Hello and welcome to World Today.
I'm Dean Hunin Bai Jing.
Coming up, China is going to impose tariffs regarding 10 to 15 % on some American products.
EU leaders have agreed to step up their defense efforts.
Economic cooperation and counter -terrorism top the agenda of Pakistan's president's ongoing China trip.
Donald Trump, the US president, says an American sovereign wealth fund could acquire TikTok possibly.
To listen to this episode again or to catch up on our previous episodes, download our podcast by searching world today.
China has announced the plans to impose tariffs on some US products in a slew of measures to counter US tariffs.
The move is in response to the 10 % additional tariff imposed by the US on Chinese products.
China will levy additional tariffs of 15 % on coal and natural gas imports from the United States and additional 10 % tariff on petroleum, agricultural equipment, high emission vehicles, and pick -up trucks.
China's Ministry of Finance has accused the unilateral U .S.
tariffs of violating the rules of the World Trade Organization.
In the meantime, China has also announced a slew of export controls on key minerals, and launched an end -time monopoly investigation into U .S.
tech giant Google. Go.
China has also put a U .S.
closing company and a U .S.
biotech company on its unreliable entity list, saying they have interrupted normal transactions with Chinese enterprises.
So joining us now underlying is Liu Zhiching, Senior Fellow at the Chongyang Institute for Financial Studies, renmin University of China.
So thank you very much for joining us today Mr. Liu Zhiching.
Now, first of all, do you You have agreed with this statement from the Chinese government that the unilateral US tariffs on China are not only unhelpful in terms of solving the own problems of the United States, but also undermine the normal economic and trade cooperation between China and the US.
Yes, definitely. I personally fully support the announcement and statement for government because we always reiterated before five or six years before already that the United States should not take unilateral actions imposing any kind of tariffs on China's product.
This is not reasonable and not friendly action, because as we know the cooperation and the inclusiveness and mutual understandings are the basis for China and the United States.
And actually China has done its best to implement all these applications and the commitment we have agreed with the United States and also China always try to improve the business environment in order to have more business with the United States in different areas so I think that the global market has already noticed that the China's efforts has done before.
I know we made a really very great contribution to the global to supply chain and the industrial chain in order to get a fair business condition.
So I think we should fully support our government actions taken in order to deal with all these problems with the United States.
Now, as we look at these additional tariffs that the Chinese Government has announced to levy on the US products in response.
We are talking about 15 % on coal and natural gas imports from the US and 10 % on petroleum agricultural equipment, high emission vehicles and pickup trucks.
As we look at these tariffs, what do you think could be the considerations of the Chinese government in deciding on these tariffs?
I think China's government has really well prepared to make a response in a very reasonable, very considerable, polite way to give the United States what China will take and a follow -up.
Because from the products we have announced, I think the two points should be noted.
The first point that all this products that we put in the Korea for the list are non -consumer products.
I mean for not for normal consumers in the United States, So that will have less effect on the U .S.
normal consumers. So this is one point.
The second point is, this is only one small step to try a response to the United States, whether we should take further action.
I have to say, this is only the first step of the Chinese government to make a response.
So if we can find a final decision on the negotiation, I think all this lists to be imposed on tariffs would also lifted.
So in that, we just try to find a good and a reasonable foundation for further collaborations and negotiations.
Hmm, now was regard to the new export controls on minerals announced by the Chinese government it is generally believed that these targeted minerals or materials can be used in industrial or defense applications including say the manufacturing of solar cell etc do you think this represents an appropriate countermeasure from China yes I fully support such actions.
Actually that way, China and the Chinese enterprises are suffering a lot from the sanctions from the United States.
For instance, for the chips export control and any high tech -related technologies and equipment, even for related personal exchanges are fully prohibited and controlled by the United, only under the so -called National Security issues.
So this is, I think, we should have the right response, because all these miners that we put in the list are very sensitive, very crucial to make chips and make other defense related products.
All these products will be used to threaten China's security.
So I should say that we should not supply that the raw materials to the United States Now, in the meantime, Mr. Liu, what do you make of China's plans, anti -trust, or anti -monopoly investigation into Google.
I guess when we talk about Google, a basic fact we need to note here is that it is actually facing widespread anti -monopoly regulatory scrutiny in many markets, including in both the EU and the US itself.
Yes, this is a very good question because anti -trust or anti -monopoly policy is not followed by which is Chinese government, but this is a global online action.
Because Google, I think in the past, has done something good to promote or to provide communications to the world, but actually, there are monopoly actions really has damaged the people's interests, especially the consumer's interest is different areas.
For instance, in the searching online education area that they always try to limit, to put Google as the first online to be used by their consumers.
They have some limitations and the second also for the advertisement that they make the very strong advertisement in all level in all different companies and different actions in commercially so this made Google some more favorable conditions to make profits and make more earns on the gaining from different actions and the third is also very essential that for the operational system, when it's not to use only the Android as the operational system but as we know the enterizer already occupy the 77 percent in the in the smartphone so this is really absolute monopoly that gives no chance for other
products to replace this operational system and the second the force is a very important thing that they make the so -called the cloud the communications, cloud, computer business.
Also they have monopoly that made people that more losses and the sufferers.
So that's why in the United States, in Europe, in many countries that they have already a policy, law measures against Google.
So we hope that this could be discussed and then negotiated and help Google to correct their behavior and actions.
No, during his first term in office, Donald Trump was talking about the US trade deficit with China when he was launching his trade war with China at the time.
Why do you think this time around he has resorted to a different tactic?
Let's put it this way by talking about the fentanyl -related issues.
you know they're drugs is a key problem for the Trump administration during this campaign for reelection that he already that the promised to deal the drugs and also they migrants issue but the drugster is special relative to Fanta Nea is a long history Chinese government has now it's best made great contribution to control this drug export and also some related organisation department in the past years have settled down on all this agreement and regulations with US partners to make a good regulation on the market distribution and export control and also in details.
I think the United States government has showed their satisfaction that China's counterpart has done its good job to control the things.
But they didn't care about these effects.
They just used it as an excuse to make their own policies.
For instance, they would take the interest on China's product.
We need any kind of reasons or excuses, so that's why the he tried to use it but it's wrong and also it does not help to control the drug distribution among the Americas especially on the borders of America.
So in this way he should try to discuss all these issues with China with Mexico, with Canada with other countries related in order to make a more effective control of this drug's import and export is especially for the smuggling.
Mmm. The final question before we let you go, Junqing, what do you make of the potential fallout from a second US -China trade war, regardless of whether Donald Trump is ready for it?
Do you think American businesses and American consumers are ready for it?
I should answer the second part of the question.
I think that nobody is getting really well prepared to deal with the so -called second trade war with China with the United States.
Because the consumers are very sensitive that to deal with all this price, the hike or inflation and the difficult time for the supply chain.
Even including some local government in the United States.
Some state government still needs a lot of support from China.
That's why many states have signed contracts with the Chinese partners to have more good and cheap products from China.
So in this way, why should China have done its best in order to avoid any serious so -called trade war the second time?
because any war in trade business will harm or damage all the supply chain and also the quality of life of both countries so nobody likes it because only we have losers, no winner if we have the so -called trade war hmm a trade war is in nobody's interests that's for sure but thank you much for joining us.
Liu Zheqing, senior fellow was the Chongyuan Institute for Financial Studies, Renming University of China.
Coming up, EU leaders agree to step up defense efforts.
Stay tuned. You're listening to World Today, I'm Ding Hu Ining Bai Jain.
European Union leaders have agreed to do more to bolster their defenses by hiking, spanning, and filling gaps in their military capabilities.
The bloc on Monday held a summit on defense in the city of Brussels.
European Council President Antonio Costa said that a lot has been done already but the EU needs to do much more.
European Commission President Ursula von der Leyen has also vowed to strengthen the bloc's on -defense industrial base, noting that the bloc has underinvested in defense for many, many years.
So joining us now underlying is Dr. Kamau Makiliy Knight from Raul Wallenberg Institute of Human Rights and Humanitarian Law in Sweden.
Thank you very much for joining us Kamau.
Thank you for having me.
So first of all, let's begin by talking about what the EU has already done in most recent years.
Last year's data tells us that EU countries spent an average of 1 .9 percent of GDP on their defense issues, or somewhere around 326 billion euros, representing a 30 percent increase on 2021.
So what has prompted EU countries to ramp up their defense spending in most of recent years?
Well, in the recently, they've been prompted by two very distinct geopolitical developments.
One was the new sort of push from the United States, and not in a friendly manner but already in the more coercive manner to spend more on defense starting with the first Trump administration, That actually rallied a lot of European leaders but that actually pushed this kind of constant increase in spending in terms of percentage of a GDP.
And the second was, of course, the Russian military campaign in Ukraine, which have prompted a lot of fears that the European defenses have been under invested for a very long time And that may create a huge security problem for Europe on the whole.
So these these two factors.
So regarding the very first factor that you have mentioned, I mean, if we check on the rhetoric from US President Donald Trump, he has actually most recently, I guess, suggested that the European NATO members should spend 5 % of GDP on defense.
how would you look at such a comment or such a demand from Washington?
Is that a realistic demand?" Well you know this is a very interesting question because it's it's a little bit speculative in terms of that well can you actually demand something right and it turns out because of transatlantic connection and all those ties sometimes this kind of demands are actually in coercive of nature.
And we've seen that the first Trump administration actually prompted the Europe moving towards this goal of 2 percent that the demand before of GDP, and I think it's going to have the same kind of effect.
So the Europe is going to start moving towards 5 percent GDP for sure.
The thing is as realistic in short term, of course not.
It cannot be done in the short term.
You see it took years to get to almost 2 percent on average.
Right. and most of the countries are doing good except for Ireland, maybe, but to reach 5 % is gonna take a lot of time.
But I think in terms of goal setting yes it's realistic in the midterm and especially if the geopolitical trends that we see right now continues.
Mmm. Now it appears that at this Monday summit on the fans held in Brussels EU leaders have largely left this question unanswered with regard to how their plans surged in terms of defense spending could be paid for financially and monetarily.
At a time when governments across the EU are facing economic stagnation, including this ongoing budget crisis, even political crisis in both economic heavyweights of France and Germany, how much room is there, Kamal, when we talk about a further search in the EU's overall defence spending?
Well, actually, the room is there.
The willingness to fill that room is a different kind of question.
So you have to, of course, divert the money from certain programmes that have been financed more or less by Europe.
You have also to make the spending more efficient because there are always questions about how to make the spending European spending efficient.
A lot of times the European spending tends to, so to say, waste a lot of resources on the middle men or on the sort of middle sized institutions that are in between the practical goals that where the money should go and budget in Brussels.
So if these measures are taken and if the such problems are fixed, so to say, plus if there is a willingness to divert certain spendings that might not be as critical as the funds spending in certain geopolitical instances that we've seen in the recent years.
Then this is very realistic, but again, it going to take years, uh, just because of how, uh, Brussels bureaucracy and the budget bureaucracy and the political process within the European union is working.
So it's not going to be immediate effect, but that one key factor here is willingness to, to make those kind of changes.
And it's anything but certain, but if we look back at how it was, uh, after the first Trump administration, we see that, you know, that the European Union even slowly, but is going to move in that direction.
So, if I have to make a prognosis, I would say, it's not going to be immediate, but there is going to be that discussion at least, and probably the decision to start diverting more financing towards defense spending.
Now, will that reach the goal 5 % immediately?
No. And if it's even going to set the target as high as that, no.
But it will move into that direction for sure.
so I guess money and the financial power is just a one aspect curtailing or curbing some of the internal bureaucratic issues like am mentioned represents another layer of the of the question or problem here and I guess there is another question say in terms of strengthening the EU's on defense industrial base.
I guess the ambition has been made clear by people like Rond the Lion in terms of fulfilling this critical gap in things like air and defense and ammunition, military transport, transportation etc. and I guess down the road, a lot of internal hurdles within the EU needs to be overcome.
So the final question before we let you go, come out, if let's suppose a pro -NATO and EU friendly American president is once again elected into the White House in the future.
Is that going to weaken Brussels' resolve to bolster its own defense and, in a bigger picture sense, seek strategic autonomy?
In short, no. But more expanded answer is if you take a look at what happened after the Trump administration ended its first term and then the Biden administration came in.
We will see that although the pressure on Europe has been decreased by the policies that the Biden administration has started to implement instead of Trump's administration, it still moved in towards this more spending and towards that goal.
Even if the Trump administration was not there to push it further.
Why? Because that push was actually, you know, even if it was taken very negatively at first, it also fed into the overall understanding of Europe, that the strategic autonomy and strategic defense is something that the Europe will need to work on.
Will need to work on further.
And it also been prompted by the war between Russia and Ukraine as well.
So we can think that the same logic is going to apply after the Trump administration, have finalize it second term that the Europe is still going to be moving into that general direction and that also strategically it is so that all the time that Europe starts on some kind of a journey it continues there you know like dynamically so I would say no okay thank you very much for your perspective and for joining us that was dr.
Kamal Makili alliyev joining us from Raul Weyllenberg Institute for Human Rights and Humanity, and Riang Lau in Sweden.
You are listening to World Today.
I'm Dean Hunin Bae Jin.
We'll be back after a short break.
You are listening to World Today.
I'm Dean Hunin Bae Jin.
Pakistani President Aseef Ali Sudeiri is on a 5 -day state visit to China.
Pakistan's Foreign Ministry has indicated that the President is focusing on economic cooperation and security collaboration during his trip.
His trip is coming nearly 8 months after Pakistan's Prime Minister Shabaab Sharif paid a trip to China.
So joining us now underlying is Gaoshi Ray, political science PhD candidate with the University Welcome back, Chiré.
Thank you. So, Chiré, I think it's pretty fair to say that we're seeing some kind of very, very frequent high -level exchanges, official exchanges, Bahrain, Islamabad, and Beijing.
What do you think this tells us in general?
Indeed. So on the one hand, it indicates that China and Pakistan are all -weather strategic cooperative partners now.
Two countries have built high -level political mutual trust and practical cooperation, but on the other hand it suggests that there are lots of issues to be accomplished ahead.
So issues to do can be roughly categorized into first economic and infrastructure, second defense and security, and third international cooperation and affairs.
So for the economic infrastructure agenda would include the following items, the first is China and Pakistan now enters the phase two of China -Pakistan economic corridor or CPEC, the second is, two countries need to put more efforts into infrastructure projects for instance, seeking financial support for the Karakolam Highway Realignment Project, further developing the quarter port and airport as a key hub for cross regional connectivity.
Also, some arrangements are needed to strengthen industrial cooperation and promote international cooperation in industrial supply chains.
Also, for defense and security, Pakistan needs to ensure the safety and security of Chinese personnel projects and institutions in Pakistan.
Last, but not least, two countries need to exchange opinions and improve cooperation on international affairs such as the issues of Afghanistan and, presumably, Trump's second administration.
Now, since you have already talked about the second phase of the CPAC, China -Pakistan Economic Corridor, the second phase, according to the Pakistani site, would involve setting up special economic zones in partnership with China to overhaul Pakistan's agricultural and information technology sectors while trying to attract Chinese corporations to relocate parts of their industries to Pakistan.
Now the Pakistani government is quite confident that CPAC 2 .0 would enable this country to become a regional export hub.
So what do you think needs to be down if we want to turn that vision into reality?
So of course, there are security concerns infrastructure but I would like to highlight two points here.
First is the Pakistani economy recently fluctuates.
For instance, the GDP growth rates decrease from 6 .1 % in 2018 to negative 0 .094 % in 2020 and it rebounded to 5 % and 6 % in 2021 -22 % then it decreased again in 2023.
So the GDP, the whole economy of Pakistan is fluctuating.
The second is, financially Pakistan needs to maintain financial health.
For example the interest payment absorbs some of its government revenues.
So the Islam bot needs to watch its balance table.
But there were solutions however.
So, first Pakistan should enhance its export to China, the Pakistani enterprises can make full use of platforms such as the China International Import Expo to expand their bilateral trade with China, and second, the Pakistani side should provide Chinese enterprises and investors with better security environment to expand investment in priority sectors for enhancing export oriented industries.
Now despite the momentum we have seen and acknowledged with regard to the ongoing construction of CPAC, the security risks that the program has faced with is also undeniable.
This very notorious, I would say, separatist in below Chester and Liberation Army has been responsible for many attacks on those CPAC related Chinese invested projects or programs.
So how do you think China and Pakistan can strengthen their security and anti -terrorism cooperation?
Thank you so the terrorist attacks in Pakistan have surged if you look at data in 2024 and has reached its new high.
So security concerns rise, especially in Palau Chistan and KP provinces in Pakistan.
Two factors that contribute to the turmoil can be identified now.
So one is religiously inspired militants.
And another is the separatist forces, including the Palau Chistan Liberation Army and the Palau Chistan Liberation Front.
So their logics are quite the same.
The Separated Force targets Chinese citizens and interest to coerce Islamabad.
Now we are seeing Pakistan government putting more commitments into anti -terrorism.
Some arrangements can be done to further address the problem.
So first the two countries can enhance their cooperation on intelligence gathering and sharing, especially analysis.
The intelligence gathering analysis between Pakistan and Chinese intelligence communities would be challenging for China without cooperation because we need to train security experts who understand Palochi language and politics of local tribes and analyzing such information in Palochi or Udo or other local languages and dialects would also be challenging even with the help of AI.
So, investigation, for example, and identifying such targets are also problematic.
So, intelligence gathering and sharing between Pakistan and China is important to address the security problems.
The second is allowing Chinese security companies entrance and to play a greater role in this.
So, Pakistani security troops have experienced large casualties, so allowing Chinese security companies to play a greater role would benefit more.
Also, they need to ensure and develop people's livelihood in Pakistan.
The socio -economic environment in Pakistan Province is somehow asymmetric compared to Punjab Province, where the capital, Islamabad is located, so the worsening security environment would make people less willing to invest there and further make it more inter -development and make it a vicious cycle.
So Xirei, we still have about like one minute before we need to finish this dialogue with you today.
So the final question before we'll let you go briefly, Luckily, some people speculate that because of the security risks that CPAC has encountered, there has been a subtle shift now in terms of China's approach to engaging with Pakistan.
Do you think this kind of analysis or speculation has a point?
Why or why not? I disagree with such a speculation.
Operational -level threats, such as security risks, will not shift strategic -level corporations such as CEPC, and China's stance has not changed.
The problem is terrorism instead of cooperation itself.
So in the John statement between two countries emphasize the strength in the high -level political mutual trust and deepening high -level practical cooperation.
Thank you very much for joining us.
Gaoxirang, political science, PhD candidate with the University of Hong Kong.
Coming up, we will analyze some latest economic figures from the Eurozone.
We'll be back. Eurozone inflation unexpectedly accelerated to 2 .5 % in January from a reading of 2 .4 % in the previous month.
The European Central Bank lowered borrowing costs for the first straight time last week, hitting at even more policy easing.
The ECB has warned of headwinds the Eurozone economy as it cut the interest rate by a quarter point.
The Eurozone economy saw zero growth in the last quarter of 2024, and among the bloc's major economies, Germany's GDP fell by 0 .2 % in the fourth quarter while the French economy also shrank slightly.
So, with regard to the key challenges that the Eurozone is faced with, my colleague Zhao Yang spoke with Professor Yang Lian was Willamett University.
So yeah, what's the current situation of the eurozone economy and what are the main challenges do they face?
Right. So when we look at the European economy, the major problems are, first of all, the two largest economies, Germany and France, their economy actually contracted by 0 .2 % in the last quarter of 2024 for Germany, and France contracted by 0 .1%.
So because these are the two largest economies, and they are accounting for half of the GDP of the euro zone.
So because of these two economies are not doing well, so the entire prospects of the euro zone economy is not looking very good.
So we're looking at zero growth in the last quarter of 2024.
So in a way, I think this is a wake up call that European economies really need to sort of get their act together.
So, the ECB has been cutting interest rates, and they're now cutting their benchmark interest rate for deposits by a quarter point to 2 .75, hopefully to reflate and to rekindle the economy.
But I think there are many structural issues facing the eurozone economies, and we can talk about some of those challenges.
And the US president, Trump, has pledged to impose duties on the EU in the coming days.
and the European Commission said it is ready to retaliate and the European leaders were not paying from the transatlantic trade war.
So how will that track down the European economy, do you think?
Yeah, there will be a major impact on the eurozone economy if Trump's tariffs go through.
And with the retaliation, it's not going to really help the European economies, because Europe does rely a lot on the US when it comes to the export destination.
So, for example, the automobile sector.
So if the trade war, you know, does escalate, I think it's going to produce loose -loose situation for both Europe and the United States.
So I think it's all the more important at this time for Europe to think about diversification.
And also to bolster the domestic economy.
Cutting rates is, it's only one thing but there are a more the European policy makers can do.
So all these issues will continue to weigh on the European economies in addition to the potential tariff.
And the ECB president, Kristin Lagarde, said the economy was set to remain weak in the near term, adding that service pointed to a continued contraction in manufacturing sector.
And she said, consumer confidence is fragile.
So how do you view all this?
And why is the situation?
Yeah, I think her assessment is accurate, but also, you know, sombering.
I think she's right.
When it comes to, you know, consumer sentiment, that is very important to push the economy forward.
Because again, the export markets are very uncertain at this point.
So they really need to have the domestic consumer demand to help the drive demand side.
But on the other hand, after going through the high inflation and then interest rate hikes and even though their real wage is growing, still, I think consumers are worried about their jobs, they are worried about their income growth.
And so there will be still time for the consumer sentiment to really improve.
Not to mention, as you just alluded to, which is the manufacturing sector has been declining, We have here stories, you know, about Germany's auto -mobile sectors, they're facing competitions coming from China, they're looking at the work—weaked demand domestically, and now to export market uncertainty.
So I think all these will weigh on the consumer sentiment.
And for the manufacturing sector, it's not helping when they're struggling with high energy costs, the lack of innovations, the lack of productivity growth.
So all these structural issues, in addition again, to the trade prospect, all these are going to weigh on the economy.
So I think LaGora's assessment is sombering.
I do think that even though the IMF is projecting better economic growth this year in 2026, I think that there's still a lot of obstacles.
And so the policy makers need to remain vigilant, for example, in their rate cuts.
And also I think more importantly, in terms of public investment and fiscal expansion in order to help the economies.
And confidence is in short supply as you mentioned, so how could they fix the confidence?
Yeah, I think this is a very difficult question.
So for one thing, of course, you want the ECBs to continue to help to ease the economy and give more sort of confidence so that consumers will feel that, on the one hand, inflation has been under control, and, on the other hand, the credit situation is being eased.
But I think more importantly, I think the fiscal side is to – especially in countries like Germany, they are still having really high level of so -called fiscal discipline.
The government is not helping enough to support the demand, and it's not enough in terms of pilot investments.
so I think all these needs to happen, not to mention also policy coordination among the European economies in terms of really promoting the integration of the market.
I think this is very important for Europe because, you know, for every single country, if their trade prospect with the United States is somehow, you know, undermined because of Trump's tariff policies, then they really need to think about how they improve their market integration and trade with each other to improve both the efficiency, but also the complementarities of their economies.
So there's a lot, I think, at stake, both at the individual country level, but also at the collective level, that they need to coordinate policies to think about implement industrial policies that are not sort of at the expense of each other.
And as you mentioned, Germany and France both contracted in the last quarter of So what do you think are behind the setback in German and France economy?
Right. So if you contrast Germany and France with countries like Spain, Portugal, and Hungary – you know, the letter, the usual sort of the so -called peripheral countries – they actually grow at a much better rate than Germany and France.
So I think the major reasons again is these two countries, France and Germany, they're very much reliant on manufacturing, they're also very relied on their export markets.
Whereas countries like Spain, they have much stronger service sector and they are less hit by the energy costs and so on and so forth.
So, I think the reason for Germany and for France to a lesser degree is this energy cost.
Again, also the lack of productivity growth in the past few years, also the lack of in Germans case, lack of public investments, to upgrade their infrastructure, especially the digital infrastructure, right, to promote their digital economy.
So I think you know these two countries will continue to face some of these struggles and especially when it comes to, you know, managing the competition with China and with other countries and also trying to redevelop their industrial sector by innovating, by, you know, getting reliable and cheap energies, and also by increasing the public investments to support their infrastructure.
What do you think is the fix for the eurozone economy?
Talking about competitiveness of Europe, former ECB Chief Mario Draghi in his report calls for the EU to build its own artificial intelligence infrastructure to double down on industrial policy and finish the work of integrating the single market, and he also calls for the big increase in the investment.
But in your opinion, what kind of reform do they need?
Well, I pretty much agree to a large extent, a jargi report.
I think for one, again, I emphasize that the public investments in building the infrastructure to allow for more innovations, I think that it's very important.
So that I think it's still lagging in countries like Germany, company.
And not only itself has been really self imposed, right, this kind of fiscal discipline, but it's also in a way constrain other countries to have the, you know, fiscal activism and increase public investment.
So I think that's number one.
And number two, I think Jacqueline report.
Well, I mean, again, going back to this public investment aspect, Jackie has talked about your eight hundred billion Euros investments that is needed for the Eurozone.
the current level is nearly far from enough.
And the second point I think again, it's at the collective level, I think policy coordination between countries and build this integrated market, I think that is the second priorities that they need to work on because otherwise there's so much regulatory differences and there's so much red tape, it becomes very difficult for businesses to navigate and to maneuver.
Yang Yang, Professor of Economics with Will and Matt University, talking to my colleague, Zhao Yang.
We'll be back. You're listening to World Today.
I'm Dean Hunnibai Zheng.
U .S. President Donald Trump has signed an executive order calling for the creation of a sovereign wealth fund.
He says the fund could potentially help finance the purchase of TikTok.
U .S. Treasury Secretary Scott Benson says the plan is to monetize assets currently owned by the U .S.
government for the American people.
More than 90 countries across the globe have sovereign wealth funds.
So joining us now in the studio is my colleague Zhao Ying.
Hey Zhao Ying. Thanks for having me.
So first of all, can you help explain what is basically a sovereign wealth fund and and how such a fund typically operates.
Well, a sovereign wealth fund is essentially a government -owned investment vehicle.
It's a way for a country to manage and invest its surplus financial resources, typically accumulated through budget surpluses or natural resource revenues like oil or gas.
And the idea is to take these surpluses and invest them in a diversified portfolio of assets such as stock, bonds, real estate, and even private equity.
And the goal is to generate returns that can be used for future priorities like infrastructure, education, or pension, or to stabilize the economy through financial stress.
And for instance, Norway's sovereign wealth fund, which is one of the largest in the world, is funded by oil revenues.
And it invests in everything from global companies to infrastructure projects.
And these funds are usually set up with an emphasis on long -term growth, which means they're less concerned with short -term returns and work focused on building wealth over decades.
And often they're managed independently from the country's day -to -day government operations to keep them insulated from political pressure.
And the U .S. has never had a national sovereign fund before, although in some states like Alaska and Texas, they do have smaller wealth funds tied to oil revenues.
but Trump's proposal is different because it would be a federally run investment vehicle, and it raises a lot of question about how it would work in a country that doesn't really have a surplus to fund it.
I see. So why do you think Donald Trump is now interested in creating such a fund?
Well, he has been hinting at the idea of a sovereign wealth fund for quite some time even during his campaign, but Now, it seems like he sees this as an opportunity to further his economic agenda.
I mean, the idea of a sovereign wealth fund fits into his vision of boosting American economic strength and reducing reliance on foreign entities.
He sees this as a way to make direct investment in strategic industries and infrastructure at home.
For instance, he's talked about using it to finance major projects like highways, airports, and even medical research and I think this could also be part of his America First agenda, especially he mentioned that he could use this fund to possibly acquire TikTok and that fits into his practice of using government intervention to, in strategic industries as a tool to counter foreign rivals, particularly China.
But also, I think he may also view this as a political move to solidify his legacy because sovereign wealth funds are seen in many countries as powerful tools for national prosperity.
So, if he can successfully create one, it could be seen as a major achievement in his economic policy.
But that said, it's clear that his proposal is still in very early stages and there's a lot of uncertainty about how or even if it will ever happen.
Okay. So talking about his very suggestion here that the phones could be possibly used to acquire or buy TikTok.
Do you think it is it is appropriate or even realistic for a sovereign wealth fund to be to be utilized for purchasing a private company like a social media platform.
Well, that's highly unusual because sovereign wealth funds are typically used for long -term investments like stocks, funds, or infrastructure rather than acquiring entire companies, especially private ones.
And the goal of these funds is usually to diversify assets and build wealth over time, not to make highly concentrated and potentially risky investments in specific companies.
from a practical standpoint, TikTok is valued in the tens of billions of dollars, and it's unclear whether the US government would get the funds to make such a purchase.
And as I said, unlike countries with massive budget surpluses, the US actually runs a deficit.
And there are also serious questions about how the government would manage TikTok because sovereign wealth funds are designed to be insulated from politics to ensure investments are made for financial instead of ideological reasons.
But if the U .S. government owned TikTok, it could face accusations of censorship or bias.
And legal experts have also pointed out that the government ownership could clash with First Amendment protections.
So also there's another serious problem is that Many Americans nowadays do not have much trust in US government, so if they perceive TikTok as being controlled by the state, then we just abandon the platform, and this could undermine the app's value and make the investment a financial liability.
That's a good point.
If TikTok is controlled by the Chinese state, there wouldn't have been so many American youngsters enthusiastic about this platform.
In the US state as well.
yeah, so like you said earlier Zhao Ying, sovereign wealth funds are usually backed by budget surpluses, which is not the case for the US government right now.
So with that in mind, do we have any idea with regard to where the Trump administration plans to get the money needed to feed this fund.
Well that's one of the biggest challenges with this proposal.
and one idea Trump has floated is using tariffs during his campaign he suggested that revenue from tariffs on countries like China or Mexico could be funneled into the fund but tariffs are often passed on to consumers in a form of higher prices and they've historically generated limited revenue compared to the scale needed for a sovereign wealth funds and another possibility is leveraging existing government assets.
Treasury Secretary Scott Benson mentioned this monetizing the asset side of the U .S.
balance sheet, which could mean selling or borrowing against federal properties, land, or other holdings.
For instance, the U .S.
government owns vast amounts of land and infrastructure, but converting these into liquid assets for a fund would be a complex and politically contentious process, and also there's the idea of repurposing existing agencies like the US International Development Finance Corporation, which currently finances projects in developing countries, and Trump has reportedly considered converting the DFC into a sovereign wealth fund -like entity, but this would also require significant new funding and congressional approval as well.
Thank you for putting this into perspective.
That was my colleague Zhao Ying.
That's all the time for this edition of World Today.
To listen to this episode again, or to catch up on our previous episodes, you can download our podcast by searching World Today.
I'm Dinhoney Beijing, thank you so much for listening, bye for now.
