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Chinese Foreign Minister Wang Yi says China will accelerate the implementation of its zero tariff policy for African countries.
China's consumer price rose in December to the highest since February 2023.
And the Iranian government has pledged to address economic concerns despite ongoing challenges.
Welcome to Road Today, a news program with a different perspective.
I'm Keana in Beijing.
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Let's first take a closer look at Chinese Foreign Minister Wang Yi's 2026 Africa tour.
He says China will accelerate the implementation of its zero-tariff policy for African countries.
He made the comment in Lesotho, the final stop of his six-day tour of Africa, which also took him to Ethiopia and Tanzania.
During the trip, Wang held a phone conversation with his South African counterpart, saying China, together with South Africa and other global South nations, are committed to upholding the UN Charter, opposing hegemony and so-called Law of the Jungle practices and defending the legitimate rights of developing countries.
Wang also spoke with the Somali foreign minister, reaffirming China's support for Somalia's sovereignty, unity and territorial integrity.
So for more on this, joining us on the line is Dr. Wang Jing, professor at Northwest University in Xi'an, China.
Thanks for joining us, professor.
It's my great pleasure.
Professor, 2026 marked the 70th anniversary of China-Africa diplomatic relations and Wang Yi continues the 36-year unwavering condition of making Africa his first overseas visit of the year.
With the world facing so much uncertainty, what do you make of the timing and significance of this trip?
Well, I think the timing is very important.
And of course, its meaning is very profound.
Because, as you mentioned China, all China's foreign minister always take the African countries as their first foreign destinations, and this has already been lasted for 36 years.
And it shows that China cherished the very core relations friendship with African countries and expressed our very strong desire to further develop and explore the possibilities of more friendship with the African countries.
And also he looked at these countries that he visited, including Ethiopia Tanzania Lesotho, and also to launch the activities in the African Union establishment.
He shows that China hopes to, on the one hand, with the friendship with our traditional partners, and also, on the other hand, hopes to take the African countries with, a hope that could further lead to the more possibilities of friendship.
And also we cannot forget that this is a very important year that China and African Union countries.
We started this year 2026 as a China-African humanitarian exchange year and this further would lead to more exchanges between the two China and African continents and the people between China and Africa.
Also in this kind of trip.
During the trip he also mentioned a lot of cooperative projects between Tanzania and also between the African Union.
So that's why I think this means that the more profound opportunities will also emerge between the two countries.
So that's why it's meaningful.
It's important not only politically, but also culturally and economically.
This shows that China's strong friendship with African countries will be further enhanced.
Professor, looking at the visit overall, what would you say are the main takeaways, any agreements or initiatives that really stand out to you and are worth sharing with our audiences?
Well, I think it's a very important visit.
And if we're looking at the kind of the agreement signed between China and Wang Yi during his trip, we could see that there were several agreements has already been promised and has already been reached between China and African countries.
And, for example, in the Tanzania and China, maintain that we will further try to help the Tanzania to enhance their railway projects and also try to, for example, to put forward and encourage much more cooperative projects between China and Tanzania.
For example, also in Lesotho And other countries.
We will continue to put forward some smart projects, including the green development, including the digital economy, including other energy cooperation projects.
And also that we cannot forget that China and African countries.
We have already launched many cooperative and China promised to, for example, to give the new privileged tariff policies to African countries and these would help China to further enhance friendship with African states.
So that's why I think, of course, this is a very meaningful and fruitful trip by China.
And also it will pave the way for further solid development of the friendship between the two sides, China and Africa.
Professor, building on that, Wang Yi also mentioned, China will accelerate The full implementation of zero tariffs on 100 of eligible African products.
What does this mean for African exports?
And from an industrial perspective, where could the biggest opportunities be, especially for agricultural and primary products?
Of course, as you mentioned, it's a very important development for China to privilege the policies to African countries for their, for example, agricultural products and other preliminary products, and we know that during the past decade, China has economic relations with African countries has already been further enhanced and the Chinese products has already been flooded into the markets of African countries and has already accepted by the African people and also African people's hopes to further enhance the cooperative opportunities with China, including the projects ranging from infrastructure to other kinds of the the, the daily uh pro, pro projects.
So in turn, i think china should do something to also uh share the economic development benefits and also the economic development opportunities to the african people.
That's why china kind of uh uh, this kind of uh uh the policy to the so-called zero tariff policy, uh on on the 100 of the eligible african products.
Also, we hope to utilize Chinese development benefits to help the people, to help the products made in Africa and also to help the people in African states, to help them to improve their life-standings.
So this also shows that China's international responsibility and also shows China's very strong solidarity with African people.
So that's why I think it shows our very strong determination and also shows our very strong spirit to further enhance the cooperative, to share our further cooperative benefits and fruits with the African country.
So that's why it's very meaningful and important.
When speaking with his South African counterpart, Wang Yi emphasized China's commitment, alongside South Africa and other Global South countries, to uphold the UN Charter, oppose hegemony and law of the jungle practices and protect the rights of developing nations as the Global South takes on a bigger role internationally.
What can China and Africa do together within platforms like the UN or BRICS, to protect shared interests and deal with external pressures like the unilateral sanctions or economic coercion today?
I think China and the African countries cherish our partnership in the framework of so-called global south because, from the African countries' perspective, China is a very important leading country of the so-called global south, while from China's understanding, African countries are always very important partners of the global south and the actors could uphold the slogan of the global south.
So that's why the two sides agreed to oppose the so-called hegemony and so-called law of the jungle practices.
And particularly, we know that during the past, actually two weeks, we witnessed very shocking incidents, international incidents ranging from Venezuela to United States and other Western countries, for example, possible intervention into Iran.
So it shows the very, very urgently and pressing necessary for the global cells to work together and stand together to oppose this kind of the new threats imposed by the hegemony and the unilateralism.
So that's why on the one hand we hope to share our benefits economic development benefits with each other and also, on the other hand we stand very firmly politically with each other.
And so that shows it's kind of the much more dimensional I mean multi-dimensional relations has already been established and the friendship will further be enhanced.
Professor, one last question.
Looking ahead.
China-Africa cooperation, we know still faces uncertainties, especially in modernization and global challenges.
What do you see as the key factors that will support this partnership in the near future?
And how can both sides ensure that their cooperation remains strong and steady even as the international landscape shifts?
Well, I do believe I do agree with you that China and the African countries also face uncertainties and challenges.
Certainties.
For example, some African countries.
They might be influenced by the Western media and they have a very negative uh perceptions, uh growing negative perceptions against the chinese presence inside their their own countries and also in china, that the kind of misunderstanding and misinformation leads to much more negative voices towards chinese relations with african countries.
We have to meet that, but the problem is that.
But i think the crucial, crucial thing is that on the one hand politically, china and the african countries stand closely with each other and the relations will become much more closer.
And also economically, and i think the new kind of the framework between the chinese and the african countries cooperation has already been established and it would further to the win-win uh structure of the bilateral and the multilateral relations between china and the different african countries would be further enhanced.
And, last but not least, as you, as we stress, this year is a very important year of the china african humanitarian, the China African cultural exchange here.
So this is very crucial.
It means a new opportunities to further enhance the relations and understandings between the two sides.
And it will further pave the new ways for the future's kind of multilateral and bilateral understanding between China and different African countries.
And that's why I think the future should be much more prosperous.
We should be confident about it.
Thanks, Professor, for those insightful analysis.
That was Dr. Wang Jing, professor at Northwest University in Xi'an, China.
Coming up, China's consumer prices rose 0.8% in December.
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Deputy Director at the Center for Middle Eastern Studies at Fudan University.
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China's inflation ticked up in the final months of 2025 as government policies aimed at boosting domestic demand continued to make a positive impact on the economy.
With the New Year's spending boost, the consumer price index rose 0.8% in December.
That's again 02 compared to November, while consumer inflation for the whole of 2025 remained flat compared with the previous year.
Factory gate prices continued to improve.
The PPI, the producer price index, fell 19 on the year in December and posted a 02 increase on a monthly basis.
This is adding to signs of stabilization in the industrial sector.
With more.
Zhao Yang spoke with Dr Zhou Mi, a senior research fellow with the Chinese Academy of International Trade and Economic Cooperation.
So, Dr. Zhoumi, China's CPI rose 0.8% year-on-year in December.
This is the highest since March 2023.
And the cold CPI has stayed above 1% for four consecutive months.
So what does this tell us about the economy?
Well, we know that CPI is a very important indicator to show the balance between the demand and the supply.
If CPI comes stable, it means that the demand is supporting relation between these two sides.
I think that we can find that it's a really good news for us to know that cpi is gradually becoming stable.
I think that's a really a reflection that when we're talking about the relation between the demand and the supply, the supply is still very strong but the demand is recovering.
So we are looking at that.
I think that more companies will be more confident about the futures of the balance between these two sides and the ppi is still negative year on year, but it has risen months on months for three consecutive months.
So what are the main reasons for that?
Well, you know, the ppi is a little bit different compared with the cpi because cpi are more locally related.
It means that most of these relations are to do with the domestic market, but we're talking about the ppi because China is a really important manufacturing and also an important stakeholder in the global trade.
So our production is not only something to do with our domestic demand, but also from the foreign demand.
The PPI do need some time for recovering from a negative to a positive.
I think that is based on the global economy and also demand recovering.
I believe that, if you are looking at the data, as you mentioned, that the PPI is growing actually, although it is still negative.
But I think that they really are able to meet the more balanced way of the development.
So there are several factors.
The first one is that the balance between the demand, especially from the foreign demand, foreign market demand.
And the second is about the expectation of the producers whether they still believe that they can uh have a better and more markets for the future uh, for future production.
Uh, if they do have this uh perspective, they will try to put more inputs in this regard.
But the third one is about, you know, the uh, the global order, about the global trade.
When we are seeing there are so many barriers, it is very difficult for the enterprises to to have a better expectation and decide what we are going on for the future.
So I think that we are gradually trying to introduce more policies or kind of coordinations between different stakeholders to give the enterprises more understanding about the market.
And, based on these understandings, they will do better decisions and trying to have a more balanced way of the output.
And, based on the economic data that we are seeing so far, where does the direction of momentum look like for the Chinese economy in the year 2026?
I believe that, you know, as one of our priorities, that consumption is very important.
And there are so many policies to try to encourage the development of the consumption, no matter the consumption on the products or on the services.
So we are still trying to put more emphasis on this regard.
And we have already introduced some of these policies to give the consumers better support if they are going to buy new products, like the consumption products, some of these AI related products at home.
And I think the second is that we are going to see that Chinese companies are really cautious about what they can do for the future, whether they are still trying to increase their capacities or not.
So we are going to have a better or more resilient supply chains cooperation with our trading partners.
But that is not that easy because we are seeing some of the fluctuation from the outside.
And third one, I think that the momentum are decided by China's integration of the domestic market.
The government is trying to do more to improve the integration of the domestic market.
And based on that, I think that we will see more and stronger development trend.
And let's talk about the investment opportunities in China.
What do you see as China's advantages right now for multinational companies in terms of opportunities, and which sectors are the most attractive?
Well, China is a huge one, a huge market.
I think that the huge market is the main reason why the investors come here to invest.
So compared with the previous years, China's domestic market are playing even more important.
So the investment in the consumption-related areas are really welcoming, including some of this home appliance and also something to do with consumer-driven, this kind of products.
And the second is the innovation-based investment.
China has introduced some new policies, like to encouraging the investment in the innovative sectors, so we are ending many new sectors in this catalog.
So the companies, the foreign companies, if they come here they can benefit from a better, better policies and a very stable expectation of the market, and especially for the robotics and also some of this other areas which exchange companies are really good at.
And the third one is definitely the services.
Actually, that is already happening because we are seeing more companies, no matter from the United States or Europe, they come here to invest in the service sectors.
I believe that is also what we are now doing as free trade zones who are really focused on the service sectors.
And let's talk about innovation technology because in the recommendations for the 15th Five-Year Plan, innovation technology occupies a central place on that agenda.
And beyond that, China's overall consistency towards technology is passed towards high quality development.
Innovation also occupies a central pillar.
So where does Chinese innovation stand right now, and how important is innovation technology for China's economy today?
Well, China's innovation abilities are widespread.
I mean from the manufacturing to the consumption and even for the science, the development.
So we are saying that the chinese are really are good at, you know, trying to commercialize the technology from the institution and academy to the markets.
So actually that is a very important way for the companies who are having some intellectual properties.
They can transform those intellectual property into the real benefits of the commercial and the business transactions.
And the second, I think that China is really good at supply chains and the manufacturing.
So if the company have the innovation abilities, They can do it with a much more easy way and a cheaper way.
I think that is really important for the companies who are really trying to discover a new market and they are trying to try their new technology with much more affordable prices or cost.
So I mean China is so diversified, you know, from the east to the west.
There are so many different markets and the demands.
Some of the specific markets are really good for the companies who have the innovation abilities.
And the United Nations is now forecasting that the global economy will grow by 27 this year, with the impact of higher US tariffs and geopolitical tensions.
So, under this scenario, what do you think will be China's role in the global economy today?
Is true that when you know, just at the beginning of this year, the world is seeing some very, very are presented geopolitical tensions.
I think it's maybe well still going on to spread to other regions in the world.
So China is, you know, very firm country who trying to develop its market.
I think this kind of idea is not just limited in China's domestic market, but we are going to implement the agreements that we have signed with our trading partners like ASEAN.
So the Chinese market is a really important one when we, when we are seeing some uncertainties are so, so huge in the other area of the world, we can provide the you know, the stakeholders with more certainty and based on these certainties, they can just try to put more efforts on the longer term of the decision.
So i think that we are still seeing that the world is needing more certainties and the chinese market is giving these certainties.
So, based on that, i would say that you know so many differences between China's attitudes and the United States in the trade issues and other investment issues.
And China's very firm commitments will provide the enterprises with so many opportunities.
They can come here and they can benefit from these opportunities.
That was Dr Zhou Mi, a senior researcher, fellow with the Chinese Academy of International Trade and Economic Cooperation, speaking with my colleague Zhao Yang.
You are listening to Road Today.
We'll be back after a short break.
Welcome back to Road Today.
I'm your host, Ge'enna.
Iranian President Massoud Pesachkian says the government recognizes peaceful protests and is open to dialogue with all groups, but he also warns that what he calls rioting will not be tolerated.
Pesachkian says authorities are ready to address economic grievances.
State media Tasnim reports more than 100 members of Iran's security forces have been killed in recent clashes.
The government has declared three days of national mourning.
Meanwhile, Tehran's provincial governor says protests in the crowds have sharply declined and no longer pose a major security threat.
So for more on this, joining us on the line is Dr Zhang Chuchu, deputy director of the Center for Middle Eastern Studies at Fudan University.
Professor Yuan has been under the spotlight in recent days.
One of the recent developments is The government says it is listening to public concerns and wants to fix the economic problems people are facing.
So from your perspective, what are the main economic pressures right now?
And under the conditions of external pressure and restraint, how is Tehran likely to manage and respond to these economic issues?
Right.
Actually, in the past, Iran previously maintained low prices for food, especially bread, to ensure social stability.
However, the recent plunge in the Iranian currency and soaring prices for food, beverages and tobacco sparked protests.
And it's very similar to the 2011 Arab Spring in the Middle East.
Also, with winter approaching, at the moment, some cities faced water, electricity and gas shortages, which leads to widespread discontent among Iranians.
Now, as you mentioned, the Iranian president has promised to address economic problems, and these policies may provide some immediate relief and help alleviate certain protesters' immediate frustration over the skyrocketing prices.
However, the effects of such economic reforms typically take a long time to materialize and deliver meaningful, sustainable improvement.
So in the short term, it's still very hard to see a dramatic change.
Professor, Iran has written to the United Nations accusing the United States and foreign forces of backing the protests.
How much weight do you think this idea of external interference really carries in the current unrest?
Right, there is a role of the external interference because, first of all, if you you look at the economic crisis, which is the key root of this large-scale protest,
Why is there this dramatic economic crisis?
One important reason is that Tehran faces severe economic sanctions from the United States since a long time ago.
And also, right now, Trump has already made a statement that he's going to attack Iran.
While there is the possibility of that, but in the end I think the likelihood of the United States directly in preventing militarily Iran is still limited.
But this kind of statement, you know it aims at deterring the Iranian government to take any actions.
And also it encourages and incites Iranian protesters to escalate the action.
So the problem here is that it is going to worsen the situation in Iran, because it could further escalate the social tensions and make things even more difficult to resolve.
U.S.
President Donald Trump says the US is looking at very strong options, even military ones, towards Iran.
So do you think Washington will actually act?
And Could Iran face the same kind of bullying tactics we saw used against Venezuela by U.S. forces?
Right.
It is worth noting that currently, Trump's statement is primarily aimed at making deterrence against the Iranian government.
And also we should note that Trump's current strategic focus is on the Western Hemisphere.
So it means that he will put more effort in countries like Mexico and Cuba.
Also currently, the United States national security strategy has lowered the priority of Middle Eastern affairs on its foreign affairs agenda.
Also, Netanyahu has expressed a very strong intention to launch military attacks against Iran.
So all these factors means that the United States might not necessarily launch a real military attack against Iran.
But it has many other options.
For instance, it could impose additional sanctions or launch cyber operations to disrupt government capabilities without direct violence.
And also other tools it can use could include financial and banking restrictions against Iran and imposing export controls, and also the enforcement of secondary sanctions.
Professor, President Trump also claims Iran's leaders have reached out to him and want to talk.
How should we break this signal if talks do happen?
What do you think both sides could actually agree on?
So far.
The important point is that both the United States and Iran have very limited space of negotiation and compromise with each other.
So let's say, if US-Iran dialogue resumes, then a realistic, limited consensus might focus on short-term de-escalation rather than a comprehensive deal, which is very unlikely.
And possible outcomes could include a temporary freeze on Iran's nuclear enrichment in exchange for partial sanctions.
Relief for humanitarian imports to ease Iran's economic problems.
However, broader issues like ballistic missiles, regional influence would likely remain unresolved.
And as the moment, you know, neither side wants to make a real compromise.
And given that neither sides have real trust of the other any deal could be very fragile.
Professor about the background.
The United States military operation against Venezuela first of all, it sees the President Nicolas Maduro and his wife has triggered a global shock.
Since then, Washington appears to have sent warning signals to multiple countries, including its European allies Iran and Cuba.
How do you assess the impact of this episode on the Middle East region?
Right.
So actually the operation suggests that the United States demonstrates concrete plans and tries to act unilaterally in the international community.
And while, when it comes to Iran, so Trump aims to use psychological signaling to Iran, So the purpose of taking Maduro is to create a sort of demonstration effect, thereby deterring other countries, including Iran.
And on the other hand, the United States began formulating plans targeting Iran a long time ago.
Moreover, not only in the United States but also Israel has consistently viewed Iran as its biggest regional adversary and has repeatedly expressed its intentions to launch a military attack strikes against Iran.
So the United States may not actually launch an attack against Iran itself, as it is also concerned about the potential impact on international oil prices.
But it could encourage Israel to target Iranian military targets.
And also, it could further encourage the protesters within Iran.
Building on that, and taking into account Iran's domestic response, US intervention intentions and Israel's position, what are the most likely trajectories for the current situation?
And, in the short term, what do you see as the critical factors or turning points that could lead to de-escalation?
So right now there are still many uncertainties.
And Iran is currently facing a huge dilemma.
The most likely trajectories could include three possibilities.
The first one is the United States backed escalation which could potentially involve strikes on Iranian facilities, encouraged by Israel to target some of Iranian key military facilities.
Well, the second scenario could be the government entrenchments through hardline actions.
And another possibility could be a negotiated escalation if Iran's outreach to Trump yields a limited deal in the short term.
But I would say you know, critical factors for the escalation include the outcome of the potential US-Iran talks, whether it's going to take place and what they could achieve.
And turning points might also involve partial economic relief to ease the bazaar strikes at the moment.
Thanks, Professor, for those valuable insights.
That was Dr Zhang Chuchu, Deputy Director of the Center for Middle Eastern Studies at Fudan University.
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Let's shift gears to a landmark trade deal between the European Union and South American nations, the Mercosur bloc, including Brazil Argentina, Uruguay and Uruguay.
They have reached the long-awaited free trade agreement after 25 years of negotiations.
Representatives of the EU member states in Brussels agreed to move ahead with the deal.
A majority of the EU's 27 members representing Brazil, 65 of the bloc's population backed the agreement.
The move comes amid renewed global trade tensions, including U.S.
President Donald Trump's tariffs and Washington's recent military intervention in Venezuela.
The deal now has to the European Parliament for approval in the coming months.
So for more on this, let's bring in Professor Liu Baocheng, Director of the Center for International Business Ethics at the University of of international business and economics.
Professor, after more than 25 years of back and forth negotiations and repeated delays, the free trade deal has finally been approved within the EU.
Then from Brussels' perspective, why now and what made the EU move forward at this moment?
Well, from the EU perspective, there is increasing urgency.
It's now a matter of now or never, moment shaped by the global conditions rather than the biological or bilateral fatigue.
So EU is now operating in a far more protectionist and fragmented global trading environment, when WTO is dysfunctional and the United States has been playing a very aggressive role in disrupting the global trade regime and also in controlling the entire Latin American region.
So now they also face the rising tariffs and also the growing uncertainty around those major traditional trading partners.
The situation presents, that are to secure a predictable access to a large South African American market represented by Mercosur with, roughly you know, the so many population, is really a strategic necessity.
So it's a long term aspiration.
And then the EU is also increasingly see that regional trade agreements are there to serve the two, to beef up their strengths in terms of the trade governance and also to serve also as a geopolitical instrument.
That's a way to anchor their influence, to stabilize their supply chain and hopefully they wish to uphold a rule-based trade regime.
So again, such a sort of backdrop, by teaming up with Mercosur as the custom union which has been operating for the last more than 30 years, is really a sensible deal.
Professor, the vote passed away the qualified majority, covering about 65 of the EU population, even though several member states opposed it and the farmers protested.
What does this reveal about internal geopolitical dynamics and the balance between national interests and a collective economic strategy on this matter?
I think it's really a re-collaboration of their political structure as how EU can really balance their national sensitivities over different members with the collective economic strategy.
While the agriculture still remains the political powerful restraining force, but it is no longer holding the absolute veto power over the EU trade policy.
So the qualified majority vote shows that a broad coalition of member states, particularly those with strong industrial exports and also their service sectors, now they prioritize strategic market access and long-term competitiveness for their own economy.
But even now at the cost of the domestic controversy.
So there is a high value for them to achieve as compared with some and also protest from those conservative sectors.
So now there's a high probability that this is going to be passed, given that those stronger countries are having a stronger voice for this type of decision.
Then looking at the microcosm countries Brazil Argentina, Paraguay and Uruguay, how is the deal being seen at these countries and what opportunities or risks do they expect?
I think broadly.
We consider this as a positive and pragmatic approach to gain further knowledge into the EU market, particularly for the agricultural sector, be it the beef, poultry and other types of the local producers.
But there are also some differences between different members because they have different industrial structures where those export-oriented sectors are very happy to engage into a long-term and also rule-based access to the wealthy market of the EU.
But for other countries, for example Brazil and Uruguay, who are more industrially advanced, they may also see some of the challenges for their industries, because more of the EU industrial products will also end up in the market.
But having said that, there are buffers in this agreement on both sides.
For EU.
They can really step on the brake of the agricultural produce if they experience kind of surge.
But the same token is also applicable to Mercosur in terms of the industrial product influx.
Professor, we know the Trump administration has slapped tariffs of up to 15 on some EU products and 40 to 50 on key Mercosur exports.
This deal aims to reduce trade barriers.
Then, from the perspective of countering US unilateral pressure, is this agreement a way for Europe and South America to band together, and Do you think this could help them rely less on the US market?
I think to a large extent, the answer is yes.
But with some of the important caveat.
The agreement clearly helps the both sides to reduce their excessive dependence on the US marketplace and also strengthen their resilience against the volatility generated by the United States.
So, for the EU side, expanding the preferential access to South American countries, you know, these major economies that can really provide a strategic cushion to really reduce the shock, whereas the US tariff reinforces its role to continue to serve as a global trade hub.
For Mercosur countries, a deeper tie with the EU does not only offer some of the alternatives for the trade, but also having a reliable partner can also shore up their reputation to really attract more of the investment.
And also they may also use this as a leverage to conduct some of the reform in the regime of trade and investment policies.
So you know, for the US.
I do not think the US were really regarded as a decoupling policy for both sides, but rather more as increased competition both on economic and also on political front over there.
But I think now it is still manageable at the moment and the US would really prefer more of the allies because the EU is still considered to be an ally of the United States to penetrate more rather than some other actors that they do not really highly welcome.
Thanks, Professor, for those in-depth analysis.
That was Professor Liu Baocheng, Director of the Center for International Business Ethics at University of International Business and Economics.
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Our last topic for today, U.S.
Fed Chair Powell under investigation.
The federal prosecutors have opened a criminal investigation into Federal Reserve Chairman Jerome Powell, marking an escalation in tensions between the White House and the central bank.
The probe relates to testimony Powell gave to Congress about renovations to Federal Reserve buildings.
Powell called the investigation unprecedented and suggested it was the response to his refusal to cut interest rates, despite repeated pressure from President Donald Trump.
Trump said he had no knowledge of this investigation, but criticized Powell's performance as a Fed chair.
For more on this, my colleague Song Ruixin spoke with Zhang Gong, a professor at the University of International Business and Economics.
First of all, Professor Gong, let me start with the near term.
Do you think this investigation could influence how the Fed approaches its 2026 rate decisions?
I mean, especially by adding political risk into what is supposed to be a data-driven process.
Well, at least the person involved, Jeremy Powell, said he's not going to do anything not based on market data, not based on realities.
He said he's going to maintain his neutral position.
He's going to take actions as the Fed has always been doing.
But nevertheless I think deep in his heart he must be very resistant to President Trump's desire to lower interest rates.
And probably it hardens his determination to be probably more resistant to lowering rates.
That's giving him the benefit without that he's going to do things based on realities.
So I think in the short run, it's not going to alter his decision, I guess.
Okay, but looking beyond the next few meetings, Chair Powell has pushed back against political pressure before, but the Fed chair is still appointed and confirmed through the political system.
Then how much lasting damage could this episode do to the Fed's institutional independence, both in perception and in reality?
Yeah, well, it's characterized as a deterrence model.
It's going to set up a very, very bad precedent.
General Powell, he doesn't care.
His term is going to expire, I think, in three months or four months.
And the upcoming new Fed chairman definitely looks at this incident and get a lesson that he'd better be not to act in the contrary interest of the president.
I think this is a long-term damage.
It's more of a long-term, profane damage to the Long held tradition of the Fed being an independent organization.
I think this whole idea that Fed is going to be acting independently, not much subject to the whims of the president,
I think this model. starting to show cracks.
And definitely, this is going to be a landmark event, I think, moving forward.
But what does that look like in practice?
Well, I think it's going to make the chairman to be more.
He's going to think twice about doing anything that is sort of contrary to what the president says, because it's intimidating, essentially right.
And when they all understand that if he's doing something that's not according to what the president says, there's going to be consequences, and the consequences are going to be very severe.
President Trump is willing, and he has done so so far, to weaponize the Justice Department, to target any government official who is essentially not subservient to him.
And that's a very, very bad political precedent.
And again, I will say that it's going to cost a profound influence in the future.
It's going to deal a very bad damage blow to the idea of Fed being neutral on political matters.
At the end of the day, Fed has a mission to contain inflation.
At the same time, maintain certain economic growth.
President Trump seems to be more interested in the latter objective and probably leaving the inflation to the next president.
So, you know, so these things are supposed to be being balanced by the Fed chairman.
Now this model is under jeopardy.
So I think, you know, in the future, the market is going to take actions.
The market is going to take into consideration that the Fed is not going to be independent as it used to be independent.
Then let's move on to divide.
Does Republican Senator Tillis' strong opposition reveal a significant split within the party of weaponizing law enforcement against economic institutions?
Yeah, I think Senator Tillis' point is not so much about the Fed's independence.
He is more concerned about this precedent that the Trump administration.
The president, can weaponize the Justice Department to target anyone that doesn't listen to him.
That is supposed to be neutral.
That's supposed to do things independently.
I think that's a very bad procedure.
I mean, it's not even a procedure.
President Trump has already done that.
Although he's targeting, he's using the Justice Department to target former government officials.
Now he's targeting a sitting government official.
It's a matter of principle, I guess, from Senator Tillerson.
I think he's fighting for that.
And if the United States government goes down that path, it's not so much from a banana republic.
That's the kind of thing belonging to the banana republic.
The United States is supposed to have a democracy.
It's not supposed to be operating like this.
Then, in terms of the real economy Professor, how does this kind of political shock interact with the existing pressure on growth, trade and ongoing inflation?
Could it lead that to hesitate or to overreact?
I think it's very likely to the overheating of the economy is more likely to lead to inflation.
President is more concerned about growth, more concerned about creating jobs, and he has probably less of a concern for inflation, and inflation tends to be a long term phenomenon.
It's going to take some time to be reflected.
By that time, it's already too late.
I think this is the from an economics point of view.
This is the danger, the peril associated with a Fed that's being controlled by the president.
And this is definitely bad economics.
So I think from that perspective it entirely undermines the usefulness and the foundation of the Fed.
You don't need to send him.
Basically, you know you can have president has an economic I think it's called a chief economic counsel or something advisor.
And he can do that.
Right.
You don't need the Fed to to analyze data, to make a educated, deeply calculated decision.
You don't need any of this at all.
You just do what the president tells you to do.
And that's a fundamentally very bad economics and bad economic policy.
Like you've said before, there would be dangers, there would be risks.
So if markets started to believe that the central bank was taking political instructions...
What would be the immediate impact on inflation expectations, financial stability and the Fed's ability to manage such a crisis?
Yeah, well, the market is going to adjust the expectation.
They're going to take into consideration that this Fed is going to be essentially a tool of the president.
And I think they're going to adjust the expectation for the future on a range of things, particularly on inflation.
So it's going to be a very different situation.
That was Zhang Gong, a professor at the University of International Business and Economics, speaking with my colleague Song Ruixin.
That's all the time for this edition of Road Today.
I'm Guiana in Beijing.
Thank you so much for listening.
Bye for now.
