Daily news and analysis.
We keep you informed and inspired.
This is World Today.
Hello and welcome to World Today.
I'm Ding Hen in Beijing.
Coming up, Xi Jinping calls on China and Germany to be reliable, innovative and cultural partners.
US-Iran nuclear talks resume in the city of Geneva against the backdrop of military threat.
Modi is making a trip to Israel in a test of India's priorities in the Middle East.
The International Monetary Fund is urging the United States to change course on economic policy.
To listen to this episode again or to catch up on our previous episodes.
You can download our podcast by searching World Today.
First up.
Chinese President Xi Jinping has called for stronger China-Germany ties during a meeting with German Chancellor Friedrich Merz in Beijing.
The Chinese leader emphasized the need for strategic communication, mutual trust and pragmatic policies to advance bilateral ties amid global turbulence.
Xi Jinping has also put forward three suggestions for the further development of bilateral ties, saying the two countries should be reliable partners that support each other, as well as innovative partners and cultural partners.
Mads noted that German businesses attach great importance to the Chinese market and are seeking expanded cooperation for mutual benefit.
He said that, amid global uncertainty and turbulence, Germany and China share a common responsibility to address common challenges, support free trade and oppose protectionism.
So joining us now on the line is Professor Cui Hongjian from the Academy of Regional and Global Governance, Beijing Foreign Studies University.
So thank you very much for joining us today, Professor Cui Hongjian.
According to a joint statement, China and Germany agree that mutual respect, mutual benefit, open dialogue and jointly tackling common challenges should be the fundamental guiding principles for bilateral relations.
What do you make of the new momentum that the German Chancellor's visit has injected into the relations?
Before his visit to China, Chancellor Merz proposed a kind of effort from the German side to they calibrate relations with China.
So, as we know, the very big issue for bilateral relations between China and Germany is how could both sides to restart the process to when the, you know, stable and sustainable development?
As we understand, for the past years some German public opinion had been discussing that if it's possible to change, you know, position from German side towards China, especially to challenge this all-round strategic partnership with China.
So I think at this moment, during the visit of Chancellor Merz, both to countries and both to leaders, They confirm structure of all around strategic partnership between two countries.
I think that could be two direction or two new momentum to support the China-German relations is one of them.
We need to go back to a normal track, which means that we need to support a comprehensive and a more constructive relations between China and Germany.
On the other direction is both the countries need to face new reality and they need to find out some more momentum, especially for economical cooperation, by dealing with some divergences or even frications.
So I think sure this visit by the chancellor to China injected some new momentum for this bilateral relations.
Dan, how do you understand President Xi Jinping's suggestion calling on China and Germany to be reliable, innovative and cultural partners?
President Xi's call to the German side.
I think it's trying to provide some more of some posted and constructive direction for these observations.
As we know, for the time being some German public opinion has been suspecting partnership with China and it's looking for some more reliable partner, even
But according to China's perspective, always China played an active and also responsible role as a partner with Germany.
So to become a reliable partner certainly could be a very, very important issue to promote the mutual trust between two countries.
And how about this innovative partner?
I think, according to China's perspective, not only we need to continue this very good tradition of cooperation between China and Germany, and we also need to keep.
We need also to keep a pass with the times, especially when we are facing huge changes geoeconomically and geopolitically.
So, to find some new solutions for any kind of questions or challenges, i think could be the context of the innovative partners between two countries.
And finally yes, culture and the people to people contact could be very, very important and also indispensable fundament for this long time exchange between two countries, between two people and two societies.
In terms of the economic and trade relationship between China and Germany.
Of course, I mean, each side has its own expectations as well as concerns.
For example, Germany is concerned about over-dependence and unbalanced trade, while China is concerned about over-securitization of economic and trade issues.
So Professor, what do you make of the meaning of openly acknowledging those concerns in the joint statement between the two sides?
Also, you know, recently German side raised the issue that German foreign policy could be in the principle of practical realness.
Which means that the German side will try to address some issues, even difficult issues on the table when you talk about China.
But I think that for China we are also very, very serious and pragmatic to deal with any questions in relations with Germany.
Of course, I think that at this moment, once both the countries focus on the strategic partnership, it will create a favorable environment for any kind of discussion of difficult issues.
So, no matter what happens for these relations between China and Germany, I think once we try to put every difficult issue on the table and then we can open a serious discussion.
Undoubtedly, it will be a very, very important condition to promote the mutual trust.
And then, once we keep all of these discussions in the environment of cooperation, it will be expected that we can find common solutions for common challenges.
Apart from Beijing, Chancellor Merz has also visited Hangzhou this time, which is home to several major Chinese tech companies like DeepSeek and e-commerce giant Alibaba, you name it.
So, Professor Cui, how do you assess the space for China-Germany cooperation in emerging tech fields?
Not only.
I think the Chancellor Merz visited China, not only the first visit after he became the Chancellor in Germany.
I think that it's important for Chancellor Merz to have this journey to China of knowledge and of the process of learning.
Also in recent years the Chinese development of some technology, especially AI or some other, give some shock to German industry.
And to a large degree it has been regarded as a kind of competition to traditional manufacturing of Germany.
But frankly, I think that once Germany tries to take the step to follow the tendencies of technological and economic development, I think it's very necessary for german side to realize that there will be some space and also necessities for china germany corporation in emerging technical fields especially as we know on some traditional areas or sectors in germany like a car making industry once there will be some more cooperation or even more innovative cooperation between China and Germany.
I think there will be some maybe new supportive momentum or some UN technological injection to help the upgrading German industry.
So I think once German side keep it serious and also frankly, I mean, second knowledge.
So I think it will give some more space. for any further cooperation between two countries.
Now digging deeper into a relevant field we know.
Earlier this month, Germany launched a major artificial intelligence project called Industrial AI Cloud to cut its reliance on US providers of high-performance computing and data processing.
The move is largely seen as helping Europe to control its own artificial intelligence future.
In the meantime, it's interesting to note that in Hangzhou, Chancellor Merz has visited this AI-powered humanoid robot maker, Unitree.
So at a time when humanoid robots seem to be fundamentally transforming our factory floors.
What do you think could be the future China-Germany relations in the area of say, industrial AI and smart manufacturing?
In recent years, most of the European countries, including Germany, felt a lot of pressure of competition from both China and the US in the AI area.
Especially last year, not only Germany and also European Union launched a lot of strategy to support kind of independent development in AI areas.
But I think that yes, on one side, to have some more independent development in AI or some other new advanced areas could be very necessary for its strategic autonomy.
But at the same time to keep the international cooperation, especially to cooperate with China as a reliable partner.
I think could be a more rational option for Germany and the European Union to develop their AI and other smarter manufacturing.
Especially, as we mentioned before, For some traditional areas or sectors in Germany, like car making or some other.
Once there will be some complementary cooperation between China and Germany, undoubtedly it will provide more favorable conditions or even technological advantages to help the transformation of traditional sectors in Germany.
So I think that AI areas could be another very, very important area to showcase.
How could China and Germany?
We can keep the cooperation as a principle.
And at the same time we can try to transfer more and more relying competition into a more effective cooperation.
In a bigger picture sense.
Why, do you think, against the backdrop of global uncertainty or even turbulence, more and more Western countries are nowadays choosing to cooperate with China in a more pragmatic manner?
Yes, I think that the chance of much visit to China has been an important part for the past months of the visit by some countries, by the western economies leader and especially some middle power countries leader.
So I think it's a showcase that firstly, China is trying to insist on the free trade and the open economy principle or commitment.
It attracted a lot for those economies to find out some more opportunity of cooperation with China.
And then secondly, also in the recent years very, very huge challenges from the geopolitical tensions and even the competitions between major players in the world.
But undoubtedly, China always plays a stable zone to support the reform of the global governance.
So I think the Chinese stability and the consistent policy of China undoubtedly attracted a lot to this Western economy and especially the middle power countries.
So I think that it's not from a kind of, I mean, wailing, but mostly it's from a common challenge.
It will give some continual, you know attraction to these countries to look for more exchange, dialogue and even cooperation with China in future.
Thank you very much for joining us.
Professor Cui Hongjian from the Academy of Regional and Global Governance, Beijing Foreign Studies University.
Coming up, U.S.-Iran nuclear talks resume in Geneva against the backdrop of military threat.
This is World Today.
Stay tuned.
Welcome.
I am Chu Chu Zhang.
Deputy Director at the Center for Middle Eastern Studies at Fudan University.
On the World Today program.
We will dive beyond the headlines to uncover the stories, trends and impacts that connect states across the globe.
Join me on World Today.
You are listening to World Today.
I'm Ding Hen in Beijing.
Iranian Foreign Minister, Saeed Abbas Arachi, is in Geneva for a new round of indirect nuclear talks with the United States.
The Iranian top diplomat has outlined Tehran's position on its nuclear program and the lifting of US sanctions, saying progress would depend on the other side's seriousness and avoiding contradictory actions and statements.
The latest round of negotiations comes amid heightened tensions following a US military buildup in West Asia.
So joining us now on the line is Professor Wang Jing from Northwest University in Xi'an, China.
Thank you very much for joining us.
Hi, thank you.
Nice to hear from you, and also thanks for having me.
Yeah, so we understand.
In the negotiations that have been held so far, the United States has pushed to halt Iran's enrichment of uranium entirely, as well as try to address Tehran's ballistic missile program and its alliance with other regional forces.
But why do you think Iran has maintained that the talks, the negotiations must remain focused only on nuclear issues?
Well, I think, from Iran's perspective, they believe that missile capability and its original policies are their internal affairs, rather than the affairs that could be brought to the negotiation table with anybody else, particularly by the United States.
Also, if the negotiation agenda includes the issues such as, as we mentioned, the ballistic missile capabilities and regional affairs, it would be very easy for the United States to direct this kind of negotiation towards the very comprehensive or the very multidimensional talks, rather than the very, very concrete talks over the Iran nuclear issue, which is the most highly observed and the most pressing issue for the original countries and particularly inside the relations between United States and Iran.
So I think that's why Iran always maintained that the talks should be concentrated on the Iran nuclear issue.
Well, other issues are maybe important, but from Iran's perspective, then these issues should talk by the other ways, under other circumstances and particularly with other partners, rather than with the United States, particularly when the United States' pressure against Iran is growing.
Even according to the assessments by US intelligence agencies and the IAEA, for example, Iran has not restarted a nuclear weapons program yet, and Iran's uranium purity is still far away from normal, a weapons grade levels.
So is it fair for Iran that Washington is exerting maximum pressure to try to constrain the country's nuclear program?
Well, I don't think it's fair, of course.
From Iran's perspective, it's also not fair.
But maybe from the perspective of the United States, and maybe from even the perspective of Israel and maybe some of the Western countries, they might believe, at least to some extent, that these measures are so-called fair or so-called highly necessary.
Uh, because we're actually talking about the different uh kind of the very conflicting uh ideas on the conflicting understandings over the nuclear capabilities because uh, from iran and, i think, from the majority uh states inside the international community, they believe that actually iran very closely observe the terms of the Iran nuclear deal signed in 2015.
And also Iran's nuclear capability is far from making the nuclear bombs.
And also Iran has already repeatedly stressed that they would not try to develop nuclear bomb and they have no intention to do that.
So maybe from the international communities, majority countries, The idea that this kind of the Iran nuclear capabilities, nuclear weaponry capability, shouldn't be a very worried issue.
But maybe from the United States, and particularly from Israel perspective, they think that Iran is actually lying and they are trying to cover something.
And the IAEA's cooperation let's be frank has already been suspended with Iran for more than a year, for actually near one year.
So we don't know actually what kind of level that Iran's nuclear capability is now reached.
So, from Israel and the United States' perspective, that Iran's nuclear capability shouldn't be overly underestimated and should be so-called very, very scientifically understood.
So that's why I think we're talking about the different and the conflicting ideas.
That's why this makes things much more difficult to be resolved in the short term.
I see.
So Iran has warned that if an American attack happens, then all US military bases in the Middle East will be considered by Tehran as legitimate targets, putting tens of thousands of American service members at risk.
So does Iran have the actual capability to strike any U.S. military base in the region?
Of course.
I think Iran has a very powerful capability to attack any United States bases in the Middle East and also to attack the United States military presence in this region.
We're talking about two things.
On the one hand, it's the United States military bases, their bases located, as we can see from the map if we search on the internet, that their bases are located actually around iran, i mean in the some of the gulf arab states and also in many other middle eastern countries.
So iran's capability, particularly their missile capability, the missile range could reach the United States military bases in nearly all the Middle Eastern countries.
So they have the capability to do that.
And also, on the other hand, the United States has now one aircraft carrier group near the Iranian ocean, and also the other one is on the way of coming.
So Iran also has the capability to utilize their missile to attack them directly.
So that's why I think Iran has the very strong capabilities to counterattack once the United States decided to strike Iran.
Now some people say it's not clear whether limited US strikes would work if the aim of potential military action is to pressure Iran to make concessions in nuclear talks.
What is your take on this?
Do you see any signs that Washington is now planning for a larger, longer military campaign against Iran, including its possible consequences like potential for chaos in Iran and regional ramifications?
Yes, I think I totally agree that actually we are actually talking about the very growing tension in this region.
And if the United States utilize the military way, it will lead to the region into much more dangerous scenario.
But I don't think that United States... hopes to take the military strikes against Iran as a goal.
I think it's just to take the military away as a very channel to force Iran to make concessions on the negotiation table, preferred United States.
So that's why military strikes or military pressure from the United States against Iran is just a tool to force Iran to make concessions, while Iran's making concessions on the negotiation table are the very ultimate goal of the United States.
So that's why I think the talks will continue and the mediation efforts from the regional countries will continue to bring both sides closer for the possible comprehensive or the temporary review that could decrease the tension in this region and also find the peace opportunities to bring the stability back to this region.
And, in this particular regard, regarding diplomacy, we must pay tribute to the diplomats from Oman, for example.
But thank you very much for joining us, Professor Wang Jing from Northwest University in Xi'an, China.
You're listening to World Today.
I'm Dinghan in Beijing.
We'll be back after a very short break.
Welcome.
I'm Elav Elad, economics professor and member of the Data Science and AI Center at New York University, Shanghai.
On the World Today program, you can find in-depth and impartial insight, as well as critical commentary, on key trends in the Chinese economy, financial technology, business and blockchain.
To prepare for the world tomorrow, join me on World Today.
You're back with World Today, I'm Ding Han in Beijing.
Indian Prime Minister, Narendra Modi, is on a two-day trip to Israel to strengthen security and economic cooperation between the two countries.
In a speech to the Israel's parliament, the Indian leader expressed deep condolences for the death and loss of lives in the Hamas attack on October 7 2023.
He didn't mention the loss of Palestinian life in the war in Gaza that followed the attack.
Modi also voiced the support for Israel's normalization of ties with other Arabic countries in the region.
He also affirmed his backing of U.S.
President Donald Trump's Gaza peace plan.
Israeli Prime Minister, Benjamin Netanyahu, has called Modi a great friend of Israel and a great champion of the Israel-India alliance.
So joining us now on the line is Gao Xirui, political science PhD candidate from the University of Hong Kong.
Thank you very much for joining us.
Thank you.
So, of course, no one needs a reminder about this very fact that Israel has seen relations with many of its allies, including Western countries, worsen since the war in Gaza began.
So is Modi's visit this time likely to give Israel a boost of international support and standing?
Thank you.
So yes, I do think Modi's visit would provide Israel with an important diplomatic boost, but it's more symbolic and intangible instead of tangible support.
So since the Gaza war has begun, You know, Israel has facing mounting criticism across Europe, the global south and even within the segments of American politics.
So several Western governments have faced domestic pressure over humanitarian concerns.
In that context, a high-profile visit by the prime minister of India, of course, would carry some symbolic weight.
Because Israel and India could leverage the identity of India to boost some international support.
For example, India is not a marginal actor.
It's a G20 member.
It's a leader in the global south.
It has been labeled as a democracy.
So they could leverage these identities to support Israel.
So that's that.
This is not about India replacing Israel's Western allies or fundamentally shifting the global opinion, but rather it carries some symbolic weight to Israel.
So, India has historically supported the Palestinians.
Actually, New Delhi didn't establish full diplomatic ties with Israel until 1992.
So, with that in mind, why do you think, Under Prime Minister Narendra Modi, the ties between Israel and India have grown so much closer?
We know in 2017, Modi became the first Indian Prime Minister to visit Israel.
Yes.
So what is significant is that Modi is the first Indian prime minister that actually changed India's low profile policy towards Israel, meaning that even if after 1992 India has established diplomatic ties with Israel, they always keep a low profile until Modi.
So there are three main reasons.
The first is that the prime ministers who used to keep low profile with Israel are usually the Congress parties.
But now Modi, the BJP has winning all over India and they have a different stance, if not less moderate, towards the Muslim population in their own country.
So first, they have less concern about domestic backlash on supporting Israel, compared to Congress, who still rely on the Muslim voters.
The second is that the security cooperation has become more central.
Israel is one of India's top defense suppliers, and now India is the largest buyer of Israeli weapons.
And most recently, they just agreed on an 86 billion US dollar deal including buying guidance bombs, air-to-surface missiles and etc.
Missile systems.
So, last but not least, the two countries, especially Modi and Israel leader Netanyahu.
They found common ground on consolidating their control in some sensitive regions.
So they cooperate on missile defense systems drones, surveillance technology and counterterrorism in both Israel and India.
And India wants to learn from this experience and transfer into some leverage in dealing with Kashmir.
So are there signs that Mr Modi is taking care of the feelings and concerns of other Arab countries in the region when showing support to Israel?
Yes, I think.
First of all, India wants to emphasize that it's not a zero-sum way of dealing ties with Israel and the Arab countries in the region.
That's their thought.
And the second is that they want to dehyphenate, meaning decoupling their policy with Israel policy, to decouple their Israel policy with their Palestinian and Arab country policy.
So they want to balance between the two sides instead of just waiting themselves on just one side.
So they have also invested heavily in relations with UAE and Qatar.
So millions of Indian workers now live in Gulf regions and it's a very important part of India's economy.
So what they do is they try to separate the two lines of diplomacy.
I take your point.
So Modi's visit is coming at a time of heightened regional tensions.
A key concern, of course, is regarding U.S.
President Donald Trump's threat of military action against Iran itself, including this fear that any escalation could trigger a wider regional conflict.
And as a matter of fact, actually, India has also maintained strong ties with Iran as well.
So what do you think is really at stake for Mr Modi and India when we talk about regional tensions in the Middle East?
Thank you.
So first, I think India...
If tensions escalate, India would face a very complex dilemma.
So wider conflict between US and Iran in the region would of course threaten its oil supplies and disrupt its trade routes and potentially endanger larger Indian diaspora.
So that's the key Indian stakes in this region.
Um what they try to do is um they want to um lower the possible diplomatic pressure they would face.
So, that being said, if um they have developed closer ties with the us and israel, while maintaining its ties with iran, the india hope that they could?
Um further develop their diplomatic asset on both sides instead of just leaning on one side.
So they want to deepen defense cooperation without triggering and irritating the Iranians.
But they also want to keep their ties with Iranians so that they would not interfere in the US-Iran tension.
Thank you very much for joining us and for your analysis.
Gao Xirui, political science PhD candidate from the University of Hong Kong.
Coming up, the International Monetary Fund is urging the U.S. to change course on economic policy.
This is World Today.
We'll be back.
Hello, I am Dr Digby James Ren, a political analyst and international relations scholar specializing in China area studies.
World Today offers unmatched in-depth perspectives on China's politics economics business, technology and society.
World Today's team of reporters and contributors provides valuable information from all of the world's major economies.
I hope you can join me on World Today for the very best insights and news from China, on China, and help to build a better understanding of China's role in the world today.
You are listening to World Today.
I'm Ding Hen in Beijing.
The International Monetary Fund is urging the United States to rein in the country's growing fiscal deficit, saying it is the most effective way to narrow trade imbalances.
IMF Managing Director, Kristalina Georgieva, says the US current account gap is too big, estimating that it could reach some 4 of the GDP in the near term.
The fund expects U.S. growth to remain resilient over the course of this year.
However, it is warning that public debt could climb to 140 of GDP by 2031, posing a major risk to both the US and the global economy.
For more.
My colleague Song Ruixin spoke with Professor Zhang Gong from the University of International Business and Economics.
Professor Gong, for our audiences who may not follow economics closely, can you briefly explain how the IMF arrives at its debt burden projections?
Okay.
First of all, thank you very much for having me.
Well, the IMF does a sort of a country study every year for many countries.
And the United States, even being a major founding member of IMF, is no exception to that.
So the IMF looks at the overall healthiness of the U.S. economy.
And one important aspect, of course, is with respect to the fiscal side the famous US federal deficit and its accumulated debt burden on the economy.
And there are several measures of measuring that burden.
And typically people, we economists use debt to GDP ratio to measure that.
I have a little bit of a different feeling for this, a different opinion about this, but we'll talk about this later.
Anyway, so yeah.
So I think it's a normal practice for the IMF to do something like for the US economy.
Okay.
So, if I understand this correctly, this isn't just about today's spending, but also longer term structural assumptions built into the model.
Then why is the debt-to-GDP ratio projected to keep rising?
Well, this has to do with the every year U.S. federal budget deficit.
In other words, the U.S. federal government is spending more than it collects from taxes.
The excess part has to be financed by issuing debt, and that adds to the accumulated debt the United States federal government has to service.
So as that burden increases as a percentage of the GDP which in this case is actually larger than the size of the GDP, the interest payment, the total interest payments, also goes up.
Today, a large portion of the federal budget actually goes to servicing the debt, meaning paying for these interests.
So at a certain point, this is not going to be sustainable if this debt keeps growing, particularly if it grows faster than a pace of the size of economy expands as the GDP increases.
So at some point, this is going to break down.
So what is the core goal of U.S. debt management right now?
Well, if you look at President Trump's fiscal policy, it's my impression that he's going to keep maintaining pretty much the same expenditure level is not increasing.
I mean he's cutting some expenses in some aspects, particularly those areas that the Democrats like and the public don't like.
This is what Elon Musk's work is all about when President Trump first took office.
But he's also expanding a lot on other areas.
For example, on defense, he's already been saying to propose almost like a 50 of defense expenditures to something like 15 trillion.
I mean, that's a huge amount.
So my expectation is that the federal budget is going to continue to expand.
Oh, I forgot to mention that he also offers some tax decreases, actually, tax reduction.
So on one hand, he's collecting less.
On the other hand, he's expanding more.
So I might forecast for the US federal deficit is that it's going to continue to expand.
So, as a matter of fact, I think the debt to GDP ratio is actually not the best measure in my view, because GDP is something that is not 100 used to pay for the debt right.
I think probably more relevant measure would be debt to tax revenue ratio.
In other words, you look at the size of the debt compared to what you're collecting as a government ratio from the tax revenues.
I think that's more of an accurate measure of your cash flow situation.
And that's not a very good indicator for the U.S. economy right now.
One-fourth of the federal budget right now is to service the debt, is to pay interest.
As a matter of fact, last year, I think it's the first time that the interest payment is actually larger than defense expenditure.
Neil Ferguson, the American historian, whom I have a lot of arguments with, by the way.
I disagree a lot of things with him.
Nevertheless, one thing he said is that when a country's interest payments on debt exceeds that of defense expenditures, that's the moment when the empire starts to decline.
And he refers to the Roman Empire in history.
So I think this debt-to-GDP ratio at current level is very high.
IMF report is saying that it's going to exceed 100%.
And that's very high.
I mean, there are only a few countries in the world that has this ratio above 100%.
Japan is the highest.
I think it's like 120-something, I remember.
So, you know, this is a path that is very precarious in my view.
I think the United States federal government has to try to at least balance the budget and try to reduce the debt burden.
Well, it looks like not everyone agrees on the solution, though.
I see the IMF's natural talk explicitly states the best way to reduce the current account deficit is to reduce the current physical deficit.
Then the Trump administration, however, is doing another thing.
So, as an economist, can you explain the theoretical mechanism behind each approach and why the IMF believes it is the right prescription?
Well, US government has a trade deficit problem.
The trade deficit has a lot to do with the fiscal deficit.
In my view, it is somehow induced by the fiscal deficit.
The low savings rate, is overall is a big driver of the trade deficit.
So I think you know this is the trade deficit and the fiscal deficit is something highly highly correlated.
You know, I think the United States needs a comprehensive policy to solve both problems.
Otherwise, it's not going to work.
So I think President Trump's policy is entirely to the contrary of what the government is trying to achieve.
It has brought up a series of adverse effects on the U.S. economy, on consumerist welfare.
So I think this is something that I think the IMF has strong recommendations, strong opinions about.
So is that the reason why the IMF prioritized physical adjustment?
I think that's part of the reason.
The way the federal government's debt is going is not going to be sustainable.
I think it's particularly susceptible to the interest rate swings.
It's going to increase the burden of servicing this debt and make the federal budgets deep into negative territory.
So I think the worsening of the fiscal situation worsens the environment.
To raise that, to raise funding.
So I think over the long run, give it a couple of more years.
I think it's going to be a serious problem.
Let me press you slightly on that.
The IMF says the risk of a US default is low, but financial stability risks are rising.
So what does that distinction actually mean?
Well, when the federal government has a cash flow problem, there's a couple of ways of doing this.
One, of course, is to essentially print more money.
And by that, it essentially introduces an inflationary pressure on the US economy.
The dollar debases, depreciates, and there will be implication for the rest of the world.
Dollar not being stable is going to introduce a lot of problems for many economists, especially those economists that borrow heavily very vulnerable current account balance of payments problem.
The other way, of course, is you default.
And I think this is not even an impossible scenario.
An elastic government is not going to default across the board.
It's going to default, in my view, selectively if the US federal government really runs into a problem like this.
I mean there's already a proposal from, I think, an economist early in the year, I think the first year when Trump came to power.
He's already floating an idea about essentially, in my view, that's de facto defaulting on foreign creditors.
I think his idea is to tax these foreign creditors on their interest.
You know, it's the interest payments US governments make to these foreign creditors.
Introduce taxes, for example, on those incomes.
And this is just a way, in my view, of defaulting on debt owed to foreign creditors.
So I think at some point, these things are not unfathomable, right?
So, you know, that's going to introduce a huge blow to the global economy.
So finally, Professor Gong, is the US facing a gradual physical erosion or are we kind of approaching a potential tipping point where markets should suddenly reassess US risk?
Yeah, absolutely.
You know, the way the financial market works is that if it is a crisis, it erupts overnight.
You know, it's like a volcano erupting.
It just keeps accumulating.
At some point, it's going to explode.
Honestly, I believe that tipping point is still many years away.
But certainly, I think the way it's going right now, it's moving in that direction.
I think that is what's very, very, very dangerous.
And I think the bottom line is that I'm not in agreement with President Trump's policy to address that problem.
He's just not working in that direction to address that problem.
Professor Zhang Gong from the University of International Business and Economics speaking with my colleague Song Ruixin.
This is World Today.
Stay tuned.
You are listening to World Today.
I'm Ding Hen in Beijing.
The French government has survived two no-confidence motions in the parliament.
The motions were filed by a far-right party and a far-left party after the French government adopted a new energy law by decree earlier this month.
The failed vote have given French Prime Minister Sebastien Le Corneau some breathing room after several attempts to unseat his minority government.
Earlier this month, France set out a long-delayed energy strategy that scaled back the country's renewable energy goals and reversed a mandate to shut down 14 nuclear reactors.
The law has triggered fierce debate among French lawmakers, pitting support for renewable energy subsidies against those that advocate for financing nuclear energy.
So for more.
Joining us now on the line is Dr Joseph Syracusa, professor of global futures with Curtin University.
Thank you very much for joining us.
Thank you.
So some say the politics in France remain unsettled, despite the government's survival of no-confidence votes.
What is your take on this?
Well, yeah, it is.
It's sort of an unstable government.
And hopefully the prime minister and Macron government can move forward in a more stable fashion.
But I doubt that's true.
This is the second series of censures or no-confidence votes.
They had to do it or there was two votes no confidence votes, I think over the budget earlier in February.
Now, this one over the energy policy.
The party on, the far right party, which is likely to be in power next time around.
It's becoming more acceptable and the far left party have decided they don't like the government's policy.
They don't like the way it was done.
It was done by decree, sort of like Donald Trump trying to do everything by executive action instead of working through the legislature.
Well, they don't like this, and they see this policy as threatening to the French public.
That is, they think the French public is going to have to pay for this. sooner or later.
And, as you suggested in your opening remarks, this also represents a reversal on 14 major nuclear reactors.
There was a time before Fukushima when France and Germany most of their electrical grid was based on nuclear power plants nuclear energy.
And, of course, after Fukushima and And other things, they decided to get rid of most of these reactors.
Well, the French want a second thought about this.
They want to scale back on solar.
They want to scale back on wind.
They want to have a more balanced policy.
They want to be able to count on something to the year 2035.
And so the far left. and the far right ganged up on the government.
Neither one had enough votes to get through, as a matter of fact.
But it is suggesting a new trend, a new direction in France.
Up until very recently, there was a determination to keep the far right out of government.
But I think the right is starting to look more inevitable.
Uh, then the left.
You know, the government today wants to keep the left out of government, as the people do.
Uh, because this is a great deal of social friction in france.
So it's a very lively situation and one that will say a lot about what happens in the eu, nato and other things.
Yeah, so obviously the politics in France is very divided between supporting renewable energy and supporting nuclear energy.
That's for sure.
And we know the French government is struggling with high public debt or high government debt, which is another major issue over which we are seeing fierce political fights, including no-confidence motions against the government.
So in what ways do you think the high debt of the government has sharpened the political debate regarding what kind of or what category of energy to support?
Well, I think it's causing a rethink about nuclear energy.
And keep in mind, too, that without a balanced budget, you can't pay for an army, navy, air force.
You can't pay for various other expenditures.
I mean, nation states have to be able to pay their bills.
You know, not unlike in the United States, when we have inability to pay the budget or pay people salaries.
And so, you know, this is where the debate is taking place.
And, of course, France is experiencing, like a lot of European countries, a populist swing in the mood.
That is the far right.
When I say populist, there's sort of a nationalist populist movement that wants to do a lot of rethinking.
It doesn't regard the pass policies on energy as viable today.
They regard them as so-called woke policies, that is, policies that belong to a different age, that kind of thing.
And keep in mind that the United States is the bellwether here.
You know, Donald Trump has made it very clear he's not interested in wind or solar.
He keeps calling global climate change a hoax.
The United States belongs to no organization that deals with this.
And so the French are having a rethink here.
I mean, if their greatest partner is not interested in global climate change and that is the various technologies to combat it.
And why should they go down that road?
Because they're at variance with the leading power in the world.
So how could a lack of political consensus in Paris affect this country's long-term transformation or long-term shift towards low-carbon green economy?
Well, they'll try to have a balance of sorts, you know, the economy.
The 2035 energy program has allocated so much power coming out of various things.
And so there's going to be more emphasis on nuclear energy that is created by the nuclear power plants, less on wind and solar.
I mean, they're not going to abandon this technology altogether.
And of course, this...
This kind of thinking is going to affect the electric vehicle all over the world.
I mean, if governments aren't doing a thing about climate change, that is, if they're reverting to nuclear energy, maybe they don't care so much about battery-powered automobiles.
So this will have a downscale effect on a lot of other things, too.
Thank you very much for joining us and for your analysis.
Dr. Joseph Syracuse, Professor of Global Futures, West Curtin University in Australia.
That's all the time for this edition of World Today.
A quick recap of today's headline news.
Xi Jinping calls on China and Germany to be reliable, innovative, and cultural partners.
U.S.-Iran nuclear talks resume in the city of Geneva against the backdrop of military threat.
To listen to this episode again or to catch up on our previous episodes.
You can download our podcast by searching for World Today.
I'm Dinghan in Beijing.
Thank you so much for listening.
Bye for now.
