Japanese Prime Minister's provocative remarks sparked strong criticism.
Does it reveal a resurgence of far-right militarism in Japan?
China and Germany look to boost trade and investment as top officials meet.
How will this deepen their cooperation?
And Moody's Economist warns U.S. deglobalization would offset its AI-driven growth.
Welcome to Road Today, a news program with a different perspective.
I'm Ge'anna in Beijing.
To listen to this episode again or to catch up on previous episodes, you can download our podcast by searching Road Today.
Our top story.
China is again urging Japan to stop crossing the line and playing with fire, calling on Tokyo to retract erroneous words and deeds.
The warning followed the Japanese Prime Minister's recent comments on Taiwan that have sparked a strong backlash across the region, including inside Japan and on the Chinese island.
Sanae Takaichi suggested Tokyo cannot rule out direct involvement in any future Taiwan Strait contingency a remark critics say dangerously blurs Japan's security role and the island's political status.
Beijing condemned the statement as a blatant violation of the one-China principle, warning Japan not to send wrong signals.
Political figures on the island and opposition voices in Japan label the remarks reckless and inflammatory, cautioning they could further escalate already heightened tensions.
So for more on this, let's bring in Professor Chu Qiang, fellow of the Belt and Road Research Center at Mingzhu University of China, and Sultan Ali, a retired Air Force officer and author from Pakistan.
Mr Holly Takaichi recently said that the Chinese mainland's use of force on Taiwan could constitute a survival-threatening situation for Japan and implied the possibility of armed intervention in the Taiwan Strait.
How do you assess the gravity of her remarks, both in terms of interfering in China's internal affairs and undermining the post-war international orders?
Well, thank you very much for having me on your show.
This is a very serious matter.
In fact, today I've written an op-ed on this very hot topic.
And my opinion is that it amounts to interference in internal affairs by framing any mainland use of force regarding Taiwan as a survival threatening situation.
Takachi signals potential Japanese involvement in a matter which China considers strictly internal and escalating beyond diplomatic commentary into coercive signaling.
This erodes strategic ambiguity.
It invites a tit-for-tat militarization and heightens crisis risk in the strait.
It is also undermining the post-war order.
The post-1945 settlement sought to restrain militarism and stabilize territorial issues.
Publicly implying armed intervention upends the restraint which has been embedded in asia's security architecture and it revives polarizing narratives that fuel right-wing mobilization and regional insecurity.
Now, just very briefly, I will give you an international law perspective, because the Cairo Declaration of 1943 stated that territories Japan took from China, including Taiwan and the Penghu Islands, they shall be restored to China.
And the post-dam proclamation of 1945.
It affirmed Cairo's terms forming part of the political foundation of the post-war order.
And while Cairo and POS-TAM were declarations rather than treaties, they were subsequently reflected in the terms under which Japan accepted surrender and in the post-war settlement framework.
Therefore, Japan's claimed basis to intervene shows that there is no clear standalone legal basis in the international law for Japan to assert an armed intervention in the Taiwan Strait, which was premised in the Cairo and post-Tam declarations, which were constrained Japan's post-war territorial scope rather than authorizing any new extraterritorial enforcement rights and invoking domestic survival threatening doctrines to justify cross-strait actions.
This would sit at odds with the non-intervention principle and the post-war restraints which both the Cairo and post-times sought to entrench.
Professor Chu, Mr. Hawley mentioned the Cairo Declaration and post-time proclamation.
Legally speaking, is there any basis at all for Japan's claimed intervention in the Taiwan Strait?
No, I don't know where does that ridiculous idea come from in her mind.
It's basically a prepared this kind of uh activity in their mind.
I think, according to all the international arrangement, like the cairo declaration, pastan that uh.
Well, for one thing in china side uh, taiwan is without any question part of the chinese territory.
It's been given back to china and we accepted their surrendering.
The misery, you know battleship, that's a done deal.
On the other hand, Japan has no rights to get interfering in any other nation's international affairs or domestic affairs, especially with armed forces.
So Japan basically has no rights to go into or meddle with the other nation's issue.
That's a rule set by the international laws.
And also according to Japanese.
Their own law, their own constitution says Japan, not only they cannot interfere, but also they cannot interfere with armed forces or military presence in the other countries' issues.
So basically Takahashi's idea about that China's activities in Taiwan would make Japanese interference to be legalized.
I think this is idea coming out of the thin air without any legal ground.
Nor to say that Taiwan is very far away from Japan.
So you know, it took me for a whole day to think about where does she have this kind of imagination or idea?
But I cannot understand what's going on in her mind.
Maybe, well, she's just a crazy lady.
That's it.
Professor Chu.
We know Takaichi has a record visiting Yasukuni Shrine, whitewashing Japan's wartime aggression, pushing hardline security policies.
Now she's stirring up trouble over China's Taiwan question.
Does this show Japan's right-wing camp is trying to break loose from the pacifist constitution and expand military in the region?
Well, I think Japan, yes, they are in a pathologic kind of situation, the post-war Japan situation.
Post-war Japan and their far right-wing politicians always have this kind of mindset.
They want to recover Japan as a normalized, normal nation.
Currently, Japan is like a puppet.
Japan is like a crippled nation.
They're not allowed to have their independent armed forces.
They cannot meddle with the other countries' international or domestic affairs unless it's been directly hidden in Japan or matters with Japan.
So Japan always wanted to have these influences, international influences.
They want to have these military influences, but they can't.
Their hands are tied with all the international laws.
And also more than that.
Their next and the next generation after the war did not see their nation as a normal nation.
So the idea... of Japan being an independent nation has been long gone.
Young people just don't know.
They don't have this kind of idea.
And this kind of situation bothers Japan.
Well, I think to this part.
So they want to rebuild Japan as an independent, really independent nation, not like a pseudo independent nation.
Well, this part we understand and we can empathize.
But the thing is, they're doing it in a wrong way.
In order to make sure your nation to become a normal international member, come back with independent sovereignty, not as a puppet or half-slave of America.
What you need to do is maybe learn from Germany.
You admit what you have done in the Second World War, confess and ask for the forgiveness.
And then you come back up and bright with all these agreement from the other nations to accept you and welcome you to be a normal member in this international community.
But they choose to be, you know uh, the previous bully again, you know, to restore my military forces to challenge the other nations, domestic rights and a violent international loss so they can come back as a as a thug.
So i don't think they actually think about it, right.
They chose a wrong way.
I think this way, if it continues, Japan will not come back again as an independent nation.
Japan will be destroyed as a failed nation again.
So I really think Japanese people should think about the things clear.
I think there are current frustrations in Japan.
Well, like many other nations, developed nations like Aging society, frustrated younger generation, immigration issues and, you know, outbound religions and so on.
All the things that have been encountered in America, in the European Union, and now in Japan.
But they cannot face these issues right.
They won't challenge America because they know they're going to be nuked again.
So they challenge, you know, China.
But I think the one thing they failed to understand thanks to the wrong depiction of the Japanese media,
They think China is something that they can violate and, you know, foully treated.
But actually I think they're missing.
This whole idea probably gets themselves, especially the normal Japanese people, into a very dangerous situation.
I gotta say, if they really want to do it, the coming back and retaliation is just going to be worse than what America used to do to Japan.
Mr Hawley, we know, since taking office, Takeuchi has proposed extraordinary defense increases lifting all arms export restrictions, enhancing Japan's preemptive strike capabilities, revising the security documents, documents ahead of schedule and even backtracking on the three non-nuclear principles.
How should we understand this policy trajectory?
Does her aggressive stance on Taiwan dovetail with Japan's broader rearming plans?
Well, it has come as a shock to me, but then, at the same time, I'm not surprised because, you see, Japan has always had very, very strong tendencies to be imperialistic.
And it was suppressed because of its crushing defeat during the Second World War.
And it was hoped, and it was also believed that, probably by disarming Japan, not allowing it to develop any armed forces, and taking the route of pacification, it will probably behave in a responsible and a rational manner.
But unfortunately you see Takahashi and also you see her mentor, Shinzo Abe.
They have been trying to rebuild Japan on militaristic terms and also to revive the old fascist, imperialistic thoughts.
And because of that, they are trying to create this kind of a situation.
This was not a careless slip of the tongue.
This was a premeditated statement.
And I must commend China that, although it is being very rational, it is being very patient, But its reaction to Prime Minister Takagi's remarks, declaring that any Japanese intervention in Taiwan would constitute aggression and be met head on, is both deliberate, predictable and balanced, because Takagi has crossed a red line.
And Beijing is underscoring that Taiwan is a core sovereignty issue.
There is historical sensitivity.
There is a strategic messaging.
But at the same time, it is very important to realize that Taiwan is central to China's territorial integrity and there is no legal standing.
There is no rational standing of Japan to try and use the shield of Taiwan to create ripples and also to revive its old imperialistic thoughts.
Professor Chu, Mr. Hawley mentioned China's response.
China responded strongly.
The Ministry of Foreign Affairs said if Japan gets involved in Taiwan, that would be aggression and China would hit back head on.
How should we understand this tough response?
Has China overreacted in this situation?
Taiwan issue is the bottom line of China towards international policy.
Well, China is a large country, but China is very different from the old Western empires.
When China gets large, powerful, it never seeks to expand itself.
It never seeks to colonize the other nation.
Japan, for the past 5,000 years, is just a small nation sitting next to China.
But the independence for 5000 years of Japan is a very good example about China, how China is a peaceful nation.
When China's power is like hundreds and thousands of times bigger than Japan, for example in Tang Dynasty, Song Dynasty, Ming Dynasty.
We never attacked or tried to colonize Japan.
The only time one attack has been launched through the mainland towards Japan is the Mongolians right.
So I think China, its nature, is being a peaceful nation.
But Japanese failed to understand that.
They think that is kind of the sign to be weak.
But the other nation, for example, like Australia.
After the Second World War they killed like dozens of thousands of Japanese captives.
And also Russia, they also just executed dozens of thousands of the captives during the war.
America and also did the same thing.
But the Japan thing, those nations are stronger, tougher ones.
They cannot mess around with.
So I think that's the problem with the Japanese mindset.
Well in China, us being, you know, stronger and more developed.
The only target is that a revitalization of Chinese nation, better life, independence of our people.
And I think this only last piece missing in Chinese territory, I think, is our full legal rights over the Taiwan island.
China only wants to make sure that the territory and sovereignty is integrated.
And that's it.
We have no further ambition.
And I think this is also a bottom line and legal rights respected by all the legal documents, all the internationals legal document after the Second World War, when Japanese empire are forced to return their foully occupied colony, which is Taiwan Island, finally returned to China.
Now they want to use this spot to pinch China and to restore their old empire dream.
I think that will trigger Probably the worst kind of memory, not only for Chinese people but also for the whole Asian society, even the whole international society.
I cannot remind how many American brave soldiers lost their lives in the Iwo, like the Iwo Jima Island, like on the Pacific war zone, and how many Australian soldiers have been killed.
Even the civilians have been killed.
Probably no one would like to see that evil empire to come back again.
But now I think the Takaichi are showing all the old alliances that this evil shadow has been already lingering around.
So I think that's the reason why China stands out, not only for itself, but for all the victims to speak out to this culprit of the previous war.
I think China probably is going to take all kinds of the measures to deal with the situation including, but not 100 only to that, for example, like the economic sanctions and all the other kind of the limitations towards Japan.
I think we should do that until the Japanese far right-wing politicians understand how dangerous they're putting Japanese people into in discussions about how nations stood together in the fight against Japanese militarism during the Second World War.
When asked about the China-Japan exchanges of wars, U.S.
President Donald Trump responded many allies are not real friends, avoiding criticism of China or aligning with Japan.
Professor Chu, how do you interpret Washington's message here?
Well, I think Washington, I don't even need to listen to what Washington is saying or speaking.
Well, just take a look at the Ukraine.
Washington is the only side never jump into the Ukraine crisis.
This water they meddled around and stirred to be muddy, but now they refuse to do it.
I remembered only one country used to do that kind of thing in the whole international politics.
That is UK.
You know, Great Britain used to be the muddy water stirrer in the whole world.
They make things worse, but they don't want to get dirty of their own finger.
So they can't have the best of their interests and balance every side.
But now this time in Ukraine war zone, even UK has already, you know, get themselves dirty.
They're clothes dirty.
Not only mentioning about the traditional alliances of America, like France, like Germany, You know the Yugoslavian countries and like you know Germany.
But United States, they are very, very perfectly insist on the Monroeism.
And they stay away from all the troubles and they only benefit from the situation.
The crippled European Union, their greatest economic competitor, and also the crippled Russians.
You know, military forces make them exhausting so that themselves can be safe.
And they...
America can stand in the middle to benefit from all the situation.
I think they learned the essence from the Great Britain Empire before.
So just imagine the same situation happening now in the Far Eastern Asia.
Would America jump in, try to meddle with China?
I don't think that's even a question.
Even they don't want to meddle with Russia.
How can they bother or how can they dare to meddle with China, the second largest country, military presence and economic force in the whole world?
I never think that we're going to happen.
So if that really been happening in the whole region, if they're going to be some extreme event happening, probably japan will become the war zone, instead of taiwan being the war zone or the strait being the war zone, and there probably going to be zero chance america sending any their foot soldiers or marine corps to this piece of land, and probably The only side to be sacrificed and suffer from all this cause and danger is Japanese families, Japanese young and old, Japanese men and women.
That's going to be a very, very catastrophic situation.
We're going to look into if that really happened.
So I don't think the Japanese politicians should be that kind of naive.
You should grow up and face the real situation and don't put your people into that kind of danger again.
Mr Hawley, what kind of message, in your opinion, is President Trump sending to figures like Takeuchi in Japan?
It's very interesting because President Trump's remarks that many allies are not real friends, which was delivered in the context of the China-Japan exchanges, is very telling.
It reflects a deliberate choice to avoid siding with Japan or criticizing China.
And it is signaling a recalibration of U.S. priorities.
Now, please let me talk about the strategic ambiguity by refusing to align openly with Japan.
Washington is preserving flexibility.
The US does not want to be dragged into Tokyo's provocations over Taiwan, especially when such rhetoric risks destabilizing the region.
And you see, in the near past Mr Trump has learned his lesson that it cannot provoke China unconditionally and therefore Trump's phrasing underscores his transactional view of alliances.
Not real friends suggest that some allies, Japan included, may be seen as opportunistic, benefiting from US security guarantees while pursuing agendas that complicate American interests.
As far as the message to Tokyo is concerned, the remark is a subtle rebuke.
It warns Japan that reckless militaristic signaling, such as Takeuchi's threats, may not automatically receive US backing.
Therefore, Washington is signaling that Japan's credibility as an ally depends on restraint and consistency with international commitments.
Therefore, the message to Beijing is that, by avoiding criticism of China, the US is leaving space for dialogue.
This reflects recognition that stability in the Taiwan Strait is too critical to jeopardize through automatic alignment with Japan's right-wing rhetoric.
So in my opinion, Washington's message is calculated ambiguity.
It distances itself from Japan's provocation.
It signals dissatisfaction with allies who act irresponsibly and leaves the door open for pragmatic engagement with China.
In effect, the US is telling Tokyo that militaristic adventurism will not be rewarded with unconditional support.
Mr Hawley.
Finally, if you could say one thing directly to the Japanese Prime Minister about China-Japan relations right now, what would it be?
I hope, Prime Minister Takahashi, you are listening.
Let me tell you the future of China-Japan relations will be defined not by provocation, but by restraint.
Japan's credibility since 1945 has rested on its pacifist constitution and its commitment to reconciliation.
By invoking Taiwan as a survival threatening situation and signaling possible armed intervention, you are risking undermining both Japan's moral authority and the stability of East Asia.
China has made clear that Taiwan is the matter of sovereignty grounded in the Cairo Declaration and post-Potsdam Proclamation.
Any attempt by Japan to intervene militarily would not only constitute interference in China's internal affairs, but also unravel the post-war order that has so far kept Asia largely at peace.
The path forward is not confrontation.
It is dialogue, respect for sovereignty and adherence to commitments already made.
A China-Japan joint statement.
Japan's prosperity and security are inseparable from regional stability.
That was Sultan Haile and Professor Qu Qiang.
You are listening to Road Today.
We'll be back.
You've been listening to Road Today with me, Ge'Anna, in Beijing.
Chinese Vice Premier He Li-Feng says China and Germany should strengthen trade ties and bringing an end to months of trade tensions between the two countries.
He made the comment during a meeting with visiting German Vice Chancellor and Finance Minister Lars Klingbeil.
The Chinese Vice Premier added that Beijing welcomes German firms to invest in China and that he believes trade frictions could be resolved through dialogue and consultation.
Klimbo expressed his belief that Germany and China together can find answers to the challenges of our time.
The German finance minister arrived in Beijing less than a week after Germany's parliament appointed an expert commission to rethink trade policies towards China.
He's the first member of a new federal government being received in China.
So for more on this.
Joining us on the line is Helga Zepp-LaRouche, founder of the Schiller Institute, a Germany-based foundation political and economic think tank.
Thanks for joining us, Helga.
Yes, hello, good day.
Helga, what do you make of this visit?
What are your expectations for both sides?
Well, I think this visit takes place obviously, in a very complicated strategic situation which is extremely tense.
So therefore one would assume, that German-Chinese and also European-Chinese relations should actually be a stabilizing factor.
Now, one of the problems is that the present leadership of the European Union is still thinking very much in terms of the old geopolitical paradigm that you have to defend your interests against other interests, and so forth.
And Germany is not outside of that paradigm.
On the other side.
Naturally, the German economy and the Chinese economy are so interwoven that it is absolutely in the interest of Germany not only to keep stable relations but to find ways of expanding it, because the German economy right now is in a complete phase of collapse.
So hopefully Mr Klingbeil will look at it pragmatically and not ideologically and see that the interest of Germany would lie in the expansion of relations with China.
Speaking of geopolitical factors.
The visit comes as the German government rose out a saloon of measures that cast China in an active light on trade.
How do you understand such a move?
Well, the problem is one of sovereignty because, you know, the whole world is talking about the fact that, since quite some time, Germany seems to lose sovereignty rather than strengthening it.
The business interest would be, you know, to stabilize relations with China.
Especially if you look at the media and some of the leading politicians, one gets the feeling that they are talking like inside a club where they repeat their opinions.
And that is very, very different than what is being discussed, for example, among leading circles in the global majority.
That's the countries of the Global South, the BRICS, the Shanghai Cooperation Organization.
So it's like I think it will be a a big diplomatic skill from the side of China to somehow make sure that the German delegation finds out that the global majority thinks very, very differently.
Helga to delve into this.
Some analysis pointed out that Germany has a longstanding white-left ideological tradition, with media and politicians reinforcing a narrative of suspicion toward China.
How does this kind of thinking work? shape Germany's China policy today?
And why is it so hard for programmatic business voices to influence political decisions?
Well, when President Xi Jinping announced the new Silk Road in 2013, we were talking to a lot of business people managers and they were very curious.
They said, oh, this is like a great idea.
This new Silk Road, that's fantastic.
But then what happened was that, by the end of 2017, the United States changed their security doctrines, where they declared China to be rival and opponent competitor.
And then all the think tanks started to have negative reports which don't correspond at all to the reality in China.
But the media is repeating this negative narrative and opposing voices are very...
You know they are there, but they are not heard, given the fact that the media is strictly controlled, at least the mainstream media.
And that doesn't mean that there is not a growing opposition, because you know the European governments, especially you know France, Great Britain, Germany.
The approval rates of these governments is not very high.
So it's not all written in stone.
And as you mentioned, with the U.S.
President, Donald Trump's American first trade agenda on one side and China's huge market on the other.
Germany seems caught in the middle.
Then do you think it can carve out a genuine strategic autonomy, or will it eventually have to pick a side?
Well, I think that Europe is not unified.
You have on the one side, you know, the so-called coalition of the willing countries.
They are very anti-Russia and focused geostrategically on that.
But then you have many countries in the European South and East and Balkans who basically have a different view and they are more leaning in the direction of cooperation with even Russia and China.
So the problem is naturally that the Trump administration also is pretty ruthless.
They're not treating Russia Europe or Germany as a friend and ally.
So I think it puts Germany between a rock and a hard place.
And if they would ever decide against China, it would be at the cost of a complete collapse of the German economy.
We know China and Germany are deeply economically connected.
Germany's key sectors like autos and chemicals rely heavily on the Chinese market.
How do you think Berlin will balance the political push to quote-unquote de-risk away the economic need to protect its industries?
Is any meaningful decoupling really possible?
No, it is not.
And the whole formulation of de-risking, you know, it's just a mild version of decoupling.
But in essence, it comes down to the same thing.
And the German economy is really in a deep fall because we are suffering from the loss of access to cheap Russian gas.
We have never clarified the sabotage of Nord Stream pipelines.
And you know, the European sanctions against Russia have hurt the German and European economies more than Russia.
Russia is doing relatively well because Russia could turn to Asia.
So if now in Europe or Germany people would develop the same attitude towards China, you know like against China, it would be at the cost of the end of the German economy.
That's my deepest conviction.
Helga, one last question.
German Chancellor Mayer talks about building a more resilient globalization.
Do you see any overlap with China's vision of a community with a shared future for mankind?
Could Germany and China together offer a new model for global cooperation and global governance amid all the current international challenges?
I think the initiative for that should come from China to Germany, because I'm pretty sure that Mr Klingbeil will mention China should put more pressure on Russia to solve the Ukraine crisis.
Now, there is a perfect way of doing that, and that is, in my view, what President Xi Jinping has proposed with his four global initiatives, especially the Global Security and the Global Governance Initiative, because they would elevate the whole discussion on a plane which would not be geopolitically defined, but where the common interest of all countries would be taken care of.
I have read the Global Governance Initiative and it's a very practical proposal how you could address all of these problems in a peaceful and friendly fashion.
So I think this would be in the tradition of the peace of Australia.
I think if the Chinese side would get that across to Mr Klingbeil, and also there are some other people representing the banking sector and insurances and even the central bank in Germany.
I think if people want to solve the presently very, very complex and very dangerous strategic situation, I think the global governance initiative should be put on the agenda in such a way that governments are really asked to take a position.
And since it is a way of solving oil problems on a higher level, I would hope that there are forces in Germany who would be reasonable and respond to it.
Thanks, Helga, for your insightful analysis.
That was Helga Zepp-Larouche, founder of the Schiller Institute, a Germany-based political and economic think tank.
This is Royal Today.
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Moody's chief economist says the U.S. economy is riding an AI high, but it may not last forever.
Mark Zandi estimates artificial intelligence has added more than half a percentage point to U.S.
GDP growth this year.
Without it, he said the economy might already be in a recession.
But there's a catch that AI boost is running straight into the headwinds of deglobalization.
From the US tariffs and reassuring to tighter immigration rules.
Denny warns that these pressures are driving up costs, straining the labor market and eroding the gains that AI is delivering.
And his message is blunt.
Unless the U.S. gets a lot of things exactly right next year, a recession is on the table.
With more, Zhao Yang spoke with Yan Liang, a professor of economics at Willamette University.
So yeah, Moody's top economist, Mark Zendi, says AI added more than half of a percentage points to the US.
GDP this year.
At the same time, he also said deglobalization will remain a significant drag for the U.S. economy.
So what's your take?
And when you look at those numbers, what do they tell us about the real state of the U.S. economy?
Well, I think his assessment makes a lot of sense because the AI-related, CapEx and also the stock market boom that have supported the US consumption, I think are the major factors that contributing to the US'.
's growth this year.
As we saw, you know the mechanism seven.
They're investing in each other a lot in AI-related activities.
And in the same time, I think Zendi's forecast shows that the AI contributed to 063 percentage points growth to the US GDP this year.
And we know that the US GDP is forecast to grow by to about 2%.
So this is quite significant, around 30% of contribution to the US growth.
And I think when he mentioned deglobalization, it means not only the tariffs that the US has been waging to the rest of the world, but also has to do with the very restrictive immigration policies and unfriendly policies toward foreign students and also foreign workers.
So I think he makes sensible arguments that the globalization is going to really dampen the US's growth.
And the AI has contributed.
But, as we also know that he talked about how AIs positive impact on the economy probably going to take a long time to really manifest,
So there's the question about how long this AI boom is going to last.
And when this whole AI fervor is going to slow down, then how would this also impact the US economy?
So those are a lot of uncertainties.
And also when the economy is driven largely by just one type of technology.
I think that also makes the growth volatile.
What do you think is the real impact of AI on the U.S. economy and employment?
Is the current AI boom more of a stock market story or more of a real economy story?
Well, I think it's too early to tell.
I think so far, the impact of AI is is really just manifested in high-tech sector's investments and also the stock market boom, as you mentioned.
According to a recent MIT report, the great majority of companies that invest in AI have yet to see the positive productivity growth on their investments.
But definitely the stock market boom story.
As we know now, the magnificent seven account for over 35 of the market valuation.
So with the stock market boom, it does translate into some consumer spending.
But as we also know, the 10% of the wealthiest Americans control over 93% of the stocks.
And right now again, the top 10 of the wealthiest Americans account for over 40 close to 50 of the US economy.
So, in other words, I think the benefits of AI right now are still mostly reflected in investments in the companies and stock market, and that only benefit a small proportion of the, you know, American individuals.
I think the US story right now is very much a K-shaped recovery, where the top of the economy, the top of the population, are seeing growth, but then the bottom are seeing very slow or even backward in terms of their economic situations.
The so-called pocketbook economics.
I think really with the tariffs, with the uneven economic benefits, I think the great majority of Americans are yet to really benefit from the AI boom.
And Zendi also raised concerns that the benefits of AI are largely confined to the already wealthy, which could limit its contributions to the overall economic growth.
So what's your take?
And in your view, is AI posed to widen the wealth gap in the near future?
I think so.
As I mentioned earlier.
First of all, it takes time for AI, going from technological innovations, to really be integrated into various sectors and really help to boost productivity growth.
And second, right now, AI's impact are mostly felt positively by the stock market, which again doesn't necessarily benefit the great majority of the people.
And third, I also think that AI has a lot of impact on job creations.
We know now in the US, It's really a low hiring, low firing environment.
Many of young graduate students have difficulty finding jobs.
And partly this has to do with AI replacing some of the entry level jobs.
So, giving all the three factors, I think there needs to be really careful policies, but also, I think, ways to really integrate AI into the broader economy rather than just benefit the major high tech companies as well as the stock markets.
And Zendi sees AI and de-globalization as two powerful megatrends pulling the US economy in opposite directions.
So how do you view it?
And which force do you think will shape the economic outlook more in the coming years?
Well, I think his assessment makes sense.
Although I would say that you know AI's positive contribution to the economy also need to be, you know recalibrated, given what we have discussed above, that the fact that AI has yet to translate into higher productivity growth, has yet to translate large job creations, if at all, and also it creates uneven wealth effect.
So even AI has positive impacts on the US economy this year, it is very much uneven.
And I think de-globalization trend also seem to be continuing, even though now Trump is walking back on some of the tariff decisions.
For example, he has just announced to exam the tariffs on over a hundred agricultural products mostly, you know beef, coffees and fruits and vegetables, because it really generated, you know, food inflation last month, the cpr on food prices gone up by 27 percent, which really undercut many middle and lower income households that well-being.
But I think Trump doesn't seem to be really considering reversing or broader these tariff impositions.
So that tariff is going to continue to weigh on the U.S. economy.
And it's, you know, unfriendly immigration policies including, you know, crackdown on undocumented immigrants, but also impose high H-1B visa fees and also restrict some of these student visas, and so on and so forth.
I think all of this will pull the economy away from growth.
So those negative impacts will seem to continue to weigh on the economy if the Trump administration does not reverse the course.
And it doesn't seem that at this point he's going to do this in a in a wholesale way, right?
But he may gradually walk back on some of his deglobalization policies, seeing the negative impact on the economy.
And beyond AI and deglobalization, what are other key factors that will shape the US economy in the coming years?
Well, I think, in the short term, I think the government policies would have a large bearing on the economy.
As we know, the US government just ended the historically long government shutdown.
But this is only temporary.
Right now, the measure only continue to fund the government by the end of January next year.
So there is still the question about going forward, whether the two parties are going to reach some kind of agreements to continue to, you know, maintain a functional government, not to mention the Affordable Care Act.
Subsidies are still.
You know, this discussion is still continued because without ACA subsidies which, by the way, if it's not extended, it's going to expire by the end of this year
And that is going to affect a lot of individuals.
About 20 million Americans received ACA subsidies in 2024.
And without these subsidies, many of them would see an increase in their health insurance premium by an average of 75, which means these individuals could see their health insurance premium to go up by as much as 1000 per year.
So this will continue to drag on the economy.
And without a functional insurance plan.
I think that would again affect the labor force to a great extent.
I think that, in addition to these fiscal policy, whether or not the government is gonna continue to open and provide public services and whether or not there will be subsidies on the Affordable Care Act the other aspect of government policy of course has to do with the Fed.
Right now there's still less than 50 of the chance, according to the Wall Street, that the Fed is going to cut rates in December.
But again, that is very much still uncertain because the government shutdown has caused maybe October's labor market data not to be published at all.
So, in other words, the Fed is not going to get very reliable data when they made the decision to cut or not to cut.
So overall, I think this kind of policy uncertainty right both on the fiscal side and also on monetary side will create some uncertainty in the US economy, at least in the near term this year, the rest of 2025, as well as 2026.
That was Yan Liang, a professor of economics at Willamette University.
New Zealand's highest court has sided with the lower court's ruling that drivers of Uber should be treated as employees.
The Supreme Court unanimously dismissed the ride-hailing company's appeal for a 2022 ruling by the Employment Court.
Case was brought by two unions on behalf of four Uber drivers.
Uber argues its drivers are independent contractors using its platform, not employees.
So for more on this.
My colleague Ding Hung spoke with Joseph Siracusa, professor of global futures with Curtin University.
So Uber Australia and New Zealand suggests that the implications of this latest decision could be far-reaching.
What do you make of its possible implications?
Well, the implications are enormous.
I mean, if Uber has to treat its independent contractors as employees, they're going to have to extend to them everything they normally extend to employees insurance holidays, minimum pay, the right to complain and that kind of thing.
Independent contractors.
Of course, they have a lot of freedom, but they're not entitled to a number of these things.
It's not just Uber or Lyft.
I mean, this is the kind of things that universities use a lot of independent contractors, as does IT and other people.
So this kind of thing has enormous implications in modern economies where they count on the gig factor or the gig economy.
Yeah, exactly.
I guess in the case of universities, Professor, you have this term like adjunct professors.
In the case of Uber.
Professor, what do you make of the key differences between being an employee and being an independent contractor?
And do you think Uber drivers are independent enough from Uber to be considered as independent contractors?
Well, independent contractors have a number of advantages over employees.
For example, they can work for multiple companies, whereas in universities or government organizations you can only work for the the one person.
So you can spread it out.
Maybe you could have a little more freedom.
But, as I say, because you do not have access to collective bargaining, you do not have certain tools or certain frameworks available to you.
But look this movement towards recognizing independent workers as employees.
There's a little bit of movement in Australia on this.
There's some movement in California on this and various other places.
But it affects far more than the Uber or Lyft drivers or whatever it is.
It impacts anybody who comes to a, an enterprise or some kind of organization as an independent worker.
So there's pros and cons.
I mean, if you're denying people certain compensation, that is, parental rights and holiday leave and access to this or that, I mean, then you're sort of denying them natural justice, among other things.
Australians and New Zealanders worry about this.
But look, most of these economies you're talking about are industrial economies where the employer, that is, the employer, the capitalists.
They don't want to give independent contractors employment conditions because it costs them a lot of money and they don't make as much money on the unit or whatever they're doing.
But uh This, as I say, has these enormous implications.
And I think there is great fear among the employers, that is, the bosses, that this is going to extend to thousands of more people.
And, of course, keep in mind that if you start to give independent workers their union rights, then they can sue retroactively.
They can sue for, say, 10 or 20 years of back pay, that kind of thing.
So that's usually what capital is worried about.
It's a very interesting ruling in New Zealand. taken a couple of years to get to this point.
And the unions, of course, think this is now the opening road.
That is, they can now represent a lot of gig industries.
But this is only the beginning.
We haven't heard the end of the story yet.
Uber says independent contracting is a cornerstone of not just Uber but also the broader economy of New Zealand.
From tradespeople and creatives to IT consultants and health professionals, and hundreds of thousands of Kiwis value the freedom and control it provides.
Does Uber have a point in this argument?
And when you are involved in a job, is it realistic to expect both employment benefits?
No, I don't think it's realistic at all.
I think, in terms of independent contractors versus regular employees, there's a trade-off, no matter which way you go.
And of course, a lot of these independent contractors, they're a different generation.
They don't expect to go to work from nine to six o'clock or nine to nine o'clock in Japan, or something like that.
They want a little more freedom to choose their schedule and they might take less of this or more of that, because their time is very important to them.
That is, they want to be independent with their time.
But it's not realistic for both groups, that is, the independent contractors and the traditional employees who belong to unions, to expect the same kinds of outcomes, because they're both looking for different kinds of things.
And of course, we have this, the changing age of the workplace.
I mean, I'm not sure exactly what various generations want.
I mean, my father's generation worked all day and his father worked all day.
My generation only had to work eight hours a day or something like that.
But some of these people you know they get paid, you know, say they work four or five hour days and they're highly concentrated workers in the tech industry and they might even get paid more money in four or five hours and some people get paid in eight hours.
So, I mean, that's the trade-off.
But it all depends what you're looking for.
But there is no simple answer here and it's unrealistic to expect sort of symmetry.
In either way you go.
And lastly, and very briefly Professor, how do you think we can encourage the development of gig economy while ensuring enough protection for the workers who are involved?
Well, I think...
The various business schools around the world have to start thinking about this.
This is a very interesting question.
It's a new question.
What I mean by new is in the last seven to 10 years.
And I think business schools have to think a little more about this.
I think large organizations have to hire people at the top dedicated to thinking about these kinds of problems.
And, of course, sometimes organizations like universities and government services.
They hire independent contractors so that they can save some money.
But this isn't about saving money anymore.
It's about enhancing lifestyle on both sides of the divide, depending on what people want.
So I think the business community and the business universities and business schools within the universities are going to have to think a little longer about think harder about what they want in their workplace.
Who are they recruiting?
And of course there have to be more studies done of the newer generations and what they want in the workplace.
Some of them, of course, want more.
Some want less.
They think that they are up against the eight ball here.
That is, they don't have the opportunities people had 20, 30 years ago.
So they may have very...
Very difficult expectations.
But at the end of the day, companies have to be able to sit down with these different groups and cohorts and manage the social expectations about what is going to be achieved at the end of the day.
But you know, when you pay somebody a lot less for doing the same job as someone else, this of course creates resentment in the workplace.
On the other hand, if you're giving someone working four hours a day who's doing very important work, he may be making more than the person who gets paid eight hours for doing something alongside him.
So, you know, you have to look very carefully at this.
This is an HR problem.
This is a human resources problem, and large organizations have to give us a little bit of thought.
Up till now uber, lyft and a lot of other employee employers their first response to this problem is to take them to court and try to break the bank and to make sure they uh they don't win collective bargaining rights.
They're starting to lose us from time in different places, particularly in australia, new zealand, in the united, in the united kingdom, united states, a lot less so.
So you know, Instead of spending all that money on lawyers to try to make sure nothing happens, they might be able to spend that money and think about what should happen.
It's a matter of managing resources and I think social expectations in the years ahead.
That was Joseph Siracusa, professor of global futures with Curtin University.
That's all the time for this edition of World Today with me, Gaena.
Thank you so much for listening.
Bye for now.
