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Overseas banks lift China's 2025 GDP outlook.
What's behind the optimism?
A commemoration marking 80 years since Taiwan's restoration will be held.
What lessons does it hold for cross-strait unity today?
And China overtake the United States.
As Germany's top trading partner was driving this shift in global trade.
Welcome to Road Today, a news program with a different perspective.
I'm Gaena in Beijing.
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Several major banks forecast stronger economic growth for China this year, despite external headwinds.
Investment bank Goldman Sachs has raised its full-year GDP growth forecast for 2025 from 48 to 49, noting that the government's target of around 5 remains largely on track.
Meanwhile, British multinational banks Standard Chartered and Barclays have also raised their full-year growth projections for China in 2025.
The upward revisions come as the Communist Party of China's 20th Central Committee convened its first plenary session this week to chart the country's next five-year plan.
So for more on this, joining us on the line is Joseph Mahoney, Professor of Politics and International Relations at East China Normal University.
Thanks for joining us, Professor.
Thanks for having me.
Professor, we've seen global banks raise their forecasts for China's growth this year, partly because third quarter data came in a bit stronger than expected.
Do these adjustments also reflect a forward-looking assessment of China's policy consistency and market potential, for example?
Absolutely.
I think in the first case, we see international institutions perceiving China's proactive and consistent policy framework as a critical stabilizing force which, in turn, is fueling their long-term competence.
Second, growth revisions are not just about past performance.
They also reflect a strong belief in the future drivers of the Chinese economy.
Now, these include a resilient and expanding domestic demand and a thriving consumer market.
Policies like subsidies for trade-ins of consumer goods have successfully boosted sales at home appliances, communications equipment and furniture.
Meanwhile, we've seen a number of new consumption schemes, like the Jiangsu Super League, which are creating new growth avenues in culture, tourism and catering.
Another key driver, of course, is innovation and industrial upgrading breakthroughs in fields like artificial intelligence, EVs and robots.
And these are forcing international investors to reevaluate the competitiveness of Chinese companies and certainly the growth of new quality productive forces and a rise in high-tech manufacturing.
These are seen as fundamental to China's long-term economic vitality and resilience.
So yes, These revised forecasts are indeed a composite mode of confidence.
They consider not only the solid economic data that you noted from the first three quarters but, more importantly, the consistency of policymaking and the vast potential in China's market and technological innovation.
Professor, could you please elaborate on that?
When assessing China's economy?
Apart from headline GDP growth, what other indicators do you think better reflect the quality and sustainability of the country's development?
Well, there are a number of structural indicators reflecting these quality and sustainability.
These include new engines of growth.
The robust growth in high-tech manufacturing and strategic emerging industries is a direct manifestation of China's focus on developing new quality productive forces.
And we see this, of course, prioritizing technological innovation and advanced manufacturing over the traditional resource-intensive industries.
Similarly, the push to increase the contribution of the total factor productivity, the TFP, which measures the efficiency of all inputs in the production process.
This is also something that we're seeing as an indicator of advanced quality or advanced high quality development proceeding.
Additionally, we've seen green transitions in environmental sustainability initiatives accelerating, with a tremendous focus now on ESG performance, the three pillars of sustainable development.
E for environment.
S for relationships between people and society and G for governance, which focuses on the internal systems practices, controls and procedures.
And of course, we see this both in government, but also in how firms are now operating in China.
So altogether, what we're seeing is more than just greenwashing.
We're seeing substantial renewable energy installation and investor commitment to dual carbon goals, climate resilience and the quality of green governance.
We also have now the China Sustainable Development Index, which is offering a comprehensive alternative to GDP for measuring the economic well-being of people.
And its steady rise indicates progress towards a more balanced, an inclusive growth model aligning, as we will, with the official policy shift towards people-centric development.
But I think there are also a couple other points to note very quickly.
This time last year, what people were really concerned about was the property market.
And although we're still working through that, that has tremendously stabilized.
And I think there's an incredible amount of confidence that this is no longer a substantial drag on the economy.
And finally, I think a lot of people are very confident in China and so much as China has avoided being bullied into bad trade deals by the United States.
And we haven't seen this.
We've seen other countries, like Japan, being pushed into positions that are really going to harm their growth and development over the next several years.
And China has held the line.
And I think this is also contributing to some of the positive reads for the future.
I think that's also why we see the word resilience keeps coming up in reports about China's economy.
Then, Professor, how do you assess China's resilience today?
Well, you know, in 2025, the Chinese economy has demonstrated significant resilience by maintaining stable growth Despite all these global challenges.
This robustness stems from strong macroeconomic policy support, a vibrant and innovative industrial sector and success in diversifying international trade partnerships.
Now what we hear is that analysts, both domestically and internationally, are confident in China's resilience due to again, its solid economic foundations, including China possessing a complete industrial system, modern infrastructure and a large high-quality labor force, which provides a sturdy foundation for the economy to withstand external shocks like we've seen coming from Washington.
Additionally, analysts point to China's vast market potential.
Its massive domestic market with a growing middle class continues to fuel consumption.
In the first three quarters, the contribution of final consumption expenditure to economic growth reached 535.
And we see government policies to expand service consumption and promote trade-ins of consumer goods are further unlocking this potential.
Finally, I think we also see analysts pointing to China's long-term strategic focus.
China is steadfastly promoting high-quality development and the cultivation of new productive forces.
And this long-term strategic focus ensures the economy continues to move above the value chain, enhancing its overall competitiveness and resilience.
Professor, the fourth plenary session of the 20th CPC Central Committee is laying the groundwork for China's next five-year plan.
What parts of the plan should global investors be watching closely, and what kind of core values will boost investors' confidence in China?
Well, you know, I think we're just seeing the communique come out from the meeting and it's going to take us maybe a couple of days to really go through that and analyze it.
Then there'll be other documents that will flow from this.
But I think what we can say is based on the emerging policy direction, capital is likely to flow towards sectors that represent China's strategic priorities.
And we know here, for example, the desire to emphasize being the vanguard of innovation.
Investment will continue to concentrate on the pioneering industries of integrated circuits, AI and biomedicine, which have already demonstrated robust growth.
And we'll see that the policy push under the AI plus initiative and for technological self-reliance in critical areas like semiconductors.
These will make fields that will be particularly attractive for investment.
Additionally, the green economy, China's commitment to ecological civilization and its carbon goals will continue to fuel massive investment in renewable energy, new energy storage and EVs.
The expansion of the carbon market and innovation in green finance will create a new asset class as well as investment vehicles that will be attractive to foreign investors.
And finally, the modernized financial system.
We expect to see plans that will create a more robust, open and transparent capital market.
This will attract capital to the financial sector itself, including opportunities in fintech, digital assets and the modernization of trading venues like the Shanghai Stock Exchange.
Professor, one last question.
With so many uncertainties in the global economy, global financial institutions like the IMF say China plays a key stabilizing role.
How do you see that role showing up in practice, both in Asia and globally, now and over the next five years?
Well, China's role as a stabilizer manifests through its robust economic growth, its deeply integrated supply chains and its commitment to opening up.
These concrete areas provide certainty and resilience to the global economy.
For example, against the backdrop of rising international protectionism, China's clear and continuous policy of opening up provides a rare certainty.
Measures like continuously shortening the negative list for foreign investment and advancing the construction of free trade pilot zones.
Certainly, we have Hainan, the entire island of Hainan, as a free trade port coming online this December.
All of these signal a long-term commitment to integrating with the world economy.
Further.
Many anticipate the 15th Five-Year Plan will be seen by the international community as a tangible opportunity list.
It will further outline the path for China's high-quality development, including fostering new quality productive forces and expanding domestic demand.
Continuing to provide clear guidance and cooperation opportunities for global businesses.
Thanks, Professor, for those in-depth analysis.
That was Joseph Mahoney, Professor of Politics and International Relations at East China Normal University.
This is World Today.
We'll be back.
Hello, I am Dr Digby James Wren, 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've been listening to Road Today.
The Chinese mainland says Taiwan compatriots will be invited to attend a grand gathering marking the 80th anniversary of Taiwan's recovery from Japanese rule, which will be held later this month.
A State Council Taiwan Affairs Office spokesperson says the commemoration also coincides with the 80th anniversary of China's victory in the War of Resistance against Japanese aggression and the World Anti-Fascist War.
Zhu Fenglian noted Taiwan's recovery was a heart-warming victory forged through the sacrifices of the Chinese people, including those from Taiwan.
She said the event aims to unite Chinese people on both sides of the Taiwan Strait and safeguard the achievements of Taiwan's return to the motherland.
So for more on this, let's have Einar Tengen, Senior Fellow at the Center for International Government Innovation and the Chairman of Asian Narratives, Substack.
Thanks for joining us, Einar.
Always a pleasure.
Under the Taiwan Affair Office says Taiwan compatriots will join this month's commemoration of the 80th anniversary of Taiwan's recovery from Japanese rule.
In your view, what message does this send, at a time when the ruling DPP is attempting to distort history and silence the truth?
Well, right now there's a narrative war going on, and it's not going very well for DPP.
The problem is Cheng Li-Wen has been put in charge of KMT and she is in favor and said that she does not like this idea of separatism talk.
She wants to go back to the 1992 consensus.
And she's appealing to a lot.
We're very uncertain about what Trump is doing.
He's offered to hollow out their economy by demanding they ship 50 percent of their chip making facilities to the United States.
So against this backdrop, you have the 80th anniversary.
And quite frankly, Lai Ching-Ti is panicking.
He's trying to outlaw people or prevent people from going to these Events to commemorate which, something which should unite Chinese people, which is getting rid of the fascist Japanese who had invaded and occupied and terrorized China.
I mean, no one can forget what happened in Nanjing and the rape. and that was just part of it.
26 million people from China alone out of 100 million total that were killed were Chinese.
So this is something that should unite it.
But you see the DPP intent on this kind of pushing this narrative that Taiwan is independent and it doesn't mean anything.
So unfortunately, it's a kind of smear on what should be something that brings them together.
Einer, building on that, we know Taiwan's recovery wasn't just a historical moment.
It was a legal and moral outcome of China's hard-won victory against the Japanese aggression.
How should the world understand its legal and historical significance today?
Well, I mean, you had a civil war.
Chinese Communist Party won because they represented the people.
And the Kuomintang lost.
They retreated to Taiwan.
They took a lot of the treasures with them.
They took documents with them, legal documents.
And they basically sat there and they're protected by the seventh fleet of the United States.
So there was no opportunity at that point to bring them back into mainland China as a official part.
It's then in 1973, it was agreed that Taiwan was not a country It was removed from the UN.
And there were three communiqués signed between the US and China indicating that there is only one China.
And since that time unfortunately, different presidents have used Taiwan as a card to try to keep China off balance.
And right now Donald Trump seems to be, at least two days ago, assuring President Xi that he doesn't think anyone's going to invade Taiwan.
But this is making Taiwan extremely nervous.
So at this point, Taiwan is part of China.
It's recognized by the world.
There's only a handful of small countries that haven't recognized that and keep relations with them, but they grow smaller each year.
So at some point, the inevitable course of history is going to see Taiwan come back to China.
The question is, how will these extremists try to push a confrontation by declaring independence, in which case China mainland would be pushed to a situation where they would have to intervene.
Hopefully that will not occur.
We know, the Cairo Declaration, the Postdam Proclamation and the Japanese Instrument of Surrender together form the core basis in international law for Taiwan's return to China.
And, as you said, these documents are interconnected, forming a complete legal chain that clearly stipulates Japan must return the Chinese territories it had seized, with Taiwan and its affiliated islands as the primary objects of restitution.
Speaking of this history, people from Taiwan, as we earlier talked about, fought side by side with the rest of the mainland during the war against the Japanese aggression.
So how would you evaluate their contribution to this shared struggle?
You know, you just said it was a shared struggle.
This was not all one Chinese or a bunch of different Chinese doing something.
These.
These were people who were.
How do you come to terms with a million of your compatriots being killed?
The brutality of what happened.
The fact, even before that, that you had the colonial powers coming in insisting they could sell drugs to China, taking land as concessions when they forced their way, using force of arms to attack and occupy different parts of China under a weakened emperor system.
So there is no other way of looking at this.
And this is what is interesting about the new KMT leader, Cheng Liyuan.
She has made it clear.
She studied at Cambridge. under a professor whose specialty was a Communist Party.
He's an honorary professor at Beidou.
And she saw through him what exactly it was.
There's only one China.
And Unfortunately, you have politics mostly fanned by the United States trying to intercede to use Taiwan as a card.
Aynur, as you said, actually in recent years, the so-called Taiwan independence forces on the island have sought to downplay or even deny the historical fact of Taiwan's recovery.
What's the real political intent behind this rewriting of history, and why is it dangerous?
Well, I mean, I'm sure they feel at some point that they're independent and things like that, but there's nothing to do with it.
I mean, I could feel like I'm Superman.
It doesn't make me Superman.
You have the sad reality that you have people who just arbitrarily have determined that they're somehow not Chinese.
They all have Chinese roots.
There were indigenous people in Taiwan, but those are the people who are putting up these false claims.
It is.
People from the mainland there.
And, you know, to give you an idea, it's just not working.
Now you're seeing the public sentiment shift.
There was a survey 40 percent which has been quite low during all this kind of rhetoric going back and forth.
Now 40 percent realize are saying that they feel connected to China and they do not want any kind of trouble.
They see themselves as Chinese things.
And Chang Lee-Woon has said, look, I want every Taiwanese person to say, first, I am Chinese.
So.
It's coming to a head.
And what you have is the people, the DPP side, who are trying desperately to create an incident.
And especially right now, with Trump on his way to China, they would love to try to figure out some way of claiming that they're the victim, whether in a staged attack or trying to antagonize Chinese officials.
I wouldn't put it past them.
They feel very strongly about this, even though I think most people in the world One last question.
Do you see a shift in how people in Taiwan view their history and identity, as you earlier pointed out, with figures like Chen Lihuan, the new Chinese Kuomintang party chair, openly rejecting the independence narrative and calling for national unity and identity?
Yeah, I do.
And I think, ironically, it's really being pushed by the United States.
I think people have woken up in Taiwan that the United States is not their friend.
Far from it.
The United States is pushing a, an idea that would hollow out the Taiwanese economy, take away their chip shield and basically leave them with nothing.
Remember, Taiwan is Almost.
Some say as much as 80 percent of the economy is directly or indirectly tied to exports.
So they need markets and things like that.
So you have a situation where the economic gravity is very clear, but you have people who are running around saying you know it isn't clear.
I, you know, it could be something else.
Let me suggest something.
But the majority of people understand now that China is not the one who is making them suffer.
It's the United States.
And they do not like being used as a poker chip.
Indeed.
Thanks, Einar, for your insightful analysis.
This is Road Today.
We'll be back after a short break.
You've been listening to World Today with me, Ge'anna, in Beijing.
China has overtaken the United States as Germany's largest trading partner in the first eight months of this year.
According to preliminary data from the German Statistics Office, trade between the two countries reached more than 163 billion euros, slightly above Germany's trade with America.
Higher US tariffs have hit German exports, which fell 7 so far this year and over 20 in August alone.
Meanwhile, imports from China jumped 8%.
So to delve into this, let's have Dr Yao Shujie Chang Kong, Professor of Economics at Chongqing University.
Thanks for joining us, Professor.
Hi.
Professor, data shows China has overtaken the United States as Germany's largest trading partner in the first eight months of this year.
Is this just a short-term trade fluctuation or does it show how naturally complementary the Chinese and European economies have become?
I think in the longer term, China is getting bigger and bigger as the foreign trade partner.
So the overtaking of China as the number one trade partner from the United States with Germany is probably not a short-term issue.
It could be a long-term trend which strongly reflects a lot of complementarity between China and Germany, the two major economies in the world.
You know, Germany is still the biggest economy in Western Europe.
And China is now the largest trading nation in the world, overtaking the United States.
So naturally, I think China overtaking the United States to the biggest trading partner of Germany is just reflecting the resilience and also the strong export driving forces of the Chinese economy.
Of course, I think Germany is still very open and it imports a lot of goods from the rest of the world.
And in this case particularly the first eight months.
Given the complications in the international trade system, Germany still imports strongly from China.
So they strongly indicate that the two countries have lots of things to be complementary in terms of industrial goods, agricultural goods and also intermediate components.
Professor, some analysts argue that Germany's strong import data demonstrates the irreplaceable resilience of Chinese manufacturing in global supply chain.
Do you agree?
What kind of long-term competitiveness does this reveal about China's industrial strength?
Yes, I totally agree in this regard, because China is moving up from the manufacturing industrial ladder, from the low medium level to the medium and higher level.
And Germany certainly is still sitting at the upper end of the industrial chain.
So there are close relationships in terms of the complementarity between the two industrial systems of Germany and China.
So as China gets closer to the technological and manufacturing frontier, I think China is getting more and more complementary with the German industries, because Germany and the United States tend to be a very close trading partner.
They are the most important import and export between the two sides.
Now China step into between the German economy and the US economy, it's getting more complicated.
And China seems to gain a competitive edge in this case of getting closer to be a more integrated part of the industrial system in Germany.
Professor.
Besides China-Germany trade relations, recent news show, Airbus has just launched its second final assembly line in Tianjin, a move that doubles production and connects over 200 Chinese suppliers.
It's more than just a trade.
It's about co-production and shared innovation.
Do you think such deeply integrated cooperation will carry stronger vitality between China and the European Union?
And what kind of strategic benefits does it bring beyond simple commercial gains?
Yes, I'm very pleased to hear the news that Airbus is setting up a second assembly line in Tianjin.
I mean, the first line is still also in Tianjin.
This makes Tianjin become a very strong place for the cooperation between China and also the Airbus, where Germany is a major member of the Airbus consortium.
Airbus is one of the most advanced airplane manufacturers.
Boeing is another strong competitor.
But in the global market I think strong bus, air bus, is getting you know, bigger and bigger and it's more welcoming the Chinese market.
This kind of cooperation is also a reflection of China and Germany, China and the EU.
Now this kind of relationship means that, despite there are lots of trade confessions at the global level, the complementarity and also the co-production cooperation, particularly the innovation in the aerospace industries.
It reflects some sort of scope, a fairly big scope, and also potential vitality between China and Europe, between China and Germany.
But professor, there are still calls in Europe to de-risk and reduce the supply chain dependence on China.
So how do you view such rhetoric?
Again, the backdrop of deepening cooperation.
What should both sides prioritize to keep differences from shaking the foundation of their partnership?
International relationship, especially relationship with multinational companies, is always a complicated issue.
I mean not only between China and EU, but also between EU and the United States, between China and the United States.
Nowadays, the global market is still fully integrated.
I mean international trade, international cooperation in terms of the manufacturing services and so on.
One cannot be totally independent from the others.
The key issue is how can we get the maximum mutual benefit for both sides?
I mean in the Airbus case.
I think China has a huge market.
Airbus have the technological advantage.
So there is an obvious complementarity and mutual benefit.
Some other sectors, such as the microchips, you know semiconductor others, they are also complemented complementality and also competitiveness, competition between the two sides, but also cooperation have some potential benefit also.
So what we need to do is to have a mutual understanding, not only the law and also the regulatory system, but also the culture, the common value and also the long-term view of mutually benefiting each other rather than antagonizing each other.
Especially nowadays, we see about the tariff, the non-tariff value of trade and other conditions, whether it is political, business or economy-wise.
We have to have some sort of mutual understanding.
And I think EU and China maintain a very good dynamic in terms of understanding each other, understand the long-term benefit of cross-border investment and also cross-border innovation and co-production.
As some observers noted, the resilience of China-EU economic ties lies precisely in their ability to move forward amid friction.
Thanks, Professor, for your insightful analysis.
That was Dr. Yao Shujie, Chang Kong Professor of Economics at Chongqing University.
This is World Today.
We'll be back.
Hello, I am Dr Digby James Wren, 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.
At the UN marked its 80th anniversary.
The road faces urgent challenges like climate change, calling for stronger global cooperation.
Earlier this year, Chinese President Xi Jinping has proposed the Global Governance Initiative, or GGI, to promote a fairer international system.
How can you align with the UN's Sustainable Development Goals and support global climate action?
To discuss this.
My colleague Wang Guan spoke with Chauvin Charles Hart, Special Advisor to the UN Secretary General on Climate Action and Just Transition.
Recently, we've had the honor of interviewing Secretary General Guterres during his visit to the SCO in Tianjin.
When I asked him about our climate commitment, Our goal of reaching 1.5 degree Celsius.
He said we're far off track right now, but it is still salvageable.
It can still be managed if countries take actions.
What do you think he means exactly by that?
The 1.5 degree goal is a long term goal.
And science tells us that we need to act urgently to keep this long term goal within reach.
The reality is that the solutions are readily available.
This year also marks the 10th anniversary of the Paris Agreement.
And when we reflect on how far we've come over the course of the last 10 years, there's a lot that the world and the international community should be proud of.
For example, and I'll give a couple examples, solar and wind.
The cost of solar and wind have fallen dramatically over the course of the last 10 years.
The deployment of renewables has skyrocketed by over 250, close to 300%.
Over the course of the last 10 years, investments in renewables have surged.
This year, the International Energy Agency estimates that the investments in clean energy technologies will be double those of fossil fuels.
It is estimated that over 2.2 trillion will be invested in clean energy.
So we've made tremendous strides over the course of the last 10 years.
But the reality is that fossil fuels, for the most part, still dominate energy systems, despite this enormous progress.
So what the Secretary General means is that we really need to use the solutions that are readily available.
What do you think are the biggest hindrances and obstacles keeping us from reaching this 15 degree Celsius target in particular, and our climate and sustainability goals in general?
Well, for some countries, it's political will, right?
We've seen significant or significant backtracking in some countries, but for others, and especially for the developing and emerging economies, it's not an absence of political will.
I was just at the Africa climate summit in Addis.
And I heard African leader after African leader speak about their strong commitment to industrialize, but industrialize in a green and sustainable way.
The big challenge for developing and emerging economies is finance, fair finance, right?
There's lots of finance available out there, but the problem is the cost of finance for developing and emerging economies.
And the renewables revolution is a clear example of how broken the global financial architecture is.
Since Paris, four out of every five dollars invested in clean energy has gone to the advanced economies and China.
The rest of the world is sadly being left behind.
So the reality is just one out of every 5 invested in clean energy since Paris was invested in countries representing two-thirds of the global population.
And take Africa, for example.
Africa has 60 of the world's best solar potential, 30 of the critical energy transition minerals needed for the energy, Yet we have a situation where 600 million people in Africa still lack access to clean energy and Africa only attracted 2 of the global clean energy investment.
And we know what the challenges are.
Many of these countries lack the fiscal space to make these investments.
Many of them have high levels of debt.
But equally important is the high cost of capital.
African countries and developing countries in general have to pay, whether it's debt or equity financing.
The cost of capital in most instances is two to three times higher than it is for the advanced economy. same technology, and the reality is that developing countries really don't, and African countries default on, for the most part, on their debt.
But the broken international financial architecture penalizes developing and emerging economies by imposing higher risk premiums on these economies and therefore increasing the cost of capital.
So we need to find ways of reducing significantly the cost of capital.
A developing country should not have to pay 15 and 20 percent in terms of the cost of capital, when an advanced economy of the same size is paying 2, 3 and 4.
Yeah, exactly.
It's not fair for some countries to perpetuate the debt situation for others.
Do you think somehow by working with China and China's latest global governance initiative, you know potential could be, you know, in those areas of the global south by working closer with China?
The role of China will be absolutely key in really supporting countries to accelerate the pace of the transition and also helping them to address some of the risk associated with the climate crisis.
The reality is that China has invested in clean energy technologies and manufactured and really has the capacity really to provide developing countries with low-cost clean energy options.
And at a time when developing countries have the political will to transition, but the international financial architecture is not supportive of these transitions.
And we've seen some really great examples over the course of the last few years.
Take Pakistan, for example.
The role of China in really ensuring and helping Pakistan to accelerate the pace of its transition.
The rapid deployment of solar technology and battery storage in Pakistan really has been phenomenal.
And if this can be replicated all over the world, including and I will say especially on the continent of Africa where, as I said, just attracted 2 of clean energy investments and where you have these 600 million persons who lack access to electricity.
Eight out of 10 of that.
600 million persons in Africa who lack lack access to electricity are in rural, hard to reach areas.
Right now, you can't build a coal fired power plant or a nuclear plant in those areas.
But solar and battery storage really has the ability to connect the unconnected and provide energy access to hundreds of millions of persons who have previously been unconnected from power in general, let alone union power.
So the role of China will be critical.
That was Xiaowen Charles-Hart, Special Advisor to the UN Secretary General on Climate Action and Just Transition.
The US gross national debt has topped 38 trillion US dollars for the first time, ebullient by 1 trillion US dollars in just 71 days, underscoring deep fiscal challenges amid a government shutdown.
For more.
My colleague Song Ruixin spoke with Professor Zhang Gong from the University of International Business and Economics.
What does this US$38 trillion figure mean for the US economy or even the global economy?
Well, it's a large amount of money.
It's already exceeding, I think it's 120% of America's GDP.
As a matter of fact, the United States spends a trillion dollars a year.
I mean, that's the federal government spending about a trillion dollars a year just to service this debt.
And the projection is that this amount is further going to increase into the future.
I mean, that's a fairly significant of a total federal budget.
And that money is actually exceeding already federal government's expenditure on defense.
Historian Neil Ferguson has a so-called Ferguson law that's what he calls that law.
He's saying that when a country's interest payment is higher than the defense expenditure, that means that the empire is in decline.
That's his rule.
So I think it's kind of a serious number.
And I think the more serious issue is that this situation is even going to get worse.
It's only going to get worse and worse.
So how serious is it, especially compared with other major economies?
The common measure to characterize the seriousness of the central government's debt issue is looking at the the total data percentage of GDP.
But I think this is, first of all, there are many countries having this ratio above 100%.
I mean especially, I think, European countries.
Many European countries see a debt to GDP ratio above 100.
I think the worst is probably Japan.
In my view, the real measure is really looking at the debt payments sorry, the interest payments to service the debt as a percentage of the central government's budget.
Because this is a number or a percentage of the central government's tax revenue.
I think this is a really important number because it's a number that tied to cash flow, right?
Tied to cash flow.
Now I think, if I remember this correctly, I think about a quarter or maybe even 20, 20 or a quarter of the federal government is spent on just servicing the debt.
And that's a huge amount of money, right?
That's a huge amount of money.
So it's becoming even more sensitive to the yields in the bond market, which means that every time the yield in the bond market goes up a little bit, the cost of financing refinancing the debt is getting more and more expensive.
So you're gonna have to pay more interest payments, more interest payments.
It's just gonna get, you know, situation's gonna get worse and worse.
So I think United States situation is not gonna be sustainable.
I won't say not even over the long run.
I think in 10 to 15 years there will be a serious problem concerning the federal government's cash flow.
Is this such an inevitable trend or the result of short-term factors?
This is a long process in the making.
This has been accumulating for many years.
I think of the past presidential administrations.
Only during the Clinton years there was a period of time that the United States government enjoys a budget surplus.
That means that it collects more tax dollars than it spends.
Just very briefly, I think for two or three years.
And each administration has been getting into a deficit situation, which means that the total US debt keeps mounting up to today's number, today's level.
And certainly this is not going to be sustainable.
We all know it's not going to be sustainable.
So something has to be done and it's going to be quite painful. for American people.
We've seen in the past, like the 35-day shutdown in 2018, that political stalemates can cost billions.
So how do such shutdowns add to America's debt challenges today?
Well, I think the issue is that a lot of the government functions are not being done and to make up for that is even going to be more expensive to get it done.
But I think the Trump administration is not so much concerned about federal functions, federal government functions.
He is more interested in firing those left-leaning Democrat federal employees.
I think he's trying to use this opportunity to make the reduction of federal employees more of a permanent thing.
And certainly this is going to be targeting more on the Democrat side.
So I think he's playing hardball.
He has not so much incentivized to strike a bargain with the Democrats in the House and in the Senate.
You know, this is going to be pretty ugly.
Overall, you know, this also imposes a toll on the U.S. economy.
Look at this rapid growth itself.
In just a little over two months, the national debt swelled by 1 trillion US dollars.
Please help us understand why is the debt growing so quickly?
It's because of the interest payments and also there's a cost of raising funds to renew that debt, to roll over that debt.
All of these things cost money and also you know, the interest rate is going down.
That means that the yields can also go down.
It helps a little bit, but I think you know at this kind of a level it's very difficult to reverse this trend.
I think it's entirely impossible. to reverse this trend.
It's probably going to be taking some revolutionary steps to reverse this trend.
I don't see how this can be done politically in the United States right now.
Professor Gong, I'm just wondering how do you usually assess the sustainability of a country's physical policy, especially when we are looking at the US numbers, like debt or even debt to GDP ratio right now, which is currently standing at 124?
What's your assessment?
I usually look at the percentage, the cost of servicing the debt, as a percentage of the government's tax revenue or government's budget.
Again, this is a cash flow problem.
If this number gets very big, I think there's a serious long-term sustainability issue.
Another metric is looking at the overall debt load on average American citizens.
And it's a very large number.
I remember it's like $150,000 per capita right now.
This is a huge number.
I think really there are not many ways of getting around this.
One is increased taxes massively, but this is not something that the Trump administration wants to do.
It's going the opposite direction, actually.
It's trying to reduce taxes or it has to adopt an inflationary policy, essentially letting dollar to depreciate by printing more money to pay off these debts.
So that's also a particularly difficult strategy, because inflation is something that the American people care very much about.
With high inflation, you're not going to be reelected.
That's the hard-learned lesson during the Jimmy Carter's administration.
I think there is some talk, even I smell something from the speeches from several Trump advisors and their message essentially is to treat America's debt discriminatively between domestic and foreign creditors.
I mean, that sends a fairly chilling signal, chilling message, I think.
I mean, that essentially means that U.S. government is now going to honor its obligations.
What about the way forward if current trends continue?
What are the potential economic consequences for, let's say, across the globe?
I think the long-term trend is that the dollar's credibility and the value of dollar is going to tank.
Many foreign governments holding dollar as their sovereign assets, sovereign foreign exchange reserve, would have to be very careful.
Already America's federal government's bond.
The credit rating for that has been decreased by America's own federating agencies amidst the much anger and opposition from the federal government.
But I think these agencies are doing the things they need to do.
They've been honest. look at the risks of federal government defaulting these obligations.
So I think, well, I think in the short run, it's probably not going to explode this issue.
But over the long run.
I think sooner or later.
This is a, This is the time bomb, just ticking there, waiting to be exploded at some point in the future.
That was Professor Zhang Gong.
That's all the time for this edition of World Today.
I'm Ge'Anna in Beijing.
Thank you so much for listening.
Until next time.
