trump administration recently exempted the smartphones and other electronics from the tariffs on Chinese imports, only to suggest that these exemptions are temporary, what do you make of this back and forth?
Well, it seems the magic wand of tariff in the hand of Donald Trump is not really creating a magic in his total favor.
It reflects two competing forces within the US political circle, where there is a voice from economic pragmatism, who would lobby for the relieved, the restrictions over the imports, not only from China, but from all over the world, because it does not really serve the US business.
It doesn't really serve the consumers.
And there is also existence from those hotliners like Peter Navarro, who insisted on decoupling with China, even at the cost of the US economy.
And now this is really a temporary relief, but it may signify a strategic pause towards hitting the China with the tariff whiplash.
So now he leaves the words and to typically use his art of negotiation to create uncertainty in order to weight and extract concessions from China.
So right now he's not ready to back off and forsake the whole span and let's see what's going to happen after this stop because now he's under tougher pressure from business community and consumers, particularly now when holiday is coming to town.
Yeah and actually he has signaled new tariffs on semi -conductors and the broader electronic supply chain potentially under a national security investigation.
Why the shift from the so -called reciprocal tariffs to the called national security tariffs.
I mean, what's the difference here?
That is his characteristic because a reciprocal tariff will have to follow the Trade Act of 1974 whereas the Section 301.
That is for him rather troublesome, because you need to approve the unfair trade practices of other countries, like IP theft, like the forced technology transfer, et cetera.
He doesn't even want to bother.
So therefore he relies on the Emergency Economic Power Act to take advantage of such a situation so that he can bypass the Congress and create a sense of emergency within the United States, which is totally ungrounded.
And now he's also able to sidestep the commitment to WTO constraints, because the US commits to WTO, the seating tariff is 3 .4%.
So right now this shift shows his eagerness to bypass the law, both at the international level and in a domestic circle.
But definitely it's gonna be short -lived because emergency cannot last long and the longest empowerment would be one year.
So right now it is more of a tactic rather than a real strategy implemented by the United States.
OK. But analysts have described the tariff policy as mass confusion that's dizzying for the industry.
I mean, what are the real world consequences of this unpredictability for supply chains, investor confidence and also pricing for U .S. consumers?
Well, he's creating a hurricane, which he does really personally enjoy that by creating uncertainty.
He can ship in a cup of water and wait until all stakeholders dinner so that he can pressurize on his terms. So the cost is very clear.
There is a high cost for doing business and a high cost of consumers, which they are going to feel even further when this whole consequence is there to transmit to their buying capacity and investors are really jittering.
They hold the money and they may be more speculative on stocks changes, but rather to put it into real production.
And now the rest of the world, are also waiting to see what is gonna happen next.
So now it's totally a standstill.
He's really creating, and he enjoys that as so many other countries come to negotiate and even capitulate to his terms. But in the long run, it doesn't really follow any of the rule based, the global trade order.
And it also gonna hurt the United States.
And he's hoping to shape a new global order under totally his own will.
but I think it's unlikely.
OK, thank you, Professor Liobao Cheng, director of the Center for International Business Ethics at University of International Business and Economics.
This is World Today.
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I'm Zhao Ying. As China's Hainan province moves forward to build a free -trade -port system, DFS Group, a global travel retailer of luxury products, says it is adapting to the shifting consumer trends on the island.
DFS is among thousands of global brands attending the ongoing Fifth China International Consumer Products Expo in Hainan.
A free -trade -port initiative of the province is about to enter full implementation this year.
Earlier, our reporter Song Ruixin sat down with Nancy Liu, President of DFS China to discuss how multinational companies are adapting to the evolving consumer landscape in Hainan.
Liu says the island can become an Asia -Pacific hub for luxury retail and international tourism, selling visa -free access and expanding air routes.
Let's take a listen.
Miss Liu, this marks DFS's second time participating in the Hainan Consumer Expo.
What are your expectations for this year's event and how have you seen the Expo involved over time in terms of international engagement and consumer focus?
Certainly, we are extremely delighted to be participating again in the Hainan Expo.
Over the years, we've seen the evolution of Hainan Expo brands and companies who are joining increase year on year, and in particular the trade councils from around the world.
So for example this year I know the British trade council will have a quite a large presence to introduce many of the British -made manufactured types of services and goods so over the years we're very pleased with the evolution of the Hainan Consumer Expo.
So from your observation what concrete efforts has China made to attract foreign investment through the Hainan Free Trade Forward Initiative, I mean especially in terms of policy implementation and fostering international collaboration, and in terms of your business and how has it, I mean adapted to take advantage of these developments.
Well first of all for the Chinese government to have had such a long vision, planning, implementation, commitment to the Hainan Free Trade Port has been amazing.
So from a multinational corporation, we really appreciate the fact that China has had this long patient enduring policy to finally see to the end of 2025, the launch of the Hainan Free Trade Port initiative.
From a multinational corporation perspective, I think in our setting up of the legal entity, capital flows, certainly infrastructure has been tremendous.
This has been great support for multinational corporations.
Also, of course, the tax incentives, the zero duties, the low corporate tax, the very competitive individual income tax, or what Heinen calls a double 15, these two policies are extremely attractive for multinational corporations.
You mentioned long vision the Chinese government has made.
Could you please elaborate more on that?
Yes, I mean, as I'm sure you know, the Free Detroit Port has been a long time in coming.
From the time that Taichung became the youngest province within China, moving away from Guangdong and starting its journey on the free -trade port route.
It has been what, since the late 70s, early 80s that Hainan has been progressing.
So this is a very, very long journey.
Today we're in 2025.
So this is the making in over 30, 40 years for Hainan.
This has been a very long commitment by the Chinese government to ensure the infrastructure, the policies, the regulations, of the people, right, because we need the people on the ground i .e. for example, the customs borders, the airport infrastructures, the highway, right, the soft and the hard infrastructure have all been planned and implemented over time.
This requires a long time in terms of commitment and a very dedicated investment plan to ensure that Hainan Free Trade Port can be successful and competitive to the likes of Singapore, Dubai, Hong Kong.
Okay, let's dive into the data.
I mean, recent data shows that Hainan recorded over seven billion yuan in offshore duty -free sales within two years, and that's driven in parts by new pickup options.
I mean, how has Hainan successfully leveraged China's massive domestic market while aligning itself with international highest standard trade and economic norms?
Well we can see that certainly over Covid, Hainan became extremely explosive because the Chinese were unable to travel overseas and I think through that Hainan also cut their teeth so to speak to perfect travel retail, duty -free retail.
And so while the offshore duty -free sales in the last few years indeed has picked up, and in particular beyond beauty, the mid -tier and high -end has also picked up in terms of market share.
Currently, China is facing a rising obesity challenge, you may know that, through media platforms, with estimates suggesting over 65 % of adults could be overweight or obese by 2030.
So in response the government has strongly promoted healthy lifestyles.
Are you seeing a corresponding shift in consumer demand as DFS?
I mean, especially for example toward health related categories such as functional foods and personal care.
Indeed, indeed, and while we continue to see strong demand for luxury goods we're noticing an increased interest in wellness related products especially among health conscious consumers, So for example, we can see at leisure, the athletic leisure scene continues to grow rapidly.
So for example, brands such as Lululemon, Arcatarix, these types of at -leisure brands continue to be performing very, very strong.
And in particular, we are expanding our offers in these categories to meet consumer preferences and to align with the growing demand for health -focused, self -care type products.
So what strategies do you have for those kinds of growing demands?
For our Hainan Yalombe project, we are planning to expand our special category and to integrate sports and lifestyle towards health -related categories to create a more engaging and innovative consumer experience.
Obviously, the big global brands such as I mentioned earlier, you know, obviously you've got the Lululemon, you've got Architarix, the domestic brands, for example, Li Ning is very strong.
We are seeing a different ranking amongst the at leisure brands.
For example, I think Nike and Adidas are undergoing a change management piece right now.
The more athletic leisure segment is growing faster than just a pure performance segment.
think that's the key change that we see today.
In mid -March, China's central government unveiled a detailed plan to unleash more potentials in China's consumption market.
So in light of the global uncertainty brought by the trade war started by the US, how do companies like yours position themselves in the Chinese market?
We think the Hang Nan Free Trade Port is bridgehead to lead China's third round of economic opening up to the world.
And Hainan is a gateway, it's a main location, it's a strategic location to repatriate Chinese consumption from overseas back into China.
We've seen that clearly through COVID, and although last year was a bit of a surprise due to the weakness of the Japanese yen, we saw that, for example, during Chinese New Year, this past Chinese New Year, the traffic and the consumption was coming back.
So it was basically flat versus 2024.
And so from a positioning perspective, apart from what we see in Hainan today, the luxury sector is a newer segment, newer opportunity for Hainan to continue to grow.
And in particular, Hainan can serve as a key Asia Pacific gateway for global luxury brands and boost Hainan's global shopping and tourism clout.
I believe that with the additional airport wing that's being built, and the new flights that are being slated to come through Hainan, the increase in inbound, not only from domestic China, but also the foreign flights that are coming through that will also increase to increase Hainan and in particular China's consumption.
I think the unique, of course, positioning of Hainan is that, at the end of 2025, when Hainan becomes an official free trade port, goods that enter into China, unless they're on the list to receive duty, in theory, these products will become duty free.
And so from a consumption point of view, clearly, Hainan will I'd say now is crucial, more crucial now than ever, in that the inflows of Chinese mainland going into Southeast Asia, as I'm sure you know, is extremely high.
What is interesting is that there's a reciprocal place, right?
We see a lot of inbound coming into Chinese mainland as well over the last two years.
It's been exploding.
I believe that the ongoing tourism, culture exchange will continue in a very strong way.
That is Nancy Liu, President of DFS China speaking with our reporter Shong Rui Xin.
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I'm Zhao Ying. Germany's economy appears likely to almost flatline this year due to US tariffs on steel, aluminum and cars.
German economic institutions have dramatically cut their growth forecasts for Germany this year to just 0 .1 % from the previous 0 .8%.
Export -dependent Germany is the only G7 country to have contracted over the past two years.
Analysts warn that US tariffs could push the country into a third consecutive year of recession.
With more, my colleague Zhao Yang spoke with Li Lun, Assistant Professor of Economics at Peking University's School of Economics.
So Professor Li Lun, actually according to Germany's leading research institutes, they say German economy won't see meaningful growth this year, and Trump's tariff policies threaten and even a bleaker outcome.
So what do you think are the main challenges facing the German economy right now?
Yeah, so I think there are a number of problems with Germany's economy.
First, it's very highly exposed to global trade.
So if you look at the share of export of product and services as a share of GDP, Germany is around 45%.
So that number is much, much higher than China, which is like 20%.
and U .S., which is around 11 to 12 percent.
So if we have an economy that's more reliant on export, of course it's going to be more vulnerable to these shocks in tariffs and global supply chain.
So that's I think the first challenge for the German economy.
And the second is, Germany has underwent years of under investment in infrastructure and also in the digital modernization and these have eroded its competitiveness.
And also I think there's a labor shortage in skilled labor and an aging population which all creates a structural problem for the industries like manufacturing and services.
and last but not least there is a higher energy cost which is driving up production costs and also further diminishing the competitiveness of German products.
So I think these are to name a few of the challenges for the Germany economy.
And for the US tariff issue, this 90 -day pause on tariffs, if you look at the fact that Germany being such a massive car manufacturer it is still having to deal with this 25 percent car tariff hike so do you agree with those very dire predictions for german's growth prospects and do you think it could be even slip back into recession yeah i think that's a really big concern for germany right now because if you look at automobiles it's germany's single largest export product.
So we know that President Trump has always seemed to have a particular problem with German auto imports.
So right now, they have like a 90 -day pause.
But if Germany cannot reach effective negotiation after the 90 -day pause, then we may even see broader tariff measures to snap back into place, which can make the situation worse.
So even if it can strike some sort of negotiation, the ongoing 25 percent car tariff is still there.
And I do know highlights or reports that warn that Germany could dig back into recession if these trade tensions are not removed.
But I mean, the new government and the new chancellor is basically more welcome to a deal to the U .S., so there's still time to strike a deal, And also we are seeing that Germany is, you know, enacting more reforms and, you know, making more domestic stimulus and tax cuts to kind of soften the effects for the blow.
So it's hard to predict the future.
I think it can go either way.
It really depends on, you know, how the Trump administration is going to further, you know, impose the tariffs or not.
And how is the current German government is going to respond and react.
And you mentioned the reform.
So could you give us more details on their planning reform?
Yes, of course. So I think it's a very comprehensive reform between, the German conservative Frederick Mers who is going to become the chancellor in May.
And so he struck a deal with the center left Social Democrats and basically they kind of listed a number of of items, on trade, on energy, on the so -called debt break.
So I think the most important thing is that they're setting up a very large investment fund, which is around 500 billion euro, to upgrade their infrastructure and to accelerate their investment in digital projects and also national defense.
They're also kind of temporarily relaxing the so -called debt break, which is basically saying that they're allowing the government to increase their public borrowing so that they can use more of that money to push their investment regimes.
And also, I think they are also putting tax cuts for corporate tax, and also for the VAT tax on foods, on restaurants.
They're also more embracing more welcoming stance to strike a deal with the United States.
Finally, I think part of the deal is also putting a harsher stance on migration.
They want to suspend family reunification for people with so -called subsidiary protection status, and also they are going to reject asylum seekers and so on.
So overall, yeah, it's a very comprehensive plan.
So what do you think about Germany fitting into the wider European landscape?
How does the German economy compare to other European countries or economies?
Well, German has previously been the powerhouse of Europe's development, but if you look at the Germany's growth for the past two years, it's actually lagged behind other countries like Spain and France, for example.
So countries like Spain are actually set to grow 2 .7 % in 2025, according to many analysts.
And also, I think Germany has a different feature with other countries in Europe, is that it's manufactured heavy and, as I said, export driven.
So these can be its strength when times are good, But it can also become its weaknesses when we're having this global uncertainty on tariffs and so on.
Also, I think one important difference is that Germany has historically been really under invested in its public infrastructure compared to other European countries.
A report says basically the Germans investment for the public investment is around 2 to 3 compared to the European average.
I think it's around 4%.
So I think those are the kind of the features of of of Germany economy that makes it different from other European economies.
And the IMF warned that the gap between European and U .S. economy is set to widen further by the end of the decade.
It backed from an ECB press and dragged his report and it calls for greater public investment in Europe.
So what do you make of that and what should Europe do to get more innovation in new and cutting -edge technologies, do you think?
Yeah, so one of the actions called by the report is a significant increase in investment, especially public investment.
So that we are already seeing some of that in the new reform plan by the new Germany government.
And also, I think, the former ECB president's report also called for an expansion, the debt issuance, which is also part of the reform plan.
So, I think, besides the usual advice of putting more research and development, putting more and, you know, resource into colleges and, you know, innovation.
I think another thing is that they should embrace more immigration of high -skilled labor because Germany is right now facing a structural challenge in its labor force.
For many companies, they're facing a labor shortage, but if we look at their unemployment rate, it's actually pretty high.
So we're seeing this kind of dilemma with, on the one hand, there's a lack of high -skilled labor.
But on the other hand, there's a high employment rate.
So I think even though the current government is putting a harsher stance on migration, but I think part of the solution to this problem is that they should really try to embrace a more, you know, welcoming stance on high skill labor, and also try to maybe strike a better deal with with China and other ASEAN countries to make sure that they're, you know, part of their trade shocks are softened.
This, you know, a strengthened trade in relation to these other trading partners.
That is Li Lu, an assistant professor at Peking University's School of Economics, speaking with my colleague Zhao Yang.
And that's all we have for this edition of World Today.
I'm Zhao Ying. Thank you so much for listening.
See you next time!
