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This is World Today. South Korean president visits the US while sending a special envoy to China to seek normalization of bilateral ties.
China will showcase advanced military equipment, many for the first time, to commemorate 80 years since the Second World War.
And summer spending in China surges. welcome to world today news program with a different perspective i'm tuyan in beijing to listen to this episode again or to catch up on previous episodes You can download our podcast by searching World Today.
South Korean President Lee Jae-myung says his country can no longer pursue the long-standing strategy of security with the United States and economy with China.
Lee made the remark during his first official visit to Washington where he held talks with U.S.
President Donald Trump. At the same time, Li sent his special envoy to Beijing, former National Assembly Speaker Park Byung-sook. carried Seoul's message of seeking to normalize relations with China and further strengthen economic cooperation.
For more insight into the latest developments, we are joined by Professor Cheng Xiaohe from the School of International Studies, Framing University of China.
Professor, first of all... What does this shift signal about Seoul's foreign policy priorities?
You see, the declarations, it's quite stunning, given the traditional Democratic Party's President's traditional positions on his relationship with China and with the United States.
But I believe such a kind of declaration may reveal a number of new things.
First, It reveals Li's government new assessment of Sino-US relations. because the Sino-US relations is so important to South Koreans, important for South Korean government to make a constant new assessment.
And so the new assessment may be That the ongoing strategic rivalries between China and the United States will continue to proceed and the two countries, China and the United States, and not find a way to get rid of that kind of rivalry.
That's, I think, the new assessment of South Koreans government may make.
And the second new assessment, the old approach that various South Korean governments have adopted in dealing with two major powers, such as the parallel diplomacy with two major powers, or so-called dual-tracked approach to China and the United States. may not good one to work for South Korean government.
And this approach, the old approach, worked in the past, if not so efficiently or effectively, but nonetheless it's worked.
But now, given the intense ongoing strategic rivalries between China and the United States, South Korea could not maintain such a kind of old approach, need to make a new change.
And the third, I believe, Such kind of declarations demonstrates that South Koreans may further lean to the United States. by building a closer and a strong relationship with the United States in economic field, in secure field.
I think it's a living aid from traditional democratic parties' diplomatic positions on its relationship, on its subsequent relationship with China and the United States.
But he is trying to persuade China to normalize the ties between China and South Korea.
If it's like what you just mentioned, so is going to move closer to the States, how is he going to reach that goal then?
You see, according to South Korean traditions, the new government needs to send special envoy delegations to China, United States, and Japan.
And this time the South Korean government partially follow the traditional protocols by sending, only sending, the special in-world dedication to China.
By adopting such a kind of traditional practice, the society can try to maintain some kind of balance in its relationship with China with the United States with Japan.
But this time, they only send special envoy delegation to Beijing. and the delegations, I think, carry two important missions.
One is to signal the new government goodwill to stabilize and improve South Korea's relationship with China.
That's, I think, the one thing they want to let Chinese people, let Chinese leaders know.
And second, by doing so, they try to keep some kind of relative balance in this relationship. with China, the United States, and Japan.
But such a kind of balance is not typical balance.
It's relatively balanced because The special envoy delegation was sent to Beijing.
At some time, South Korea's president himself visited Japan, visited the United States, and sign a bunch of deals, agreements, and a host of disputes and issues.
So in compare with special envoy delegations and presidents personal visit to Japan and the United States carry more weight, more influence.
But I think it's very difficult for South Koreans to continue to maintain such a kind of balance in its relationship with China and the United States.
At the same time, South Korea has made a decision to forge a closer and stronger traditional islander relationship with the United States.
Then in which aspect do you think the new government will make some changes or even shift then?
You're saying there's basically not such a shift from the previous government policies.
The previous government basically adopted a dual-tracked policies toward major powers, including China and the United States.
On the one hand, the previous government heavily rely on United States for its securities by buying all kinds of United States military hardware, planes, missiles and the naval boats and so on and so forth.
But on the other hand, the South Korean previous governments worked so hard to maintain robust and good trading relations with China. very good relationship with trans government and trans local But now things changed.
According to what President Li said, the South Korean could not maintain such a kind of traditional approach to rely on United States for security and promote economic tie and the trade with China.
So in the future, South Korea may buy more products from the United States and invest more money in the United States And also South Koreans and United States may work together to help United States to revitalize its built shaping industries.
And the South Korean also wanted to revise the nuclear agreement signed by itself and the United States to acquire more rights, more benefits from news nuclear agreements.
So if President Li's statement or speech could be followed through in the foreseeable future, We're going to see the United States and the South Koreans will forge more close relations, not only in the security field, but also in the supply chain field.
Yeah, like you just said, South Korea agrees to purchase more U.S. producer goods in the future.
And he's also talking about making America shipbuilding great again.
Do you think Washington can get satisfied by, you know, the last minute 150 billion US dollars offered by Seoul?
Do you believe it's a wise move? Certainly, the United States side is partially satisfied without such a kind of concessions made by the South Korean government.
I don't think the United States President Trump welcomed President Lee's visit.
The meetings between President Lee Chi-min and Donald Trump from South Green's perspective was fruitful and successful because on the one hand, as I mentioned earlier, And South Korea has made concessions to buy more products from the United States, particularly these energy products.
And also, the South Koreans agreed to invest $350 billion in the United States. among the $350 billion, $150 billion will be focused on the shipbuilding areas.
So United States really got something from South Koreans, but there's other things United States try to acquire from South Korean side, but so far failed to get it, including the United States military forces in South Korea. whether or not the United States meet the forces in South Korea and enjoy strategic flexibilities because we owned a little bit less than 30,000 American soldiers stationed in the South Koreans.
And the United States wanted to use such group of forces to intervene the Taiwan Strait contingencies if something happened across Taiwan Strait. and the United States pushed South Korea into a long mid-forces to enjoy such kind of flexibility.
But so far, South Korea has refused to cave in such a kind of demand.
And the United States also demands South Korea to do so. participating in the United States-dominated supply chains.
On the one hand, South Koreans agreed to participate.
The major sectors of such a kind of supply chain And on the other hand, the South Koreans are reluctant to make 100% commitment.
And such, I think that the United States will do more in the future to pressure South Korea to make more concessions.
Then back to the Chinese side, like you said, South Korea's special envoy has already expressed a hope to bring the Korea-China relationship, which has deviated from its trajectory in recent years back onto the right path.
But if it's like what you just mentioned, South Korea will move closer to the States. in terms of both security and economy.
How do you expect China to respond then?
Certainly, China also wants to put Sino-South Korean relations on a solid and sustainable track. because we all know the bilateral relationship between two countries have been not in a very good shape.
So China want to make a change, want to put the relationship on the good, sustainable.
But I think China and the South Korea need to meet halfway.
More importantly, it's good to hear the South Korean side want to say they want to put the relationship back onto the right path.
But we also want South Korean to match its words with its deeds.
When we look at what Lee said and what Lee did in his visit to the United States, to Japan, we may struggle to find strong evidence that the South Korean government plans to do so in forcible ways in this foreseeable future.
Let's zoom out. How would you expect South Korea's new approach to probably reshape the strategic landscape in Northeast Asia, particularly in relation to North Korea and regional security then.
We witness the new South Korean government has started its diplomacy in quite different patterns. but it's maybe too early to predict that such a kind of change of south koreans diplomatic posters may bring significant change to the strategic landscape in North East Asia.
Because we all know we have to wait and see how President Li and his government follow through their statement and speech in the future.
I don't think President Li and his government have decisively sided with the United States in every field.
So far as South Koreans just follow what other Western countries have normally downed in the past few months.
Most Western countries slave to Trump's coercions and heavily-handed policies. and to seek a minimum damages that Trump's disruptive tariff policies may brought about.
So, South Korea is just another country in caves, partially caves, to Trump's coercions. and economic blackmails in order to minimize the damages that President Trump may bring to them.
And second, we have to understand the South Koreans certainly has its power, has influence to the sheep. the geopolitical landscape in Northeast Asia.
But other countries include China and the United States, North Korea and the Russians, Japan, also play and similar laws in this regard.
And China and the United States put a crucial role in shaping geopolitical landscape in North East Asia.
So what's going to happen In the future, with regard to China and the United States relations, I think it occupies a central position in such a kind of strategic geopolitical landscape reshaping.
Right. Professor Cheng Xiaohue from the School of International Studies at Trim University of China.
Thank you very much. At least 25 countries have suspended package deliveries to the United States after Washington announced it would scrap a tax exemption on small parcels.
The Universal Postal Union says the U.S. government's decision has triggered suspensions by postal services in countries including France, Britain, India, Australia, and Japan.
The UN body says member countries cite uncertainty over how US authorities plan to implement the changes. warning of considerable operational changes for postal operators worldwide.
The U.S. decision will take effect on Friday.
For more, my colleague Xiaowen spoke with Professor John Gaun from the University of International Business and Economics.
Professor Gong, the de minimis rule allows individual packages worth less than $800 to enter the US duty free, It had already been eliminated for China.
Why do you think the Trump administration is now suspending it for all countries?
Well, I think it's very clear from the very beginning that Trump's trade policy is not just against China, it's against the entire world.
I think in his view, the entire rules-based order as we call it, with the WTO as the core, at least in the commercial area, is fundamentally against American interests.
He really buys into this narrative. So I think, you know, you look at the the tariffs imposed is not just about China, it's against the entire world and I think this the minimum exemption, its intention to totally revoke that, to eliminate that, is also not just against China, but it's also against the entire world.
This is happening right now and I'm not surprised at all.
Well, this rule, the denominous exemption, began in 1938 as a way for the U.S. government to save time and money on the low-value imports.
So now since they're planning to implement it, so how feasible is it for the government to handle the new workload including paperwork, fees, and inspections once the exemption ends completely.
Well, this is actually very characteristic of the Trump administration.
He issues these kinds of executive orders without any consideration about and how to actually implement it.
It causes a disastrous effect on the US postal system, on the US customs system.
That's the reason why there are a couple of countries have entirely stopped shipping things like that. parcels into the United States because they don't know how it's going to be handled and who's going to pay what, what is the estimated cost, these foreign shippers have no idea about, foreign postal offices, no idea about how much they should be charging their customers.
So this is creating a chaos. I think it's going to take some time for, the relevant US agencies to straighten out things, work out the process, the details, and the chaotic nature again, is happening within the Trump administration.
I mean, this is very characteristic of it.
I think the executive order came out without full consideration, without a full planning of the about the implementation part of it.
So that's what we are seeing right now. It's a total chaos.
And I might also venture to say that This could potentially be the last nail in the coffin of the US Postal Service.
The US Postal Service is in big trouble these days. but still making it, sustaining its operation. to a large extent is these shipments.
I mean, US Postal Service is still driving, you know, significant revenues from it.
And I think with this, Exemption gone, inevitably trading that nature is going to be curtailed back and it's going to have a negative impact on U.S. postal service. so we'll see what's going to happen with the U.S.
Postal Service which is the only state-owned enterprise in the United States it's a owned by the US government.
And it's in big trouble right now. Actually, the US post offices and some parcel companies are complaining about this unclear policies and ramping up entirely new logistics systems.
So is the uncertainty more disruptive than the cost increases themselves?
Well, I think you mentioned two issues here.
One is the increased cost. That's inevitable right i mean you need mechanism to enforce that you have to put a value on the parcel and then you have to collect tariffs and there's the payment mechanism and all these things at cost, that's for sure.
And the second issue you mentioned essentially is the chaos that I've been talking about. during the implementation process, the uncertainty associated with implementation part of it, both are detrimental to the entire system.
I think it's okay not to argue too much about which factor is more important, but nevertheless, I think the increased cost is probably more of a long-term nature.
So the impact will be, as I said, will be having a negative impact on US trade in the form of these sort of parcels through the US postal system or other parcel companies.
This is actually a very vibrant part of the cross-border e-commerce trade these days.
It's going rapidly. As you probably know, Chinese companies like Temu and Shine, they're immensely successful companies in that domain.
Now, of course, that's going to be a... big disruption and we'll see, we have to see how these companies will adapt to the new reality.
You mentioned about the Chinese companies Shang and Tmall operating in a US market.
I want to talk more about this. Like in the fashion and fast e-commerce industry, how will the business model shift when packages worth less than $800 no longer exist? enter duty-free, could this be the end of the rapid low-cost fashion shipping?
I think it's going to have a huge impact.
I wouldn't say that's going to die, but I think that business, especially you mentioned, the low-cost fashion stuff is probably gonna go away.
Previously, you order something like 20 bucks and it can be shipped directly from China to your doorstep.
This is just spectacular business and shows how much logistics has contributed to trade, right?
How efficient the system is. Now with a tariff slap on this, I don't think you can viably ship 20 bucks good from China to the doorstep of American households living in West Virginia.
It's just not going to happen in my view.
So these two companies have to adapt, I would say, and certainly it also The toll is not just with respect to these Chinese companies, but also ultimately with respect to American households, especially low-income American households. they would be deprived of the opportunity to order something of tremendous value, low cost, high quality and delivered on time. these days are gone i would say you mentioned low-income families in america actually think tanks like kindle institute argues that poorest Americans will take the biggest hit from ending the de minimis.
Do you agree with that? And does this policy change disproportionately harm low-income consumers?
Well, absolutely. As you can tell, I've been advancing this argument, just like Cato Institute's argument.
In general, I would say it's not just a delimitous exemption elimination.
I think in general, Trump's trade policy in the form of higher tariffs, essentially, is gonna be hitting low-income American households disproportionately, for sure.
Tariffs are simply like sales tax essentially, right?
So essentially you put a sales tax on goods and household expenditures on On daily items, things that people buy at Walmart, shopping malls, is disproportionately larger as a percentage of their income compared to high income households.
So, you know, that's what we mean by disproportionately, low-income households are going to spend more percentage-wise on these products they have to buy every day, whereas the rich households, you know, expenditures like this holds a small percentage of the overall income.
So the impact on them is relatively low.
So I think this is essentially income distribution scheme.
They're taking money away from low-income households and putting to the high income households.
And the reason I say that is that you look at what these collected tariffs are going.
They're going to the US federal government's coffer. to be part of the revenue source and also to finance the tax cuts for the rich.
The Chinese has already passed the legislation to give a tax break to American people, mostly rich people.
So, essentially, they're collecting money from the tariffs, which disproportionately hit low-income classes.
And then, using the money to finance the tax rebate to tax cut to the high income classes.
So this is clearly income redistribution scheme.
If we look at the bigger picture here, how might this change disrupt the global cross-border e-commerce trades going forward?
That also includes the US because As you also mentioned, the US benefited from this booming e-commerce trade.
So what impact do you expect to see going forward? clearly a setback.
It's going to affect the US market. Well, I mean, fortunately, I think the US market's importance to Chinese exports is waning. and quite rapidly actually.
Right now, the US exports market accounts for about a little bit over 9% of total exports from China.
And I would expect that number keeps declining.
It's declining for two reasons. I think, first of all, the trade with the US exports to the United States is declining in absolute terms.
So this is going down. Now, the denominator of this ratio, right?
America's exports to the United States versus the exports of total, to the entire world, so that's the denominator, that's China's exports to the entire world, is actually increasing despite of the, of exports to the United States.
It increased quite significantly. For the first half of this year, China's total exports increased by over 7%.
So you have this denominator that keeps increasing, whereas the numerator keeps declining.
So I would imagine that America's market's importance, significance to China's total exports is winning, and it's going to continue to be winning as we move forward.
I would expect within three to five years, probably U.S. markets, total share of China's entire exports market is going to be something around 7%.
That's Professor Jong-on with the University of International Business and Economics talking to my colleague, Xiaowen.
Coming up next, China to showcase advanced military equipment, many for the first time to commemorate 80 years since the Second World War.
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This is World Today. China will showcase a wide array of advanced military equipment, many for the first time in its upcoming V-Day parade to commemorate 80 years since the Second World War.
This year also marks the 80th anniversary of China's victory in the War of Resistance against the Japanese aggression and the World Anti-Fascist War.
The commemoration honors past sacrifices and reaffirms the country's commitment to peace.
The event is scheduled for next Wednesday.
For more, Sun Rui-hsing spoke with Zhou Bo, a senior fellow at Tsinghua University and retired senior colonel in China's People's Liberation Army.
First of all, why is commemorating the 80th anniversary of the victory in the war of resistance against Japanese aggression and the world anti-fascist war important for China today?
Well, it is important because the significance of this wall is actually not so imminent towards the rest of the world from Chinese perspective, because China believes that this war actually started in 1931 when the Japanese invaded the northeast of China.
While in Europe, basically, people believe that this war started in 1939 with Nazi Germany's invasion of Poland.
So there is a gap of eight years, which is a long time, of course, right?
So China needs to bring this to the notice. of the people of the rest of the world.
And it is also significant in that today China is a lot longer what China was at that time.
Today China looks awesome because this parade definitely will just showcase the latest development of the Chinese military, including weapons platforms and great capability in all fields.
So therefore, I think having this two coupled together, it will definitely impress the audience of the whole world.
So beside the historical perspective, how does the commemoration demonstrate China's commitment to peace, international fairness and justice?
You see, the point is, I think people will be impressed with the parade in terms of everything.
But the truth is, ever since 1979, after China finished a conflict with Vietnam, China actually has entered into no wars with any other countries.
So that means for over four decades and more, China has not even killed a single foreigner anywhere overseas.
Yes, we had a deadly brawl between Chinese soldiers and Indian soldiers in Galvan Valley, but that was a deadly brawl, not firing. of any side at the other side, right?
And that involves sovereignty. But elsewhere, away from Chinese territory, there is no evidence whatsoever. of Chinese using force against anyone, even in the South China Sea.
Sometimes we were described as aggressive or coercive.
And I thought that was precisely because you just cannot give an example of telling me how the Chinese the soldiers have ever fired at anyone, right?
And even in the South China Sea, yes, the Chinese Coast Guard used water cannon, tried to dispel the of ships getting closer to Chinese territory.
But that is for the purpose of deterrence.
Yeah, it's not a use of force. So Coming back to your question, in the last four decades and more, China's rise has been peaceful.
And that is so, so rare in human history. uh today you could argue almost that china is as strong as the united states because by ppp purchase power parity, China was already the largest economy in the world.
And by GDP, China is the second largest in the world. whether China could still overtake the United States in terms of GDP, it remains to be seen.
Some people say yes, some people say no, and some people say it doesn't matter at all.
But you see, this is already a miracle that a country that was so backward yeah rose to the second most important position in the world and probably it could create another miracle that is uh with china celebrating centenary in 2049, could we still maintain peace?
And how could China Yeah, play a role. Yeah, either for its own interest or for the interest of the rest of the world.
We don't know the future. We don't know what kind of conflicts might crop up. except to say that we know definitely some conflicts.
Well, just like the war in Ukraine or in Gaza will still crop up.
So that involves the question of how China can make better use of its military to make the world safer, if not better.
So now if we shift to the military aspect of the commemoration as a retired senior colonel in China's People's Liberation Army, How does this parade, I mean, with this display of new weapons and equipment, reflect the modernization and reconstructuring of the Chinese armed forces under recent military reforms?
Well, you see, this parade has yet to be done, so I won't be able to know the details.
But according to press release, there definitely would be some new weaponries on display.
Because it is a tradition that of all these weapons and platforms on display, there are already those that are deployed with our troops so they are the weaponry and equipment in active service so it's not the those that are still in research and development period.
According to the press release, we're going to have some new equipment and that is understandable because this is already another parade away from a parade 10 years ago.
So we definitely would have some new weapons.
And because China's defense industry is part of China's industry, which is next to none in the world.
And what would impress me from what I have read is that actually we are quite aware of the dynamics in the military revolution around the world.
For example, in this There will be drones on display and there would be also some weapons used to fight against drones.
So this kind of angiogram capabilities are also very important because, you see, probably war is the best way for soldiers to learn quickly.
The war in Ukraine has told the story because in the beginning, Russia would even have to buy drones from Iran.
But now we are seeing both sides using massive drones, and they have proven to be most lethal. in killing people, in killing tanks and trucks.
So this war has raised the question how and modern warfare has already changed and how one has to prepare Yeah, it's kind of a new warfare which involves massive drones or what we have talked about, the swarms of drones.
Exactly. So in addition to the equipment on display, what message does the new force structure, including the Army, Navy, Air Force and Rocket Force convey about China's defense priorities, in your opinion?
Well, first of all, I think for Chinese military, the festive images, we have almost everything, right?
Yeah, I see almost trying to be modest because sometimes it's difficult for you to think.
What, for example, American military is having is not found with the PLA.
It's difficult to say. Maybe this parade will also surprise people in showcasing something that the US military doesn't have.
So we have everything. The only challenge is how we might really use them in the world.
This is the dilemma, actually, because we have enjoyed peace for so long.
And we even in China, talk about how we have to cure this so-called peace disease, right?
You can call it a disease if you just lay back. and consider everything is fine, right?
But peace has to be earned. Yeah, you have to be prepared to fight a war to earn peace.
So that is what we're up to. And that is why we're doing all kinds of joint trainings, either among different services or sometimes with foreign forces. to prepare for the worst possible scenarios.
So can we see all these measures, like you've mentioned, from training reforms to new technologies as the real translation of the concept of building a strong military yeah of course you know China would do parades from time to time on major occasions.
So we know most of the weapons. that were already displayed, that will continue to be on display this time, right?
But we should just open our eyes for something new.
And this is already mentioned by a spokesman about some new types of weapons platforms.
It is this new stuff that will tell you how we have been aware of the changes in the revolution of military affairs.
So how well prepared we are, right? And for this, we'll have to open our eyes and wait to see.
Okay, so looking at today's modernization, what developments are you most proud of as someone who has this military background?
Well, certainly in China's military development, uh is impressive yeah actually this is not my impression but actually the whole world yeah would find it absolutely formidable and awesome.
People often talk about how China So Navy has actually become the largest Navy. in terms of number of ships, but not in terms of tonnage.
In terms of tonnage, American Navy is still bigger than Chinese Navy, but in terms of number of ships, would certainly have more ships, and that matters.
Why? Because for ships to be involved, in a conflict actually only one ship could be useful if you have three ships because another one have to stand by another one maybe it's just the maintenance So, therefore, number of ships matter tremendously.
And then, of course, to talk about China's shipbuilding capabilities, that is something for now and for the future, right?
And it just said how our ship building capabilities is already 230 times bigger than that of the United States.
Actually, the US Navy doesn't have many shipyards.
Yeah, to produce ships. So that is why they are even talking about having ships built or maintained. either in Japan or South Korea, things like this.
This is about shipbuilding. And then, of course, about Chinese Air Force, we have the best example is how other people have used Chinese aircraft. in the aero fight, such as the most recent aero fight between India and Pakistan, in which the Pakistani Air Force has used the Chinese J10C. to shoot down a number of Indian aircraft.
The Indian military has actually acknowledged that some of its aircrafts were shut down, but they do not want to mention the specific aircraft that were shut down.
But most people believe it is French Rafales, that is the best aircraft that the Indian Air Force is having.
Yeah, so that tells the lucidity of China's weapon system.
And remember, A J-10C is actually not the best one we're having.
It is just a 4.5 generation. And in this generation, actually, there are some other Chinese aircrafts.
But above it, there are J35 and J20 that are already in the service, OPLA.
And the last chair, actually people have released some videos showing that the two types of so-called sixth generation aircrafts on test flights.
Yeah, the Chinese government did not, you know, say yes or no to these videos.
But the fact that these videos are there on the website tells you probably they're true.
Exactly. So my final question, beyond commemoration, how can this gathering of world leaders contribute to international cooperation in safeguarding peace today.
Well, I believe the fact that so many leaders, world leaders, would like to come to China, demonstrated the importance of China today and the attraction of China today. because some of them would come here for the Shanghai Cooperation Organization. summit in Tianjin, which is a few days earlier.
So actually, it is two major events altogether.
China is now the rotating chairman of the Shanghai Cooperation Organization, so therefore this event will be held in China.
So this is a combination of two major events.
Both of them have attracted world attention. for different reasons, but it definitely shows the importance of China.
And nobody disagree about the importance of China today.
But I personally believe that this is very much like what Deng Xiaoping says.
Yeah, 18th century. Yeah, which is already here.
So it's not something that is arriving. I think the ancient century has already arrived. but therefore what is China's position.
China certainly is in the center. But having said that, it's not that only Chinese in the center. standing next to China or other developing countries or global south countries like India. which could very much become the largest economy in the world in five years.
There are also countries like Indonesia.
I know the president of Indonesia is coming.
Indonesia's future is also very bright. It's a large association of countries and also large Muslim countries.
So the rise of Asian countries and regional organizations like Southeast Asia actually demonstrated that this is a kind of collective rise happening in the Asia-Pacific or Indo-Pacific, whichever you like to call it.
That's Zhou Bo, senior fellow at Tsinghua University and retired senior colonel in China's People's Liberation Army. in Africa through the perspective of an African?
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What's the narrative of this relationship?
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We'll see you there. This summer in China, it's not just the temperatures that are heating up, it's consumer spending.
From Shanghai's cultural coupons for operas and dramas to Wuhan's Football League sports vultures, and even nationwide campaigns blending tourism, culture, and shopping, cities across the country are turning into vibrant hubs of economic activities.
Travel platforms show surging demand for cooler destinations like Xinjiang, Yunnan and Guizhou. while concerts, exhibitions and night markets draw record crowds.
What is driving China's new wave of spending?
Can this surge translate into a long-term shift toward a more consumer-driven economy?
For more on this, my colleague Zhao Yang spoke with Li Luan, assistant professor of economics, Peking University.
So Professor Li Lun, in this summer we are seeing a wave of culture coupons, sports vouchers and tourism promotions across China.
So how significant is this push in stimulating the consumer spending?
Yeah, so in terms of the scale and also the amount of these coupons, it's quite big and also coordinated.
So both at the central government level and also at the local government level.
So according to, for example, the Ministry of Culture and Tourism's you know, survey the national summer campaign basically covers over 4000 theme activities. so it's uh so if you count the events it's over 40 000 events um so this alongside over $570 million in local subsidies.
This is basically a festival of events all over China.
So the initiative includes events like live performances, exhibitions, also shopping festivals, sporting events, also like family friendly trips and nighttime events and so on.
So I think lots of major cities are also, you know, putting the effort like Shanghai, for example, alone plans over 500 million yuan, but that's in the second half of this year, so basically rolling out new coupons in the second half.
And also we're seeing cities and provinces like Shandong, or Wuhan are also rolling out similar measures.
So overall, I think it definitely shows up, it's definitely effective.
For example, if you look at national data, for the first seven months because August data is not available yet.
But for the first seven months, we're seeing the service retail spending is rising 4.2%.
2% year-on-year, so it's basically outpacing the growth for all products.
We're seeing retail sales rise 5.0% year on year for the first half.
We're also seeing a rise in service retail and online retail as well.
And so from traveling, tourism to concerts and football match, what does this tell us about the evolving spending habits of Chinese consumers, especially the younger generation?
Yeah, so we're seeing, for example, people are willing to travel to a city just for, for example, some unique experience, maybe just for one event.
For example, lots of people, my friends especially, are definitely willing to travel very far, for example, from Beijing to Guangdong just to attend a concert.
And China hosted a lot of concert in the first half.
Just for the first quarter alone, China hosted over 500 concerts across the country.
Basically, these concerts are really helpful for local economy because both the restaurants, ride-hailing services, also the travel tickets, These all benefit the economy because, you know, People not only go there to see the concert, they also tend to buy stuff and dine at local restaurants.
And also in terms of the night markets and late night shopping, this also contributes a lot of urban consumption because according to the Ministry of Commerce report, over 60% of urban consumption happens after dark.
So basically, These shopping malls, after people tend to visit the shopping malls before or after the concert, they also bring a lot of consumption after the event. so in terms of for example other sporting events uh as you mentioned the puppet shows and and so on so so because of the you know traveling is becoming has become much cheaper in China through the high-speed rail.
So people are much more willing to travel a longer distance to attend an event or to fuel an experience that they're interested in.
So this is definitely a new trend that we're observing.
And you mentioned the night economy. So do you think the night economy reflects the changing social habits, especially among the younger generations?
Yes, I think definitely so. Because the younger generation, they're much more lively in the In the nighttime, they also like to experience new goods and new experiences.
I think it definitely reflects a trend which is, know youth centric basically so there's also a social aspect of it because when you go to a city or go to an experience you kind of you know, take pictures and share it to your social network.
So basically these are also, you know, potentially attracts more youth, more of their friends to visit the same city.
So this could, for example, lead to exponential growth. in terms of the popularity of the target destination.
And from bubble tea to blind boxes, China's Generation Z has a remarkable ability to turn everyday pleasure into the billionaire markets.
So how do you look at that? For example, Popmas, Labubu, the blind box strategy has been quite successful.
So what does that tell us? Yeah, Palmbark is definitely a success story that we need to pay attention to.
So both, as you mentioned, a blind box, it provides scarcity, it provides a surprise value, emotional value to these young consumers.
They are quite successful if you look at their revenue.
Basically, for the first half, they have a 200% growth in their revenue. almost 400 percent growth in their net profit.
La Boubou alone, this one intellectual property contribute to around 5 billion yuan in terms of sales, which is definitely huge.
And over 40% of sales is overseas. So basically meaning that this IP is having common values across the world, not only in China.
So the takeaway or the success stories for other consumer brands is that I don't think Right now, for a growth of a successful company, providing a good product alone is is sufficient because in Labubu or in Potmar's story, it's both the intellectual property, the product, but also experience. also sales because you can buy it in the vending machine like you buy a can of soda, you can buy in stores, or you can buy in shopping marks. um so it basically you need to combine all of all of this the power in marketing the power in intellectual property and also bringing consumers experience and all of this together and help a company or consumer brand better serve the growing needs of Gen Z.
And as you mentioned earlier, local governments are rolling out the consumption vouchers and the central government is also providing the subsidies on consumer loans for the first time.
So how effective are these tools in unleashing the spending power and Will this momentum continue into the second half of the year?
Yes. So we are seeing both the local government vouchers and also central government measures This measure is on top of the current measure, which is the trading subsidy.
The trading subsidy has been widely successful if you look at, for example, categories like household appliances, there's a 30% growth in the first half of 2025, which is huge.
So in terms of the new interest subsidies, I think the main point of that is allowing consumers to borrow at a lower cost.
And this is especially helpful when it comes to expenses for a trip or a concert because Most of the time, the consumers need to pay a big amount upfront and then gradually pay off whatever they're old.
So if the government is funding the interest subsidy, it basically lowers the borrowing cost without squeezing too much of the bank margins.
And this allow consumers to borrow more boldly and to attend the events that they otherwise don't think they can afford.
So in terms of whether this growth momentum can continue for the second half, I think a lot of measures more vouchers, more events, and also the new loan interest subsidy are all basically queued up for the second half.
So there are lots of policy that are yet to be implemented as well.
So I think these all provides confidence for the growth in the second half.
But in terms of, we also need to watch some of the headwinds, for example, the tariff, but overall, At the end of the day, because we have pretty stable and sustainable income growth, our job market is pretty stable.
The unemployment is at 5%. And also there's a bunch of service sector growth as well.
So I'm pretty confident that the momentum, at least staying at around 5% or 5.3%, 5.3% within that range for the second half.
I don't think that's, you know, a too bold, too courageous target to hit.
That's Li Lun, Assistant Professor of Economics with Peking University.
That's all we have for this edition of World Today.
A recap of today's headlines. South Korean president visits the U.S. while sending a special envoy to China to seek normalization of battle.
China will showcase advanced military equipment, many for the first time to commemorate 80 years since the Second World War. and summer spending in China surges.
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