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Xi Jinping says the Strait of Hormuz should be opened in cow with Saudi Arabia's crown prince.
Japan announces its biggest export rule change in some decades, in another step away from the country's post-war pacifism.
Bulgaria's ex-president, Roman Radov, wins election in landslide and India and South Korea sign new deals in efforts to push their bilateral trade to US50 billion.
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First up.
Chinese President Xi Jinping says the normal passage through the Strait of Hormuz should be maintained.
He made the remarks in a phone conversation with Saudi Arabia's Crown Prince Mohammed bin Salman.
President Xi Jinping says China advocates immediate ceasefire, supports all efforts that are conducive to the restoration of peace and insists on resolving disputes through political and diplomatic means.
Mohammed bin Salman says Saudi Arabia is ready to work with China to maintain the ceasefire and ensure safe and free navigation across the Strait of Hormuz.
So for more.
Joining us now on the line is Sultan Khali, a retired Air Force officer and author in Pakistan.
So thank you very much for joining us today, Selton.
First of all, how do you rate the importance of China and Saudi Arabia jointly making a call for the reopening of the Strait of Hormuz?
Oh, thank you very much for having me on your show.
And you have touched a very important topic.
And your question is so relevant because the eyes of the world are focused on not only the war, but of course we are having a fragile ceasefire.
But most importantly, the scarlet thread of this whole war.
You see, exercise is the Strait of Hormuz.
Now, in response to your question, I must emphasize that the Strait of Hormuz is the world's energy juggler vein.
And when China and Saudi Arabia they jointly call for its reopening, It sends a very powerful message, because these are two of the largest stakeholders in global engine energy security and it shows that they are aligned in demanding stability.
And this joint voice amplifies the urgency of keeping trade routes open and reassures markets that diplomacy is being prioritized over confrontation.
In this phone call, President Xi Jinping also said that China supports regional countries in building a shared home of neighborliness development, security and cooperation, and taking their future and destiny into their own hands to promote regional peace and stability.
Is this statement in line with China's actual practice or practices in dealing with its relationship with the Middle East?
Again, it's very relevant to answer this aspect.
Now, please, this... is a unique situation which has erupted.
But the important thing is that President Xi Jinping has been saying exactly the same thing and not just saying he has been practicing it, because the proof of the pudding is in its taste and his global initiatives.
Whether it is diplomacy, whether it is security, they boil down to exactly the same statements.
So in response to your question, President Xi's words, they are not rhetoric.
They are not one time.
They reflect China's consistent practice in the Middle East, whether through brokering the Saudi Iran rapprochement last year, investing in regional infrastructure or promoting inclusive dialogue.
China has shown its support for regional countries in taking ownership of their destiny.
Now please, I would like to remind your listeners I'm sure you are aware of it that there is a Chinese proverb that a good neighbor is more precious than a pot of gold.
And the principles of neighborliness, security and cooperation is visible in China's balanced engagement with all sides.
Now talking about the Iran conflict.
I mean talking about some of the frontline issues or the negotiation issues.
Pakistan is now preparing to host a new round of talks between the US and Iran.
So, with that in mind, how do you think the US naval blockade of Iranian ports and this recent US seizure of an Iranian flagged cargo ship are complicating the whole situation?
Yeah, it's really very unfortunate because, on one hand America, or to be more precise its president, Donald Trump, has been showing his eagerness for not only continuing the ceasefire, or rather the peace, but talking about negotiations and achieving peace.
But on the other hand, he has been making very volatile statements.
But more important than that is that the US naval blockade of the Iranian ports and that by itself international law defines it as an act of war.
Now the important thing is that the US naval blockade and seizure of an Iranian vessel they are not just acts of war.
They have really complicated the atmosphere of trust because Iran, when it arrived in Islamabad in the previous talks which were held on 11th of April and now was preparing and was prepared to come Just on the eve of it.
America carries out this, you know, gross violation of not only the ceasefire but also of the trust.
So please remember, negotiations, they thrive on goodwill.
But coercive measures, they only harden position.
And Pakistan's efforts to host talks is commendable.
It has been burning the midnight oil.
Its officials, especially our prime minister and our chief of army staff and our foreign minister.
They have been visiting various capitals, calling their counterparts all over and also taking China into confidence about their efforts.
And China has supported peace, but the US effort indicates that, you see, it is indulging in blockade, which is risking undermining dialogue by creating a perception that military pressure is being used to dictate terms which, I'm afraid, is a non-starter.
Meeting the Crown Prince of Abu Dhabi in Beijing last week, Xi Jinping unveiled a four-point proposal to safeguard Middle East stability, including achieving long-lasting peace, nations respecting each other's borders, respect for the international rule of law and prioritizing security and development.
Why do you think China's push for de-escalation and a push for the restoration of peace has drawn acknowledgement from multiple parties including, I mean, the direct parties involved in this conflict, namely Iran and President Donald Trump?
Yes, Xi Jinping's four-point plan peace, respect for borders, rule of law and prioritizing development.
They resonate and are welcomed by all parties because these are universal thoughts.
And they are not just thoughts.
They are actually the home truths.
We have to achieve them because they avoid partisanship and speak of shared interests.
And that is why Iran welcomed it.
The Gulf states acknowledged it and even President Trump, who is the perpetrator of this war.
He recognized its value because China's push for de-escalation is credible precisely because it is driven by principles and it is not power driven.
By the way Selton, some analysts say a prolonged Iran conflict might increase the possibility that the United States would take more aggressive actions targeting China.
What is your take on this?
Well, it's a tricky question because we are dealing with a US president who has not been very stable or consistent in either his actions or the rhetoric he indulges into, or the statements which he keeps changing time and again.
Now please remember some analysts.
They may warn of a spillover, but the Fact of the matter is China's position is clear.
It is seeking stability, not confrontation.
And a prolonged Iran conflict, of course, it could heighten tensions.
But China's diplomatic posture engaging all sides, calling for ceasefire and safeguarding navigation.
They are reducing the grounds for aggressive targeting.
Because China's neutrality is its shield.
For Gulf countries Sultan, in your observation, what kind of difficulties or vulnerabilities or strategic dilemmas, to put it this way?
Do you think this ongoing US-Israeli war against Iran has revealed?
And in what ways can strengthening ties with China help them address those difficulties or vulnerabilities?
Well, you see, the iran conflict has laid bare and exposed the all the vulnerabilities of the gulf.
What was it?
The dependence on secure ceilings, exposure to energy shocks and, most important, reliance on external military powers and specifically, In this case, the United States of America.
Because all the Gulf countries, I mean the GCC countries, they enabled the US military bases on their soil and they were assured by the USA that they are there for their defense.
But when the crunch came, They realized that the same military bases and reliance on the military powers was their Achilles heel.
They were their weakness and Iran. targeted those bases.
Iran did not target those countries themselves, but the US bases which were there because they were being used to launch attacks on Iran, and that exposed the vulnerability.
And now you see, the other option is some people may be thinking that if the Gulf countries get rid of the US bases and ask China to make bases, that is also unrealistic.
First of all, it is against the principles on which China runs its foreign policy.
It is not making basis on other countries, but strengthening the ties, offering alternatives for long-term energy contracts, investment in diversification and diplomatic support for regional dialogue.
In other words, enabling those countries to defend themselves rather than seek external help.
And that is the key word because China is providing an economic ballast and political reassurance.
Thank you very much for joining us.
Sultan Ali, a retired Air Force officer and author based in Pakistan.
Coming up.
Japan announces its biggest export rule changes in decades, in another step away from the country's post-war pacifism.
This is World Today.
Stay tuned.
You're back with World Today, I'm Ding Heng in Beijing.
China has expressed a serious concern about Japan's move to revise its defense equipment export rules.
A foreign ministry spokesperson said on Tuesday that a series of recent moves in Japan's security area have laid bare the falsehood of Japan's claim that it is a peaceful country focused on self-defense.
The spokesperson of the Chinese foreign ministry said China is going to stay highly vigilant and formally oppose a new type of Japanese militarism.
The decision on the part of the Japanese government we're discussing here was approved at a cabinet meeting on Tuesday.
In principle, it is allowing the export of lethal weapons, marking a notable shift in Japan's long-standing restrictions on arms exports.
So for more.
Joining us now on the line is Dr Rong Ying Chair, Professor at the School of International Studies, Sichuan University.
Thank you very much for joining us.
Thank you for having me.
So we know previously, the majority of the japanese military exports to elsewhere was limited to rescue transportation warning, surveillance or mines, sweeping equipment, etc.
The latest move we're talking about here is opening the way for exports of warships, missiles and so on.
What could be the danger of this change?
It is true.
I think this is the latest dangerous moves by the Japanese government particularly, I think, the right wing, conservative forces, to push for the kind of move towards to the direction of militarization.
That's why the Chinese foreign ministry, the Chinese government, expressed grave concerns and opposition to that.
It's clear if we compare the last, the previous sort of principle, the three principles of defense equipment and technology transfers, and not to mention the first, the one in 1967, the so-called arms export.
There are many has been changed, but this one is the most, I think, fundamental changes, most representing a kind of a shift from the post-remarkable sort of a shift from the post-war sort of policy where I think Japan always want to present itself as a kind of peace-loving country, a country that upholds the international laws for international peace.
Now, three export principles will be kept in place, according to media reports.
These principles commit Japan to strict screening controls on transfers to third countries or a ban on sales to countries that are involved in a military conflict.
However, in a presentation outlining those changes, Takahichi's government says exceptions could be made when deemed necessary for national security.
As you observe this episode, Dr Rong, do you think this is actually hollowing out those principles despite, you know, making them remain on the surface?
Well, I think the approach that the Japanese government and particularly, I think, these right-wing forces has pushed for the revision and lifting of that ban has always been a kind of hollowing incremental, inch-by-inch approach.
But this one, I think, as I said, that is the most sort of fundamental, most sort of substantial one.
The danger, as I said, lies two facts.
One is, of course, the export of the lethal weapons, And the second one, which is, for me, is more dangerous and irresponsible, is that exceptions has been made that it could export to lethal weapons to the area or the country that is in conflict.
This is against the majority of the countries, normal countries in the world, in terms of their rules or regulations for arms control.
And if you look at the wordings one can easily sort of interpreted as meant to make excuse for interfering in the external affairs of some regions.
In this case, as a Chinese, I'm very much suspicious.
This is really unprepared ground for possible eventual sort of interventions of the Taiwan question.
That's why the Chinese are very much concerned and firmly opposed to that development.
Part of the motives of this change is that Japan wants to strengthen its own defense industrial base.
Is this a legitimate aspiration for Japan?
I mean at a time when global demand for weapons is certainly growing, rising due to the wars in Ukraine, the wars in Iran and in the Middle East and elsewhere in some African countries.
Do you think it is okay for the Japanese government to hope to claim a certain share in this global weaponry market?
Well, I'm not going to buy that argument, whether it's an economic or whatever.
After all, I think, as a sort of responsible country or peace-loving country.
Japan always tried to claim and present that exporting lethal weapons, for whatever reasons, Making money.
That is really, I think, against the morality, against the proper norms and the rules that Japan always claims that they want to uphold.
But the most important thing, as I can see, is that it's a strategic or security argument.
If one follows the statement by the Chief Cabinet Minister, the purpose, the goal of this revision, I think he made very clear, is to ensure that In case of that eventualities or contingencies, Japan will be able its defense capabilities, defense industry capabilities, will be able to sustain and help in sort of keeping maintaining its fighting capacities.
That is exactly, I think, the danger where this revision of policy lies.
That is the reason why I think Japan's neighboring countries, the region in particular and the world at large had to be really careful.
If you look at Japan's history wartime history and if you look at Japan's sort of the excuses that have been made to launch an aggression against its neighbors and the country in the region,
Japan always hook up, always try to find an excuse for its policy.
That is very much a dangerous development.
It is reported that one of the first deals following this latest change could be the export of some second-hand Japanese warships to the Philippines.
Should Manila think twice about such kind of purchases?
Well, I think Manila should think more than twice, right?
After all, I think, during the World War II Manila, the Philippines people, Philippines were, I mean, those who suffered most.
I mean, of the Japanese aggression, Japanese wartime atrocities.
And while some Filipinos may have short memory, but I think the Philippines people and the region in Southeast Asia as a whole should really have to be careful, should really have to be vigilant that, as we are discussing, that Japan's change, Japan's sort of policy shift on the question of arms export is primarily meant to prepare the ground for its interest and that which is, I think, to fighting capabilities to, I think, to ensure that the strategic goals will be reached or be addressed by military means.
This is again very much against the international obligations Japan should uphold post-World War II and also the commitment for, I think, peaceful development.
Yeah, indeed.
I guess, when we talk about Japan's bigger trend of trying to build its own military, a so-called normal military, of course an elephant in the room here is China.
And should Tokyo really worry about a so-called threat posed by China?
I think that's something that should be really taken with a sense of skepticism.
But thank you very much for joining us.
Dr. Rong Ying, Chair Professor at the School of International Studies, Sichuan University.
More to come, Bulgaria's ex-president Roman Radev wins election in landslide.
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I'm Ding Hen in Beijing.
With the development of artificial intelligence, one-person companies, or OPCs, are seeing explosive growth in China.
The LPC refers to a model in which AI tools enabling a single entrepreneur or a very small team to perform functions that once required a much larger team.
From product development to marketing and operations.
This new model has the potential to shape how businesses are built.
So, can OPC become a new growth engine for the Chinese economy?
My colleague Zhao Yang spoke with Dr. Yan Liang, professor of economics with Willamette University.
So, Yan, China is putting AI industrial application at the center of the 15th five-year plan.
With the rapid development of AI, the one-person company is emerging as a new frontier.
So what has changed technologically and economically to make this one-person plus AI model viable today?
Right.
So I think for these one person, company or OPCs, I think they're really enabled by very rapid technological development.
So, first of all, I think we have seen the AI.
You know the cost of AI tokens have dropped very significantly, actually somewhere between 60 to 80 from 2025 to 2026.
So, in other words, the AI token has been much more affordable for these individuals to purchase to utilize.
And so that I think helped.
And second is, I think that there are a lot of autonomous agent frameworks you know through, for example, OpenClaw or Menace, that allow these individual entrepreneurs to automate very complex multi-step tasks.
And so that technological improvements really help with that.
And then finally, I think as far as technology is concerned, infrastructure is really developed really rapidly under China's 15th five-year plan, where computing powers and AI models now are treated as national infrastructure.
And so it really puts a lot of efforts in building this infrastructure and therefore enable these individuals to take advantage of the ecosystem.
And then when it comes to economic policy in general, I think they're also becoming much more supportive.
So at the local government level, they offer computing power vouchers, data vouchers.
They're heavily subsidizing some of these AI companies.
And so I think that really reduced the barriers of these OPCs.
There's also many OPC incubators in different cities that allow free housing rent, free offices and special loans for the OPC to start.
And then I think there's also simplified legal framework, the revised company law in 2024, for example.
It lowered the capital requirements and simplified the registration process.
So I think all of this really helped the OPC to take off and to thrive in China's market today.
And some describe OPCs or one-person companies as the next wave of productivity growth.
So could they be as transformative as the rise of the internet platform economy?
Well, I think they definitely have the potential of of being as transformative as far as productivity growth is concerned.
When you look at these OPCs, first of all they're they're small and they're nimble and they are very agile.
They serve as the so-called innovation cells that help to accelerate the adoptions of these new AI technologies and also create niche products, because there are so many of them.
They need to find their marketplace.
And so there are a lot of innovations, a lot of creativity that are being unleashed by these OPCs.
And I think second important factor here is we're looking at very significantly reduced RD costs because again, you only need to have one software one, a ai model, instead of having a entire team.
So i think with these kind of ai power tools you're really able to create high quality products in a very short amount of time.
And we're looking at, you know, some companies can they go from concept to market in just two months, And even the farthest one that I've seen is in 12 days that these OPC can be set up.
So we're talking about a much faster innovation cycle with these kinds of OPCs.
And then finally, I think again, the acceleration of these developments.
Using these AI agents can really quickly turn some ideas into new digital products.
And of course, being very low cost, that also means that their sunk cost is relatively low.
So if there are any sort of mistakes along the way, they can very quickly correct them.
So in that sense, I do see that these OPCs hold great potential for productivity growth.
And China's one-person company sector is clustering in major innovation hubs like the Yangtze River Delta, the Pearl River Delta,
So what does this tell us about the role of the regional ecosystems in shaping the future of AI-driven entrepreneurship?
Right.
So I think this kind of clustering based on regional ecosystem is important for three different reasons, or there are three major factors that account for that.
One is that I think there are these integrated regional value chains that go from, you know, hardware to software, that are clustering around an area.
And so that's really conducive for the OPC, right?
So think about you being a entrepreneur.
If you need to have the infrastructure, if you need to purchase the hardware and you also need to install your software networks.
If it's all in one region, it will make it so much easier and to have so much more convenience to handle all this.
So I think the antiquity regional value chain is very helpful for these OPCs.
And second is I think that you know, depending on the different regions, they all have relatively specialized, I think, AI.
I would say focus right and AI hubs.
So, for example, in Shenzhen, building from Huaqiangbei and a lot of these hardware markets, it really helped to create OPCs that focus on supply chain matching prototyping, global logistics and utilize the local ecosystem to really bring all these elements together.
And because they're known for, Then it also helps to direct the potential clients to focus on these regions.
And then you have places like, for example, in Beijing, around Zhongguancun.
They have the AI North Latitude Hub, which then provides a lot of innovation space for all these OPCs.
They have the integrated matchmaking services.
So again, if you are a niche market, that you need to find your upstream suppliers and also downstream users, having the kind of matchmaking services, I think that it's also very helpful.
And lastly, I think it's also the regional And local governments support system.
You have certain localized regulatory system and operating platforms that help to bring you know different OPCs together.
And also, as I mentioned earlier, Shenzhen government.
For example, they're providing up to 10 million yuan in computing power vouchers.
And so that really helped attract a lot of OPCs to set up their companies there.
So I think, given those three reasons, right integrate regional value chains, the niche to specialize the markets, and also government support.
That's why we're seeing the OPCs are clustered around these regions.
And with most OPC founders coming from the post-90s and post-2000s generations, how might this younger generation of entrepreneurs reshape the traditional business models, employment patterns and innovation here in China?
Well, I think you know.
First of all, I think, the young entrepreneurs.
They're much more tech savvy, right?
They, you know, grew up with these kinds of technologies.
And so they're much more open and they're much more agile to adopt these kinds of technologies.
And second is I think that the traditional industries now are being automated and they're getting all these challenges from AI.
So there are a lot of labor saving technologies.
And so I think that the OPCs really opened the venue for some of these young college graduates and individuals with this sort of entrepreneurship Right.
To put their productive to to have the productive uses of their talent.
So I think that is also important, as far as you know employment is concerned, that now we're seeing this sort of flexible employment and employment or kind of jobs.
Right.
That would really unleash the individual creativity and their innovatability, and also their self motivations.
So I think, from these two perspectives, right one is to have this new business model, as you mentioned, being very innovative, being very tech savvy.
Being very tech dependent.
And then, on the other hand, really to transform the kind of labor market landscape that you know it's not a traditional gig economy where you know you basically work for others.
Now you're becoming the owner of your own business.
So I think in many ways it does help to motivate and galvanize these young entrepreneurs and also provide them with really a productive way of using the talent.
But, that said, I do think that some of these companies they struggle still to survive on the long-term basis because the market competition is high, but also because I think it takes some time to really figure out what are the products that would really have the long-term trajectory in the marketplace.
So I do think that you know some support from the government, from the local governments and communities needs to be provided and provide certain trainings and certain bottom sort of cushions to help these young generations to pursue their entrepreneurship.
Yan Liang, professor of economics with Willamette University, talking with my colleague Zhao Yang.
This is World Today.
We'll be back.
You're back with World Today, I'm Ding Hen in Beijing.
Bulgaria's former leader Ruman Radev has warned his country's parliamentary election by a landslide.
His progressive Bulgaria party secured almost 45 of the votes, marking one of the strongest single-party performances in a generation.
The vote came four months after massive protests over economic grievances and corruption forced the previous government administration to resign.
Both the European Union and Russia have welcomed his victory.
So for more.
My colleague Song Ruixin spoke with Dr George Zagopoulos, a senior fellow with the European Research Organization CIFE.
George, why did progressive Bulgaria win so decisively, and what does this result tell us about what Bulgarian voters are expecting?
In the last couple of years, Bulgaria has suffered from different routes of elections, meaning that snap elections were taking place very regularly and people had been fed up with having to vote all the time.
So this time they opted for a new government in the hope for some political stability.
So this is how I would see the recent result, which will finally lead into a stable government for Bulgaria in the years to come.
For Bulgarian citizens, this is what matters more to have a stable government that will to govern the country in the next four years.
Well, if I remember this right, Bulgaria has held eight elections in five years, right?
Well, Bulgaria is encountered with important challenges like corruption, economic problems and the demographic crisis.
And in order to deal with these challenges, obviously a stable government would be necessary.
As you correctly pointed out, to have so many times elections over the last five years made it quite difficult for a stable government to cope with existing problems, which have been exacerbated by external problems like the war in Ukraine, the war in the Middle East, and so on and so forth.
So the problems are there.
But obviously if a leader can govern the country and establish a stable government, then there are chances for the problems to be mitigated.
And this is what the prime minister, the new prime minister, has promised Bulgarian citizens to do.
And that's why, in my opinion, they gave him and they demonstrated confidence in the election of last weekend.
And then Radov has been described as pro-Russia, yet says Bulgarian will continue on its European path.
How should we really understand this kind of positioning between Europe and Russia?
This is a very important question and in European politics very frequently we have to wait and see how a politician might govern after he or she is elected, because the pre-election campaign is certainly different from day-to-day politics after the election.
So I would say that the new governmental agenda of the prime minister of Bulgaria is not necessarily pro-Russia.
It is an agenda which is based on a pragmatic calculation about the future need of some collaboration between the European Union and Russia.
And the Bulgarian Prime Minister is not the only one who opts for such a policy in the years to come.
Of course, we have to wait and see up to what extent the European Commission, Brussels in general, might be prepared to accommodate with this policy and up to what extent the position and the attitude of Brussels might have an impact on the future policy of Bulgaria vis-à-vis Russia.
So the prime minister is suggesting that he is not pro-Russia.
This is very important to suggest.
He promised to Bulgarian citizens better times at the economic level through perhaps economic collaboration or a sort of economic collaboration and energy collaboration with Russia.
So, as a Black Sea nation on NATO's southeastern flank, how much room does Radov actually have to shift Bulgarians' foreign policy?
Well, Bulgaria is a small country in the Balkan Peninsula and therefore small countries do not have the room to completely or drastically or catalytically change their foreign policy.
So Bulgaria is a NATO member state and is an EU member state and recently joined also the Eurozone.
So I don't expect major changes in that regard.
What I would expect is a more pragmatic and realistic foreign policy from the side of Bulgaria, suggesting that it will be possible for the country, as much as possible, to explore the possibility of dialogue with other countries like Russia.
But in terms of a major shift in its foreign policy, I find it very difficult for that to happen.
And I'm not sure that the new prime minister himself is prepared to embark on such a journey.
He will be prepared to embark on a journey of pragmatism in order, as much as possible, to solve the economic problems of Bulgaria, which have worsened over the last couple of years.
You earlier mentioned Bulgaria's domestic instability.
Do you think this is more about political fragmentation, or does it point to deeper institutional weakness?
Well, I would say that it is a political instability which is fueled by existing corruption in Bulgaria.
And this is the main reason also why citizens voted and decided for a political change.
The real question, of course, up to what extent the new prime minister will be able to deal with the existing problems he is not responsible for.
Certainly we have to wait and see, but obviously the fact that the country now has a stable government with a majority in parliament is very important, taking into account what has happened in Bulgaria over the last five years and also before, at the political level.
Finally, George, Radov has not ruled out a coalition with a pro-European group or a smaller party.
What is the single most important thing to watch in the first, let's say, 100 days of his government?
Well, obviously political synergies will be very important to monitor in the next weeks.
Certainly the new prime minister of Bulgaria now, as the one who won the election, he's the real winner is attempting to pass the ball on other political parties and possibly broaden or establish a coalition government that will give him the opportunity to have larger majorities in the parliament and take into account that his percentage in the national election was very high.
I would say that smaller parties might find an opportunity to collaborate with him, because otherwise they might be in the opposition for the years to come.
So it's up to them to either work together on a joint platform or to stay in the opposition.
And that's why I believe that the new prime minister of Bulgaria is politically gambling this way in order not to govern alone, but to establish a coalition with others and chart a safe way forward for his country for the years to come.
That was Dr George Zagopoulos, a senior research fellow of the European Research Organization CIFE, speaking with my colleague Song Ruixin.
Coming up.
India and South Korea sign new deals in efforts to push their two-way trade to 50 billion US dollars.
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Stay tuned.
Welcome.
I am Chu Chu Zhang, Deputy Director at the Center for Middle Eastern Studies at Fudan University.
On the World Today program.
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I'm Ding Han in Beijing.
India and South Korea have announced plans to expand their cooperation in energy critical minerals, shipbuilding semiconductors and the steel industry.
New Delhi and Seoul have also agreed to resume and step up their negotiations to upgrade their 2010 trade agreement.
South Korean President Lee Jong-un is currently in India for a three-day visit.
He is accompanied by a delegation of some 200 South Korean business people.
The two sides are seeking to double their two-way trade to US$50 billion by 2030.
So for more.
Joining us.
Now on the line is Gao Xirui, political science PhD candidate at the University of Hong Kong.
Thank you very much for joining us.
Thank you.
So for the first time, India and South Korea have created a ministerial level economic cooperation committee.
What do you think is prompting the two sides to seek closer and enhanced cooperation?
I think the most important drivers behind the thing is one is energy and supply chain security.
And the second is actually industrial strategy and the matching fitness.
So first, let's talk about energy and critical minerals.
Both India and South Korea have plans for developing their manufacturing, which means they are highly dependent on external sources for energy and these critical minerals.
So by setting up this kind of cooperation they could diversify away from concentrated dependencies and build a more diversified networks with each other.
The second is strong manufacturing logic.
So South Korea is a global leader in shipbuilding, semiconductors and steel, while India is trying to expand its manufacturing base.
With its initiative like making India, but South Korea's demographic change recently is not look so healthy.
However, India has a rich supply of labor.
So there's a clear complementary.
So South Korea could bring technology and capital to India, while India can bring market size and labor to South Korea.
I see.
The annual two-way trade between the two sides is currently standing at about $27 billion.
Are you optimistic that they can reach this goal of boosting this number to 50 billion over the next five years by 2030?
I would say it is possible, but not guaranteed.
So on the optimistic side, the baseline of the 27 billion US dollars now is relatively low.
Let's look at a few numbers.
It is low, especially compared to other major relationships.
For example, The trade between China and South Korea is about 328 billion.
The size between China and India trade is about 127 billion.
And the trade between US and India is about 130 billion.
So the 27 billion us dollars between india and south korea is um, quite under development.
So that means there's a lot of room to go to grow, especially if they upgrade their trade agreement and expand the cooperation.
But also, It's only about less than five years.
So there's still uncertainty and it's highly dependent on whether India can remove some structural barriers such as, you know, the tariffs, and especially on the Indian side.
Yeah, I guess for the South Korean side they want to gain a wider market access in India, that's for sure.
But on the Indian side, their pursuit or their aspiration is to reduce this trade imbalance or the so-called trade deficit with South Korea.
Now.
So, when we talk about giving new energy, upgrading their existing trade agreements between India and South Korea, what do you make of the main hurdles in this regard?
I think there are several.
The first obstacle, the biggest one is actually the market access in India for the South Korea side.
So India has been traditionally been cautious about free trade agreements.
It's overall very concerned about whether its domestic industries will be exposed to more competitive international counterparts.
And India is trying to develop its own manufacturing industries.
So if they allow a lower entry bar for the South Korean ones, the New Delhi may be concerned that whether their own domestic enterprise could survive enter the competition with South Korea companies.
And also the trade deficits may widen as seeing its relationship with China.
Because why?
Another reason that India is seeking South Korea for, you know, shipping and critical mineral instead of China is that India might be reluctant to continue to widen its trade deficits with China, which is a huge concern for New Delhi.
So, from a South Korea's perspective, one major frustration since the existing agreement has been signed in 2010 is that India has not actually delivered as much liberalization as expected.
And another issue is the regulatory and non-tariff barriers.
And even if the tariffs on the Indian side are reduced, company may still face, you know, the complex standards and the certification requirements within each state of India.
And, you know, there are some bureaucratic procedures and also infrastructure bottlenecks.
So overall, the key hurdles is not only political will, it's also whether India is willing and able to open its market more deeply and consistently.
Hmm.
Within Asia, India and South Korea represents two major economies here.
And globally, I guess they can be defined as two typical middle powers here.
So if more middle powers beginning to pursue pragmatic cooperation with each other is the picture that we're seeing today, what will that mean to the world order?
I think it's a very interesting trend.
So at least there are three implications.
First, at the regional level, it will strengthen the economic network within Asia.
So it will may lead up to the birth of more international organizations within the Asia network.
And also, second, it will contribute to a supply chain diversification.
It may mean that some more distributed and resilient networks will be built.
And the third as the systematic level, it may suggest a bigger move towards a more multipolar and pragmatic world order.
So they may be less ideological and more focused on practical cooperation, especially in trading, technology and infrastructure.
Thank you very much for joining us and for your analysis.
Gao Xirui, political science PhD candidate, joining us from the University of Hong Kong.
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I'm Dinghan in Beijing.
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