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Hainan Free Trade Port begins independent customs operations, marking a new milestone for China's opening up and global free trade.
Russian President Vladimir Putin says his country advocates peaceful solution to Ukraine crisis, and the unemployment rate in the United States rose in November to a four-year high.
Welcome to World Today, a news program with a different perspective.
I'm Ge'anna in Beijing.
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Our top story.
Hainan Free Trade Port in southern China has officially kicked off island-wide independent customs operations.
A two-tier system will make trade with overseas markets much smoother, while maintaining standard customs checks and tariffs on goods moving between the island and the rest of China.
The proportion of tariff-free goods will more than triple to 74%, covering over 6,600 items.
So to explore what this means in practice, let's turn to Dr Muhammad Ali Nasir, professor of economics at Leeds University in the UK.
Dr Zhou Mi, senior research fellow with the Chinese Academy of International Trade and Economic Cooperation.
Dr. Zhou, let me start with you.
When we talk about the special customs operation, many people in China might hear the term Feng Guan.
The literal translation is customs closure and immediately think it means isolation.
But officials have been clear this is not about sealing off the island at all.
So, from the perspective of international practice and China's broader opening up strategy, How should we better understand what Hainan's island-wide special customs operations are really about?
Well, I think it's very clear that China is not trying to close the border or just trying to seal Hainan as an island.
I think it's a kind of practice especially used for the international trade regime.
And it's something to do with customs.
We are going to put Hainan in a very... are different practices about the custom can choose.
Well, for the customs, it's really are, you know, they have two functions.
For the custom.
The first function is they are you know when you are going to import or export the goods, and sometimes you have to give the tariffs.
I mean, that is a kind of important income from of the government.
And secondly, it's very important for the customer is trying to protect its custom territory by some of the instructions about contourings and also about some of these goods.
So for Hainan, I think this practice is trying to put Hainan, a total island, in a separate customs administration regions, which is very important for them to not only to apply those kind of practices but also trying to do further improvement about the policies, trying to design better policies, which is very kind of innovative in China.
I mean, that is not the first one in China.
If you are looking at Hongqing, they have used this first line open and second line open measurement to control this area.
But for Hainan it's a super large island, so it's really our kind of practice is we want to introduce more measurements to have a better openness.
Professor Nasir, how does this model compare with well-established free trade hubs like Singapore or Dubai?
Yes, in various ways, this model in Hainan will differ from the established free ports.
I mean, if we talk about Dubai or Singapore, first of all, we can look at the sheer size of Henan.
Henan is a gate to China, a market of 1.4 billion people.
And it's a market which has emerged very rapidly, with a lot of consumer with good buying power and purchasing power.
So that Dubai is not a gateway to even 100 million people or to say 1.4 billion people.
And same with the Singapore.
So that's the comparison. in terms of size, I think Hainan is very significant.
And secondly, if we look at the areas where the focus of this policy is and the things which are offered by Hainan are more inclusive.
For instance, the focus is on tourism.
The focus is on services, whether they are financial services, education or medical services, high-tech areas and high-tech manufacturing, high-tech research and development and innovation in the high-tech areas, or agriculture and the development in the high-value agriculture output and the research in the agriculture area.
If we compare and look at these things in Dubai or in Singapore, none of them is offering all of these.
There might be, for instance, tourism in dubai, not so in singapore.
Similarly, maybe some high tech to a degree in singapore, but not much really high tech and agriculture in dubai.
So heinon is, in a way, offering a lot more and at a lot larger scale and I would say, maybe with more potential, with more future potential.
In various aspects, Hainan differs from Dubai or Singapore or other free ports which exist at the moment.
Then let's look at this from a practical perspective.
Dr Jomi, once these island-wide special customs operations are in place, what changes will ordinary travelers actually notice?
For instance, How different will the customs experience be for someone coming to Hainan from the mainland, compared with a traveler flying directly from overseas?
I don't think that we will have so many changes if you're talking about the people's movement.
Especially from the mainland to Hainan.
There will be no further requirement, like for some of the identification card can still be used.
You don't have to prepare for passport or any other kind of identification.
I mean for other peoples like the foreigners or the people from overseas to Hainan We still can offer more preferable policies to the peoples.
There are almost more than 80 countries.
If they come from more than 80 countries In that catalog, they can come to China without the visa requirement for about several days.
I think that is kind of a very preferential policy compared with other cities in China.
So for the people movement.
I don't think that is really a barrier for the management of this custom measurement, especially for the cargoes or for the goods, for some of the import of the trading goods.
Dr. Zhou, a lot of attention has been focused on the first-line and second-line system.
Under the principle of free access at the first line, regulated access at the second line and free circulation within the island.
What does this actually mean for the movement of goods and how does it reshape Hainan's position within China's overall customs and trade system?
Well, we know that international trade is a kind of important activities for most countries and when we are involved in the globalization, we every countries, every economy has played some kind of a certain roles in the global supply chains and industrial chains.
So if you are going to import the things from other countries, one of this the cost is the tariffs.
So for highline, they have reduced the large numbers of the items imported from other countries about the so-called zero tariff imports.
So this is really important, for if you are looking at, you know the details of these imports.
The new non-zero tariff imports are covering most on the manufacturing products, the intermediate products and also something to do with resources and materials.
So if you are going to do something to import those products from other countries, from other independent tariff zones, you are not able, you are not required to pay the tariffs.
So for the companies, they can just do more of the input from other countries.
While the second law means that if you are going to do something to transport the goods from Hainan to the mainland China, you may also experience another custom, because everything You didn't pay the tariffs for many of these zero-tariff things.
But if you are going to move those cargoes directly to the mainland, you have to repay the tariffs because the other part of China are using the different tariff lines and the schedules are quite different.
But there are also another kind of regulation.
If you are having over 30 of value-added processing in Hainan, you will benefit from.
You don't have to pay additional tariffs if you move those cargoes to the mainland.
If you are investing in Hainan, you have the abilities to free move in different districts like the industrial zones in Hainan for the processing or kind of collaboration along the supply chains.
So really are a big advantage for companies who are really want to import some of this raw materials or intermediate products or the parts from other countries, while benefiting by the technology and also the people here in Hainan to process or better manufacturing another equipment and then export it to the rest of the world.
So I think that's really attracting for those companies.
Dr Nasir, the launching of island-wide special customs operation is expected to attract more enterprises and talent.
In your opinion, what new kinds of jobs might this create, especially in modern services and high-tech sectors?
Yeah, so the purpose of the policy is to indeed further development, opening up and also attract the capital.
But that also includes not only the financial capital or physical capital, but the human capital.
We would definitely expect.
There are already a lot of international talent finding their way to Hainan and if we look at the data in the last few years we did see a surge in the number of international or foreign talent they are working in Hainan.
We would see a rise in that in the coming years and, although it may not matter that much with regards to the local population or Chinese nationals, but as a foreigner, it would be very attractive in terms of going there and working in henan, so we would definitely see an appeal of that.
Of course, it would create jobs in all sectors.
I mean, if you have a more tunnel and there is a focus in the services sector, for instance, so and that is related to education or medical services there would be jobs in that.
With the tourism, you will have more jobs in hospitality and with that influx of more people, we would probably need more real estate.
So an area where you can both see more investment in henan in coming days and also more jobs would be a real estate sector in my, But of course, other areas like high tech agriculture.
We would also see a requirement of more human capital.
These areas develop further.
Dr. Jomi, what's your take with more talents and enterprises entering the island province?
What new kinds of jobs might this create?
And, at the same time, could this lead to rising living costs in key cities like Haikou and Sanya, including housing prices mentioned by Dr Nasir?
Maybe.
I think that you know, based on the competition, I mean, the free trade parties doesn't are a kind of areas, just you know, have so many jobs.
If there are so many people who want to go there, there may be some kind of competition about the abilities to acquire the resources.
But I want to say that we are not just trying to look at this, you know, a fear statically.
We want to use a dynamic way of looking at today's situation.
Because when you are looking at the future of the free trade port in Hainan, it doesn't only limited on what we are having now as sectors, as different industries.
We are providing a space, a very large space for the development, for the reallocation and reintegration of the different resources, like the people, like the technology, and also the capital and the data.
So, based on that kind of scenario, so we can expect maybe in the future there will be more new factors that are appeared in the regions and the island.
We know that Hainan have proposed the four pillar industries, including the astronautics-related industries, something to do with tourism, and also with agricultural industries and health-related industries.
I think these are the targets, but it's not limited over there.
There may be a lot of integration among them because, based on the technology development, like the artificial intelligence, we are seeing that it will be more efficient to address the different acceptance of the peoples who are having the units, and it can even operate remotely from other part in the world.
So we can do more integration about the different technology which can create more jobs.
So based on these new jobs, I think those jobs are much more value added compared with right now.
So people will have more income they can afford for a better life.
So i would say that it is not just a resemble of the different people, different sectors, but our kind of innovative way of integrating the different possibilities.
So there will be our rebalance in the highland island, but i don't think that's where.
Only look at the city of sanya and heiko, because you know bo has the house related industries, and also Other cities are famous for their logistics, for the agricultural products, for the tropic areas.
And I would say that there are so many diversities and possibilities.
So I hope that we can do more to improve the diversity and the sustainability of these cities in China.
Dr Zhou.
Building on that, looking beyond tourism and duty-free retail, which industries are best positioned to take off under this new system?
And how ready is Hainan to support more, like you just mentioned, forward-looking sectors, for example aerospace, deep-sea technology, biomedicine and grain industries?
I think that you know, I visited Hainan several times this month and I have experienced a and witnessed by myself some companies who are doing very good in the astronautical related industries and they are launching the satellites low altitude satellites to meet the demand of the space-based internet and also other requirements.
And I went to a great culture development place witnessed that many people from around the world maybe not around the world, but around China they just go there to experience their different kind of plants and trying to use the tropic weather there in Hainan to have a better experience and a more efficient way of improving a better seat.
And I think that if we are considering about the possibilities of take-off, I mean the technology and logistic-related industries will be the first.
Because of this special partition of the customs, the trade will flourish.
And we are seeing that more companies will be involved in there to import more things from other countries.
In such a certain world, we are facing so many higher tariffs and if there are, if there are more of those imported and there will be even further processing requirement in this regard, and some of them are using the technology to deal with that.
So uh, the surveys uh, i mean uh, some of the manufacturing or production-related services will flourish.
I have to say that in Hainan we have put it in the position of not developing many of the highway industries there.
They are really focused on some of the high-quality manufacturing.
So I don't think that the manufacturing will be in the lower part of the value added.
We are seeing more discoveries of this technology and integration of the different sectors.
Dr Nasir, from the viewpoint of international investors and at a time when protectionism is on the rise globally, how does the launch of island-wide special customs operations enhance Hainan's competitiveness compared with other regions that are also offering preferential trade and investment policies?
Yes, the timing is, I think, very important here.
While some countries, they are raising the barriers to trade and international trade and they're imposing restrictions.
I think there is also an important message by this Anand Free Trade Board is that China is open and by the day it will be more open for trade and international cooperation.
On one hand, it also shows the vision of President, because in this specific project he has also taken very keen interest, and it is his vision and foresight and it is, in that regard, a very good message that China is open and it will be more open in the coming days.
It also shows the strength and the resilience of the Chinese economy.
Because, if we look at history, those countries which usually propagate protectionism, their economies are not in good shape and their industries are not in good shape.
So to protect their inefficient industries, they rely on protectionism.
Whereas I think the Chinese economy is very dynamic resilient, and that is also shown in the revision of the IMF forecast about China, where they have revised their forecast upward.
This didn't happen first time but we can see that the Chinese economy is stronger than many expect so that is something which is a reflection of that and of course this will give a very good message to the other parts of the world which were proponents of free trade but more recently following maybe trade war launched by mr trump they started to rethink their trade model and that also includes eu where they have taken some protectionist measure in the recent years to revisit their stance and look towards China and the policy of opening up such as this one and maybe come back to the agenda which the world was pursuing in terms of multi-literalism free trade international cooperation towards that agenda back to that agenda so i think therefore this initiative is very important not only for china but for the rest of the world dr nasir many in the international community are watching closely to see whether china's opening up is sustainable and rule-based How does the special customs operation in Hainan send a signal that this is a sustained institutional commitment rather than a short-term or experimental move?
No, it won't be, because the measures taken for instance, if you just take a look at the one policy that you have a 30 value addition, and if you have a 30 value addition, then you could take the products to mainland and you can access that market.
And this Hainan Free Trade Port is something which will be a milestone, but it is not the last on the agenda.
As we see going forward by 2035, it is aimed to be the high grounds of China's opening up.
And if we look at the trajectory of China in the last few years, every year see that Chinese economy is getting stronger, but it is also getting open more.
And if we would have, we have doubted that that this is maybe perhaps a short term thing.
If we said okay, let's say the focus is only on one thing, let's say making Hainan a financial services hub.
So the finance, financial world is quite volatile and you could say that okay, there might be a short term intangible investment.
But here you also have high tech, here you also have tourism, here you also have agriculture.
So the investments, as I see, are long term.
So this is not something that would be short term or we won't be going back.
There will probably be more opening up, more development going forward.
Dr Jomi briefly, how do you respond to the international community's concerns about the sustainability of this operation?
First of all, I would say that we have the law of the High Line Free Trade Report.
That is very important.
It's a legal basis for us to follow.
So no matter which administration, we have to abide by the law requirement.
And the second, I think that the market has actively responded to the messages.
So it means that if you are looking at the sustainability, the markets are really giving their decisions on what can they do.
So that is based on sustainability.
Sustainability and the third one i think that is also our you know kind of messages we are having with our trading partners so we can cooperate more with our trading partners, have a complementary development, and that is not just for, you know, the short term, it has been long for the longer term.
Thanks to both of our guests for this insightful perspectives dr muhammad ali nasir, professor of economics at leeds university in the uk.
Dr Zhao Mi, Senior Research Fellow with the Chinese Academy of International Trade and Economic Cooperation.
This is World Today.
Stay with us.
You've been listening to World Today with me, Gaena, in Beijing.
Russian President, Vladimir Putin, said Russia will continue to advocate peaceful solutions to the Ukraine crisis.
He made the remarks on Wednesday at an expanded meeting of the country's Defense Ministry Board.
Putin added, Russia is currently seeking mutually beneficial and fair cooperation with the United States and European countries.
He rejected claims portraying Russia as a threat to the European nations, saying that such narratives are unfounded and fabricated.
The president also emphasized that the country holds a strategic advantage on the front line with Ukraine.
He calls 2025 a pivotal year for his country's special military operation and underscores Russia's capability to accelerate its advances.
The goals of the special military operation will undoubtedly be achieved.
We would prefer to do so and eliminate the root causes of the conflict through diplomacy.
If the opposing side and its foreign patrons refuse to engage in substantive dialogue, Russia will achieve the liberation of its historical lands by military means.
The task of creating and expanding a security buffer zone will also be pursued consistently.
Putin says, Russian forces control over 300 settlements, while defeating Western-trained Ukrainian elite troops, despite NATO support.
So to delve into this, joining us on the line is Dr Alexei Muraviev, Associate Professor of National Security and Strategic Studies at Curtin University in Australia.
Professor, let's start on the battlefield.
President Putin says Russia now holds the strategic initiative in the Ukraine conflict.
From what we can see on the ground, how much of Russia's goal of creating a security buffer zone has actually been achieved so far.
Obviously not as much as the Russians would probably want to achieve, but they're continuously pushing.
They're securing settlements almost on daily basis.
They extend their reach into the Ukrainian territory.
And the problem that the Ukrainians are facing, they cannot change the tide of events.
The Russians have imposed their will on the battlefield, which is one of the key determinants of military success in any operation.
Every time Ukraine is trying to mass forces in one battle sector, the Russians use it to the advantage and advance further in another battle sector.
So Ukraine lacks resources.
Ukraine is short of manpower.
And the Russians obviously have the flexibility of using superior military power, superior numerical power,
Certainly in the second half of this year the pace of the advance has considerably accelerated, yet obviously fallen short of ideal situation where the Russians would significantly grab the territory or break the Ukraine's will to fight.
We need to recognize that the Ukrainian forces continue to offer very stiff resistance to the Russians, despite being outnumbered and outpowered.
Mm-hmm.
Professor, President Putin also said that Russia will continue to advocate for a peaceful resolution to the Ukraine crisis.
How should we interpret this statement and the timing of this?
Are there clear preconditions or a defined window for negotiations?
There are definitely preconditions as far as the Russian side is concerned.
They don't want to see Ukraine posing any national security threats.
So, for example, a proposed goal to keep the Ukrainian military at the level of about 800000 strong force in peacetime would certainly be unacceptable to the Russians, just like the idea that Ukraine may be hosting some foreign military presence on its soil, even in informal capacity, as some European countries are proposing.
So what Russia would want is effectively Ukraine becoming a neutral buffer with a significantly reduced military capability but, more importantly, different political and strategic agenda.
It's not just about negotiating new territorial arrangements or the future size of the Ukrainian military.
It's about transforming Ukraine's strategic agenda, which is currently being set, or get fixated on a state of permanent confrontation with Russia ideological political, civilizational and certainly military.
And that is linked to the question of recognizing rights of Russian ethnic minorities, recognizing rights of Russian Orthodox Church in Ukraine, and so on and so forth.
And another important element that the Russians are considered to be a stumbling block is the legal status of Ukraine's current president, Volodymyr Zelensky, because the Russians do not consider him to be legitimate enough to sign any serious documents with a long lasting effect.
So, as a result, they insist on elections in Ukraine, which would legitimize the person who may be responsible for negotiating and, more importantly, signing any future peace agreements with Russia, because otherwise the Russians will probably feel like Whatever Zelensky is going to be signed in his current status may not hold legal value in the long run.
And obviously they are not interested in some sort of an interim term simply because once again they hold initiative on the battlefield.
Professor Putin also pushed back against claims that Russia threatens Europe, saying Moscow still wants fair cooperation with the United States and Europe, while expressing regret over the current stance of many European leaders.
And with NATO continuing to expand eastward and strengthen its military posture, Do you think the progress Russia has made in dialogue with the current US administration can realistically be extended to Europe?
No, I don't think Europe as a whole, if we're thinking of Europe and Brussels as the political center of united Europe, I don't think this part of Europe is interested in restoring strategic relations with Russia.
There were obviously a select number of European countries, such as Slovakia, such as Hungary, for certain, that are interested in normalizing their relations with Russia.
They want to see a restoration of pragmatic relations between Russia, which is also part of the European continent by virtue of geography, and the rest of Europe.
So in current circumstances, The conversation about restoring any dialogue, leave alone normalizing relations between Russia and Europe, I think is not on the agenda.
The question about possible conflict between Europe or NATO and Russia is actually quite realistic.
Not in a sense that Russia would have an intent to invade any member of any member state of NATO, such as, for example Poland, or attack Germany or the UK or France, as some of their leaders suggest.
But there are flashpoints over which NATO and Russia may clash.
And certainly one of the most significant hotspots in my view is the Baltic Sea region, particularly around Kaliningrad area, as well as the Gulf of Finland.
This is where the risk of an open confrontation, armed confrontation, between Russia and NATO does exist, including a possibility of the Russians taking preemptive actions in order to defend their national security interests in the region.
Professor, one last question.
The United States and Russia are about to hold talks in Miami, but before the meeting, Trump stepped up sanctions on Russian oil, while Russia insisted that NATO expansion must be addressed before any ceasefire.
Given these core differences, where do you see the possible points of consensus in these talks?
And do you think Washington's mix of pressure and dialogue is tied to domestic politics, especially with midterm elections approaching?
Well, I think negotiations for both sides are linked to domestic politics.
So the political factor is much of a consideration for Donald Trump as it is for Vladimir Putin and the way how the domestic electorate would perceive outcomes of any negotiations.
I think, where the Russians and the Americans currently agree.
Right now, they look at Ukraine and Ukraine crisis as a stumbling block, as something that needs to be worked out and negotiated in order to clear the field for the two nuclear superpowers to re-engage strategic dialogue on a multitude of longer-term important matters, such as questions of strategic nuclear arms reductions and global arms control, cooperation in space cyber, the Arctic crisis, beyond just Ukraine and Europe, such as the Middle East, in the Pacific region, and so on and so forth.
And obviously, restoration of diplomatic relations between the two countries, normalization of their strategic dialogue, recognizing that the two the world's largest nuclear superpowers and they hold responsibility as a result of that in the eyes of the international community.
So both countries are fixed on negotiating an outcome of the Ukraine crisis, bearing in mind that I think there is a recognition that it's a proxy conflict.
And the Russians look at it as a proxy war with the United States.
That's why they're pushing the US side to effectively pressure Ukraine as a proxy to find a resolution.
But I think there is certainly a pragmatism in place, that they've got far greater and longer run agendas to discuss and they want to remove the obstacle which is the war in Ukraine in order for them to progress further.
So I think it's important to understand that Moscow and Washington are not just fixated on Ukraine.
They're fixated on so many other issues and they just want this problem to be resolved so they can focus on over-the-horizon issues.
Thanks, Professor, for those valuable insights.
That was Dr Alexey Muraviev, Associate Professor of National Security and Strategic Studies at Curtin University in Australia.
This is World Today.
We'll be back.
The US unemployment rate has risen to its highest level in four years, signaling a cooling job market.
The Labor Department shows employers added 64000 jobs in November, exceeding economists' expectations of around 45000, while the unemployment rate climbed to 46 percent over the past two months.
The job report was delayed by a six-week federal government shutdown.
So for more on this, my colleague Song Ruixin spoke with Dr Zhang Gong, professor from University of International Business and Economics.
Professor Gong, the U.S. unemployment rate is rising.
So what does this tell us about the current state of the labor market?
I think we are seeing a mixed picture of the labor market right now.
I think the overall unemployment is creeping up.
This is 4.6% unprecedented level, I think, since 2020.
So this means that the economy is slowing down, in fact particularly, I think, in the manufacturing sectors.
We're seeing jobs being slashed.
But in some areas, we're seeing it payroll increases, job increases, that's a good sign.
I think this report mentions jobs increasing in the healthcare sector, in construction.
These sectors typically benefit from especially, I think, the construction sector, benefiting from the low interest environment.
So I think moving forward, No doubt that the U.S. economy is starting to cool down.
Nevertheless, in selected sectors, we're still seeing job growth, robust job growth.
Do you mean?
The key takeaway here is that the labor market is clearly cooling, but it's not collapsing.
It's not collapsing.
I think the U.S. economy is fairly resilient.
The overall picture is still quite decent, actually.
But there are signs of cooling down for sure.
I think it's mostly driven by two things.
One is the tariff.
I think finally the tariff is starting to take its toll on the U.S. economy.
Things are slowing down.
Demand is curtailing back.
The other reason, in my view, has to do with very confusing policy environment coming from Washington.
I think there are still a lot of confusion about President Trump's direction.
There's confusion about the Fed's direction regarding the interest rates.
So, weighing this kind of a situation where the market is taking a wait and see attitude, Another thing I can think of is that probably we're starting to see the early stage of job substitution by machines related to the AI development.
There are some indications that these big tech companies are starting to take job cuts.
A lot of these jobs are actually being replaced by the AI technologies, especially these white-collar office jobs related to programming, for example.
Some of these jobs are gone, and they're gone for good.
And then you mentioned about policy just now.
Which specific policies do you think are having the biggest impact on the labor market at this stage?
I would point to the tariff policies.
The tariff is definitely starting to take its tolls.
There will be no winners in a tariff war.
Sooner or later, this is going to be reflected in the U.S. economy.
It will be reflected in the price levels consumers pay for.
And when it's tied about, people are going to act on demand.
And ultimately, this is going to be reflected in the economy.
At the same time, the job gains themselves came in stronger than expected.
The U.S. added 64,000 jobs in November, which exceeded economists' expectations of around 45,000.
So what factors contributed to this upside surprise?
From what I read, it's coming from the construction sector, coming from the healthcare sector.
As I said, you know the interest rate is relatively low.
And the housing market is still fairly active, actually.
So, you know, you look at the building permits, you look at the new constructions.
There are still, you know, decent level of activities.
So, you know, I think some jobs are created in these sectors.
And healthcare, I think, is a long-term trend.
I mean, the United States population is aging.
Baby boomers are retiring.
So there will be more demand for healthcare related services and goods.
Then can we take it as higher unemployment doesn't necessarily mean more people are losing jobs.
It may also reflect more people entering the workforce.
Well, I mean, unemployment rate reflects the extent of unemployment in the job market.
I mean, there are some jobs gone, there are some jobs created.
What the unemployment rate measures is the net effect of these activities.
So in this case, there are more jobs being created than expected.
But the net effect is that more people lose their jobs.
So the unemployment rate creeps up to 4.6%.
Okay so Professor, for our audiences who may not be familiar with this definition, what are the key indicators or models economists typically use as a benchmark when forming these forecasts?
Well, they have these macro models.
I'm not sure about, you know, how...
Each organisation has their proprietary models.
The financial institutions have their proprietary models, and the Fed has its own model, I guess.
Let's move on to those data, specifically regarding healthcare and construction's growth.
Then why are these sectors continuing to expand against the trend?
It has its own fundamentals at work.
Healthcare, as I said, is a long-term growth industry.
As more and more baby boomers are starting to retire, There'll be more demand for healthcare.
I think the percentage of the economy, percentage of GDP, that is attributed to healthcare is already fairly big in the United States and this trend continues to increase.
So, you know, there'll be more jobs created in that sector.
The construction, as I said, has to do with the interest rate.
Usually housing demand increases when interest rate comes down.
In other words, when the mortgages become more affordable.
We are entering into a low interest rate environment in the United States.
That's why the demand for housing is fairly robust.
So there'll be more permits issued, there'll be more building permits.
I mean new construction started and these things percolate onto new jobs created in the construction sector.
Given all of this data, I mean, slowing hiring, flat sales, but rising labor force participation.
Professor Gong, what does this mix of signals tell us, or tell you about the Fed's likely path in 2026?
I think the U.S. economy is doing okay.
It's starting to see some signs of cooling, but I think it's still going to be much, much better than the situation in Europe, in Japan, for example.
These are industrialized countries, industrialized economies, developed economies.
Compared to these economies, the United States still performs a little bit better than these economies.
But I think we're not going to see the kind of a very rosy predictions forecast provided by President Trump.
We are in the, you know, about 3% growth target for the U.S. economy, maybe less, maybe more.
So I think 2026 is going to be a quite stable year.
I don't think we're going to see dramatic swings in the economy.
That was Dr. John Gong, professor from University of International Business and Economics.
This is World Today.
Stay tuned.
You've been listening to World Today.
China's largest battery manufacturer CATL, says competition in the industry is healthy, but it must follow clear rules.
In an interview with my colleague, Tian Wei Zeng Yujuan, chair of the company, highlighted battery leasing as a way to move beyond unhealthy price wars, focusing instead on delivering long-term value to customers over a product's entire life cycle.
Let's take a listen.
There's a lot of competitions.
Some are great and friendly competitions.
Others are interesting competitions, if I could use those words.
For example, prize competitions.
It is healthy, some argue, for the customers.
However, too much prize competition might lead innovation nowhere.
So as a leader of the industry, how do you see that?
Because you are, generally speaking, have the power to set the price in the overall market.
I mean as an outsider.
Many have observed that way, including some of the largest research companies about batteries.
So what do you make of that?
Ah, competition, free competition is good, okay?
But it's defined in a rule, rule-based competitions.
What kind of rule?
We call it, we have an international rule, for example, respect IP, respect innovation.
So we are trying to compete to add value to the products, not only on price.
Value and price is different.
For example, if we can make the battery, for example, the battery, right?
We have a car battery.
Everyone wants to buy a car.
What's the restaurant value of my car three years later?
So if the battery can last in much longer lifetime, cycle times, that will be different because initial prices may be higher, but each cycle, each kilometer range, will be much less money.
Then how can you realize this?
For example, if you're single consumers, you cannot do that by yourself.
That's why we do the battery swapping.
Maybe you know now recently we do it with Jindong, right?
Yes.
There's very, you know, a lot of attention because you don't need to buy the battery.
You don't need to own the battery.
I just leasing, just rental the battery for every month usage.
So consumer will be, oh, in case of solid-state battery coming, right?
If I buy a battery, then a new technology is coming, my battery become behind.
It's not good.
But if you're leasing current battery, this battery in the future can return to the companies.
But can this solve the problem of the unhealthy, so to speak, price competition?
This is a very good way to solve the problem because people not compete that of current price.
They compete of the value of the whole life.
So who can create the best value, longer value for the way?
But there can be competition for the leasing price as well.
Yeah, but this implies it means you need to have your own ability calculations, because money is your own money.
If you cannot, you cannot treat the people right, otherwise you treat yourself.
So you have, for example, 10 000 cycle life.
Then you can listen 10 000 times.
Do you see that the price competition as the biggest obstacles for you as a business?
The price competition is, I need to convince my customers, the value creation is the most important.
What kind of value bring to your products?
For example, we have, you know, fast charge.
We have a killing battery, which can last for, you know, 1,000 cycles, 1,000 kilometers, one charge.
We can fast charge.
This creates some of the customers Listen what we said.
That's why we joined hands together to promote that product to the market.
Then this market is acceptable for this because consumers want to have fast charge, right?
Easily like a gasoline stations.
So some of the brand name, you know, very good sell.
Some customers say, I'm thinking about how to make it lower cost.
Then we help them to make it like a standard battery to share this battery pack.
There's so many customers.
Then we have very good manufacturing, non-stop manufacturing, big, you know, the standard products.
So different customers have different requirements.
But more focused for me is still technology creates value.
That's why I'm more focused on R&D to learn all the new things.
So, for example, we have four innovation areas.
One is the new materials.
You cannot just look at the iron phosphate.
You cannot just look at the NCM, right?
You're still beyond that.
Beyond that, what's technology?
For example, sodium.
Sodium battery.
This whole system, right?
We get rid of lithium.
We put the sodium there.
Then sodium, how can sodium make good products? it's a lot of things and also we're now working on a lot of effort on a solid state battery if we we have local these products then we really can change the game right then another area we need to look in that is how to make this product really safe reliable so we have what we call extreme manufacturing we have to control the defect rate under one ppb one parts per billion it's not talking about one part per million so if we do that then we can consider reliability how can you lasting 20 years 25 years because inside the battery there's so many side reactions for example at least 200 plus situations, how to control, identify these situations, how to design around these situations, how to reduce the situations, then make sure your reliability is good and safety.
So all this is my extremely focus.
But all this area we have to convince our customers.
At least it will create value for you, then we can sell this product to customers.
You are walking so fast.
There are others who are scratching their heads and say, where is my cup of tea?
How can I be part of this?
Is China and Robin and his company going to always be a big chunk of it and have no place to sit in this industry anymore.
If we put a lot of money in the innovation and RD, they can talk to us and say Robin, this technology is very good.
Can I license it from you?
So we have a rule base.
This rule base we call the United Nations rule base.
Respect the IP.
So I come to talk to you and say, can I license your technology to make a similar product?
That has been the practice earlier, right?
Exactly.
But now, the practice for this is everyone knows that.
Why do you think it can be difficult for some of them to digest this?
I think probably still in the concept level.
So we have to respect the IP.
So we have to enhance our thinking about this national, United Nations law, all practice, international practice, to respect IP.
For example, when we start a business in ATL, first things we're doing we know the IP is in some area in the United States telecordia laboratory.
So we license the technology from them.
That's why we respect IP.
If everyone respect IP, protect IP, then innovation become, you know, real friendly competitions.
I have new things I can license.
I'm willing to license very good IPs or technology from my competitor from everywhere in the world.
Because this is like put everything on the table.
You are one of the leading Chinese businesspersons who are very active on the international stage.
I saw you at the World Economic Forum in Davos, for example.
Now, as ABAC member to provide advice and suggestions to the political leaders in the Asia-Pacific region.
But I really wonder what about cooperation among the business leaders of the region, and not just the ABAC members, which you already touched on, but also i see your name being frequently related to some of the leading minds and entrepreneurs in the united states, for example, in asia, for example in europe?
So what do you see in common with them?
I think there's three common things.
Number one everyone believe, most of the business leader believe sustainability for the future, development or zero carbon society have to be there Because of climate change, because a lot of things happened here.
This is, we say, we have a common understanding.
We can say that.
Number two, every business leader, they have a burden.
They need to report to the shareholders.
How can we make a profit next quarter, right?
This is common things.
The third common thing is that they all agreed that Seattle, in this field, have the ability to help them.
So this is three consensus understandings.
Then we try to figure out each one different.
Someone is European guy, someone is US, someone is Asia Pacific, someone is, you know.
They have different environmental, different needs.
That's why we need to provide different solutions to them.
That was Zeng Yuchun, chair of CATL, with my colleague Tian Wei.
That's all the time for this edition of World Today.
I'm Gaena in Beijing.
Thank you so much for listening.
Bye for now.
