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This is World Today.
Hello and welcome to World Today.
I'm Zhao Ying. Coming up, China and the U .S. are entering a fresh round of trade talks in Stockholm.
What can we expect?
China has proposed the creation of a global AI cooperation organization.
What's behind the initiative?
The US and EU have agreed to a trade deal with a 15 % US tariff on most EU goods.
Who are the winners and losers?
China has stressed equality, respect and reciprocity to promote sustainable relations with the United States.
The Chinese Foreign Ministry says it hopes the US will work with China, implement the consensus reached by the two heads of state during their phone conversation and make the the most of economic and trade consultation channels.
The statement calms as officials from the two countries are due to begin a new round of trade talks in Stockholm.
Chinese Vice Premier He Li -fung and U .S. Treasury Secretary Scott Benson will halt negotiations for the third time this year.
The Stockholm meeting is seen as an important indicator of what comes next for both sides, with Washington's pause on additional tariffs to end next month.
For more, we are joined by Zhou Mi, Senior Research Fellow with Chinese Academy of International Trade and Economic Cooperation.
Dr. Zhou, thanks for joining us.
Thanks for having me.
So what do you think each side hopes to achieve in this round of negotiations?
Well, it's still very difficult to predict the result of the negotiation because everything is changing every day.
But I think that both sides are just under the way to to trying to realize that both leaders have some consensus that we can try to find out the ways to have a better collaboration and have a mutual understanding.
I think that trade is important to issues in this talk definitely, but it's not only the trade.
So this talk maybe we'll cover a lot of different areas, including the trade and also a lot of other areas like for the investment or other kind of areas both sides have some interest. There are still many kind of, you know, new emerging issues coming after the previous talk.
So I think that both sides have to update their understanding about the new situation and also trying to find out what we can do to further strengthen the relationship between our countries and trying to avoid many of the misunderstanding and the misbehavings.
Yeah, but we know that the U .S. has recently struck trade deals with the U .S., Japan and other partners.
How do these agreements kind of shape Washington's negotiating position with China?
And what do you make of China's strategy heading into these talks?
Well, I think this is true that the United States has declared many of these new achievements when they're talking with other trading partners.
But it's quite different between the United States and China and the US with other trading partners because both our two countries are really our independent countries.
I think that we are trying to fulfill our own targets.
Every country has its own characteristic.
So for any of this talk from the EU side, from the Japan side, I don't think that they will have more pressures on the talk between the United States and China.
We still stick to our principle.
The principles are not changed.
we are trying to defend our benefits and also defend the multilateral system.
Well, for us, when we are going to have some talk, I think that we should respect each other, that it should be an equal basis.
So we need to address the challenges.
I don't think that there would be a lot of barriers for us to do something together and try to deal with the situation.
So for China, I do believe that China has many kinds of new improvements, like for the trade and also the industrial structure.
We are trying to have a better connection so it's a more resilient supply.
And that is also the United States who want to have from China.
We respect the demand of the United States, but I don't think that they can just try to take advantage of our position.
So there will be a lot of new room for us to discuss about the different topics, as we just mentioned.
Yeah. So what do you think are going to be the key sticking points in this round of talks and how much leverage does each side actually have at this current stage?
Well, there will be a lot of areas for us to try to negotiate or discuss in more details like the tariffs, what should be the right tariffs by both sides.
I think that it is very obvious and clear that in the past several years, when the United States is trying to put some tariffs on China, China will do the same thing to the United States.
I think that is quite different when you are looking at the trade deals that the United States declares they have on other countries.
So this attitude is very firm.
I would say that it is also not so easy problem to deal with.
Like for the management of the system, I think that China and the United States have a lot of discussions and interactions about exchanging our real coins and the ways of managing the trade and investment and economic development.
So we should try to look at the possibilities of changing the other side's position and we should try to follow some of the practices which have been recognized and accepted by the international community.
There were a lot of new issues like for the investment or some kind of a new technology like what we have observed in the US agreements, that they have touched some of the new areas like the digital trade or other issues.
I think it's worth discussing about these issues because even United States and China, we are not able to deal with these problems by our own side.
So if we can do more to to improve the mutual understanding and trying to reach some consensus and the new mechanism and the roles.
I think it's good for the digital trade and other areas to be better accepted by the international community.
So we have a lot of other issues that we may have different opinions.
I think it's worthwhile for us to trying to listen to each other and trying to find out what are the key points And could we do something to improve the mutual understanding and trying to find some better solutions to deal with these difficulties?
So if the truth can be extended, then what kind of follow -up mechanisms or roadmaps would you expect?
Like, is there any momentum toward a longer term or more permanent framework?
Well, definitely the world is looking for China and the United States to have a better and longer term of mechanism mechanism to ensure that the global supply chain will not be disrupted so easily so i hope that you know we can start it by the consensus by the two governments and the signals can be sent to the market and the market will have some positive feedback on this so based on the market collaboration and the market the rule i would see that will be even more stronger than the consensus by the governments.
So we have a lot of changes each year about the targets, about the goals by the different governments.
But the market will still to its principle that is profitable, that is the innovation base, and also a kind of collaboration and a complementary cooperation between the different parts.
So I would say that the mechanism should give the investors and also the stakeholders more confidence that China and the United States can benefit ourselves and at the same time to benefit our partners from other sides.
Yeah, but how are the existing U .S. tariffs, I mean, already impacting China's economy or business environment?
Has the damage already been done in terms of harming the confidence of foreign companies that are doing business with China or investing in China?
Yeah, there are a lot of bad impacts for some companies who are doing businesses between our two countries.
I think that tariff is especially damaging for some companies who want to have a lot of collaboration.
I mean, in the vertical direction inside the industries, like for the automobiles and other electronics, machineries or other things.
So it's not so good for the investors and the companies to do business is based on such an unstable environment.
I think that maybe we should try to do more to support the companies to find their the best choices on dealing with the situation between China and the United States.
And I mean, then we are longer term to reduce the cost of doing business for them, for the companies and also benefits the employment and also the governments, performance, you know, the interest. Yeah, but also there's growing concern that the prolonged tariffs could hurt American business and consumers through higher input costs and prices.
I mean, are we already seeing signs of that?
Well, it's true that the cost of, I mean, the increased cost in the supply chain will definitely have the impact on the related stakeholders and the consumers, especially for the United States.
They are the biggest is the conception market right now they have to buy a lot of things from the international trade so the when they are facing more challenges about the prices about the inflation and also about uncertainty they will they will try to change their pattern of the conception i think that consumers are the most important you know stakeholders in united states economy because the conception are really supporting the development of the economy of united states So this impact will still be there if the United States is trying to change its tariff with a lot of different locations and to
different trading partners.
Well, among all these trading partners, China must be the trading partners of the United States who have the wide range or coverage of the goods for the international trade.
So we are expecting that the trade could be more stable and could be based on the prediction with a good performance.
Thank you, Dr. Zhou Mi, Senior Research Fellow with Chinese Academy of International Trade and Economic Cooperation.
This is World Today.
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I'm Zhao Ying. The Chinese government has proposed the establishment of a global AI cooperation organization and has tentatively chosen Shanghai as the headquarters.
China stressed that the move is among the efforts to practice multilateralism and bridge the digital gap.
The World AI Conference was in Shanghai from Saturday to Monday.
Chinese Premier Li Qiang addressed the opening ceremony and stressed artificial intelligence's role as a new engine for economic growth.
He said it should become a global public good that benefits mankind.
The Premier said China is willing to provide its solutions and wisdom on AI governance to the international community.
Chen Tong has more.
Chinese Premier Li Qiang said at the opening ceremony of the World AI Conference that AI's rapid development is increasingly embedded in real economy and has become a new engine for economic development.
But AI is also bringing challenges.
challenges. Premier Li said China is willing to cooperate with all countries and provide China solutions to the international society.
The Chinese government proposed the establishment of the World AI Cooperation Organization.
Currently, global AI governance remains fragmented with significant differences in regulatory approaches and rules among nations.
We must enhance coordination to establish a widely accepted framework for AI governance as soon as possible.
Premier Li outlined three key recommendations.
Ensuring AI benefits all nations, particularly the Global South.
Boost innovation and cooperation to achieve breakthrough in AI technology.
Strengthening governance collaboration to ensure AI serves humanity positively.
Premier Li's call was echoed by participants at a conference.
In the afternoon of the opening day, Shanghai's Fuda University launched an open platform called DonorInspire, providing scientific data and open -source models to global scientists.
The university also released initiative for Global Academia to collaborate.
Where's the data? It is in the hands of scientists and research institutions.
If we don't promote the openness of science, data, models and professionals and scientific challenges, we can all face through a global cooperation.
If not, our scientific intelligence cannot be shared.
As academic, we read the papers and in fact quite a lot of papers actually come from from, you know, my colleagues in China.
And obviously, we share this information.
In terms of data, we tend to open source our work and our algorithms so everybody can benefit and learn from each other.
This is the seventh conference since the inaugural event was held in 2018.
And the participants are demonstrating unprecedented enthusiasm.
The size of the exhibition area will hit another record high, and doing a three -day event.
Numerous sub -forums and over 100 new products will also debut.
Chen Tong, CGTN, Shanghai.
With more, my colleague Zhao Yang spoke with Yan Liang, professor of economics at Baolamit University.
So Yan, first of all, China proposed to set up new global AI cooperation organization in Shanghai.
How significant is it in the current international landscape and what message does China send?
well i think this is a very important and significant uh announcements i think for one is we understand that ai is really the next generation technology that is going to have a you know overwhelming effect on all sectors of economies and all the global you know economies and so it would really reshape the dynamics of global technology but right now i think we're facing a ai gap between the global north and the global south certain countries wants to have the exclusive rights to the technologies to use for their own advantages and prevent others from participating in it.
So I think it's important to have a collective actions to try to spread and enjoy the kinds of technologies.
And on the other hand, I think right now, the AI technology in terms of governance is quite fragmented in Premier Li's speech. He clearly pointed out that without a collective approach to AI governance, that is going to create fragmentation patient, and that's going to create tensions and conflicts.
So I think, you know, this announcement and this initiative to set up a global governance, you know, sort of actions and initiatives, I think is very significant and will have, you know, a lot of buy -ins, especially from the global south.
And Premier Li Qiang also laid out three key priorities for global AI development and governance.
They include promoting inclusive access, fostering innovation through cooperation, and enhancing joint governance.
So how do you interpret the significance of these proposals, and what do they reveal about China's broader vision for artificial intelligence?
Right, so I think that's exactly the point that I think the idea is that because of the AI gap, especially between the global North and the global South, it's very important to expand the assets to AI to make it more inclusive.
We know, you know, before China's deep sea launch, AI is a very expensive, it's a very capital intensive sort of game.
Only advanced countries like the United States and some European economies are able to really partake in the AI development and utilize AI for their own advantages.
And I think China in this case has played a very vital role to provide wider access to AI because China was able to develop AI in a very cost effective way and also making AI open source.
And China also has been, you know, using, you know, various ways, for example, building, you know, low -powered but easy -access technologies embodied in products like smartphones, EVs, and home appliances, and so on and so forth.
That would help to make AI much more affordable and accessible.
And China has been also building, you know, infrastructure to enable the global south countries to partake in it.
So that's why I think this idea of providing wider assets and inclusive assets to AI is important and China is walking the talks.
AI governance, as I also mentioned earlier, with different AI governance principles and strategies, this could create fermentations and very difficult to come to agreements when it comes to cross -border data transfer issues and so on and so forth.
Right now, I think the U .S. and EU emphasize their governance more on regulations, ethics.
But China's approach is more using AI as a developmental tool to really promote economic development, smart governance, and also, you know, efficient technological innovations.
So I think there are some gaps between in terms of the governance principles, and that needs to be reconciled.
And despite the external uncertainties and rising competition, China continues to make rapid progress in artificial intelligence.
So what do you think are the main drivers behind this?
Well, I think, first of all, you know, the government has been really promoting AI since 2017.
The new generation AI development plan has already laid out a roadmap to make China the global AI leader by 2030.
30, and the focus is on breakthroughs in AI infrastructures, applications, and industrial integrations.
So there is a strategic vision, and this development plan also aligns very well with other China's initiatives, like Digital Silk Road.
So that helps to promote digital infrastructures, like 5G, cloud computing, and others, to really holistically promote AI development.
Of course, entrepreneurs play a very important role.
As we know, DeepSeek and many others have really rolled out foundational models that are competitive, cost -effective, and open source.
And then the AI adoption and integration in the industrial productions like smart cars production and also in various service industries right now, smart delivery, home services, they're on the horizon.
So I think there is very innovative spirit among the entrepreneurs to promote AI.
And last but not least, China has a very large market.
So the user cases is vast. So many, you know, consumers are willing to adopt AI -enabled smartphones, you know, cars and home appliances and so on and so forth.
So that really makes it a profitable business to promote AI and to integrate AI in the various products and services.
And as you mentioned earlier, China has emphasized the importance of making AI a shared global resources, especially for developing countries.
So how might this approach help narrow the digital gap between the global South and more advanced economies?
economies. Right. So I think there are three things that China has been doing to promote AI access.
One of them is, as I mentioned earlier, that China is trying to integrate AI into cost effective consumer products that can be widely adopted.
So like Huawei, Xiaomi and BYD, they embed AI in phones, home devices and electronic, you know, vehicles.
So it makes it very easy for for people to actually access to these AI products, unlike in the US model, which really require high end computing infrastructure, so that it's not very accessible for developing countries.
And the second thing I think China has been doing is to really build digital infrastructure.
So for example, China has built 1 .9 million 5G stations across the Belt and Road Initiative countries.
And with the Beidou Navigation System, system, China is also able to really provide location based AI services for agriculture, for urban planning and so on and so forth in the developing countries.
And last but not least, I think this idea of promoting AI as a tool to develop technologies and development, I think that is very important, and also the emphasis on national sovereignty rather than just a single focus on consumer privacy and related issues.
issues. I think all of these mean that China provide a, you know, alternative approach that would really meet the needs of developing countries.
So I think, you know, China is able to continue to be part of the rulemaking, I think, you know, governance structure.
And I think that cannot be, you know, de -emphasized.
And as you mentioned, Premier Li also noted that the global AI governance remains fragmented and countries have great differences in terms of regulatory concepts and institutional rules.
So how do you understand this?
And what kind of cooperation can the international community do on this front?
Well, I think, again, it takes negotiations.
It takes collective actions and consultations between countries.
There are different regulation approaches in different countries, like the EU.
is a much more rigorous AI regulations that prohibit certain, for example, facial recognition applications.
They're also putting a lot more emphasis on ethics, whereas the United States is a more deregulated approach. Whereas China, as I mentioned earlier, it really sees AI as a tool to promote growth, smart governance.
It really takes all countries to come together to be able able to try to find a way that countries can cooperate.
So one of the things, for example, countries are able to reach agreements right now is not to use AI for any nuclear military weaponry.
So I think this is a small, but positive step towards the broader consensus in terms of crafting the government structure.
So I think the first thing is to understand that countries would have the mutual benefits If they are able to come together and, you know, talk through some of these differences and come up with some basic principles when it comes to AI developments.
That is Yan Liang, professor of economics at Willamette University, speaking with my colleague Zhao Yang.
Coming up, the U .S. and EU have agreed to a trade deal with a 15 percent U .S. tariff on most EU goods.
Who are the winners and losers?
You're listening to World Today.
We'll be back after a short break.
This is World Today.
I'm Zhao Ying. The United States and the European Union have reached a trade deal with a 15 % tariff on EU exports.
It follows negotiations between US President Donald Trump and European Commission President Ursula von der Leyen in Scotland.
Nick Hopper has more.
What we saw unfold in Scotland during the course of Sunday was really quite a quick agreement.
What we know is there will be a 15 % blanket tariff on European goods entering the United States.
Now, that's certainly high, higher than many European countries wanted, but much lower than the 30 % that was threatened by Donald Trump.
Many EU nations had been hoping for a 0 % tariff.
On top of that, we also know there will be some exceptions.
Pharmaceuticals will not entirely be part of that 15 % tariff.
And steel coming from the European Union will be taxed at a 50 % rate.
And the European Union has made a whole range of commitments including to purchase, we're using Donald Trump's words, hundreds of billions of dollars of US military equipment.
The European Union also making $600 billion worth of investments in the United States And they say they will buy $750 billion in U .S. energy over the next three years during the remainder of Donald Trump's term.
That is Nick Copper reporting.
And for more, we are joined by Einar Tengen, Senior Fellow at Taihe Institute and Chairman of Asia Narratives Substack.
The Tuesdays agreed a 15 % tariff on most EU goods, and that's down from the 30 % Trump earlier threatened.
while the EU will open its markets to U .S. exporters with 0 % tariffs on certain products.
So who would you see as the biggest winners and losers in this deal?
Well, obviously, the EU has capitulated and the U .S. has won.
But, you know, there's still a lot of details out there in terms of, you know, if you want to highlight the deals.
I mean, most tariffs cut from 30 % to 15%, although that was probably a bluff.
Luff, zero tariffs for aircrafts, chips, and some farm goods.
The EU has to buy $1 .35 trillion in U .S. energy and weapons, but we really don't know the details of that.
Steel, alcohol tariffs are unresolved, and U .S. can reimpose tariffs if EU misses targets or whatever that means.
The loser's definitely EU steelmakers, 50 percent of the tariff is staying, pharma retail, it's also 15 percent, and U .S. automakers now are disadvantaged versus EU imports.
So there's going to be a significant group that are unhappy.
For some reason, Donald Trump says he wants to support the U .S. automakers, but between between Japan and the EU of these deals doesn't I don't think they feel the love.
Yeah, then why do you think the EU would agree to this deal?
If, as you said, this is a big win for the United States.
And do you feel this is purely about trade or other geopolitical considerations?
Because we see that as part of the agreement, the EU has agreed to spend hundreds of billions of dollars on U .S. energy products and weapons.
Yeah. I mean, the energy products is kind of baffling because, Because a lot of this, it's not so much oil as natural gas.
The natural gas is three times the price of what it would cost to have Russian -typed gas because it's LNG.
It has to be compressed on one side and then decompressed on the other.
It needs specialized transport.
It's coming longer distances, et cetera.
And this has put the EU at a significant disadvantage in terms of manufacturing manufacturing, because their energy inputs are three times that of the United States.
So it's really hard to see how that works out well for them.
The considerations that they put into this is this feeling that they have to have the U .S. on their side because of Ukraine.
I think there's a marked and growing difference between the elites, von der Leyen, Root, and all these guys, and the people.
You see it a lot in these rise of right wing parties who...
it's not so much that they're reaching fascism, it's just that they're saying, oh, you know, it's time to pay attention to people at home.
It's more native as things.
So they bring a lot of different things, a lot of protests, but it's gaining traction and this worries the the EU elites, but instead of reacting to it and saying, look, you know, we should perhaps pay more attention to our domestic situation, which is not good, they are just doubling down, that they need the U .S. on their side.
And that's that. And they're going to capitulate.
Okay. But how united is the EU behind this agreement?
Because some European leaders have described the deal as unbalanced, like which member or sectors are likely to face the greatest challenges as a result of this agreement?
OK, so Germany and Ireland support the deal.
They want to protect their exports.
Ireland wants to protect its business income.
France and Italy oppose.
They see this as unbalanced.
It's hurting farmers.
It's hurting steel.
steel. It's 50 % of their duties on $45 billion worth of EU steel exports.
And that's going to hit Italy very, very hard. And it doesn't help US manufacturers that they have to pay more for steel.
It just means that their products are going to be less competitive, both domestically and internationally, because they have to pay more for their inputs.
So there are all All sorts of losers on here, as I mentioned, pharma is not going to be happy.
U .S. automakers, U .S. steelmakers, the farm community.
Also wine, liquor, unresolved as to what's going to happen.
Remember, U .S. is getting zero tariffs.
They get to kind of sell their stuff to the EU and the EU has to pay 15 percent to sell stuff, most stuff, to the US.
A highly unbalanced, asymmetrical deal.
There's going to be blowback.
People are going to realize that they didn't get a very good deal and wonder about their leadership.
Well, the deal failed to address US tariffs on steel and aluminum, which remain at 50 percent.
How big a sticking point is that?
Well, it's huge. I mean, you know, as I said, Italy is not happy and there's France, Italy, because it really hurts both the farmers and the steel industries.
And they're, you know, they're not going to be happy.
There'll be consultations about why this deal was pushed forward. You know, the EU is 26 different entities, and they're supposed to be going through this, these kinds of negotiations based on a consensus approach. approach. And it's not clear that these countries agreed to it.
So it's going to be interesting to see what the political fallout is or whether these countries just say, hey, you didn't negotiate on behalf of me.
You negotiated on behalf of, guess who, Germany and yourselves.
You know, they might see this as partisan.
So it's going to have a far reaching implications.
And as I said, the steel and and aluminum are particularly sensitive because they hurt both Europe and America.
Then what kind of message does the deal send to other U .S. trade partners that are also currently negotiating with the Trump administration?
Well, I think we're beginning to see exactly what's happening here.
Trump wants to have somewhere between 15 % and 25 % tariffs.
He did give 10 % to the EU, but we still don't know the details of, uh, all the pieces to that.
Um, and still there's, you know, there's still, uh, they still have the issue about steel and things like this.
Anyways, um, it, it appears that he's trying to, uh, create a model and then convince people that if you come early, uh, you'll get a, you know, one deal.
If you come late, I'm really going to punish you.
And this is the typical school, school, school yard bully approach to things.
But he still has to deal with China.
He hasn't really reached anything with South Korea, although they might concede to a 15 % deal, we'll have to see.
But with China, it's going to be quite different.
This idea that you can bully people into these types of things, it doesn't work with China.
China has a lot of leverage over the United States and it's going to be a slow process.
You've already had Besant say that they're going to announce another 90 day reprieve, the Emperor Taco type of situation Trump always chickens out.
When it comes to somebody who can kind of push back.
So right now the message for other countries is say whatever you need to say.
way. Promise whatever you need to promise to get out from under his hammer.
But you know, you'll see that a lot of these deals are off into the future, beyond Donald Trump's reign.
And I think a lot of countries are betting that they can give big numbers, but not necessarily produce anything, as they did during Trump won.
A lot of promises made, very little of them were kept.
That is Inger Tengen, Senior Fellow at Taihe Institute and Chairman of Asia Narratives sub -stack.
This is World Today.
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I'm Zhao Ying. The State Taxation Administration says China's total tax revenue is expected to surpass 85 trillion yuan or over 11 trillion U .S. dollars during the 14th five -year plan period from 2021 to this year.
It says the figure marks an increase of 13 trillion yuan compared to the previous five -year period.
As of the end of June this year, the number of taxpaying business entities in China had exceeded 100 million, representing a net increase of 30 million since the end of 2020.
For more, we are joined by Dr. Yao Shujie, Changkong Professor of Economics at Chongqing University.
Dr. Yao, thanks for joining us.
Hi. So what do think have been the main drivers of China's tax revenue growth during the fight the 14th five year plan period the basic foundation of the Chinese economy and business it has been expanded over the last five years consistently gdp gross average more than five percent so that is the most important revenue source for the central and local government another thing is the Chinese industry services even the agricultural sector you know income generation capability have been increased you know steadily over the last five year period and people's income also increase especially the people
who are paying tax revenue to the to the tax bureau at different level.
These kinds of you know tax revenue base have been increased in different corner of the country, different sector different you know elements so these are you know a comprehensive uh contributing system system.
Another thing is that also the digital technology enables the central and local government to get tax information.
So people and businesses are getting more and more difficult to evade tax payment.
So the digital technology has also played a very important role of collecting data, making sure that the taxation is targeted fairly precisely and fairly correctly toward the personnel and also the industrial entities.
Well, the government has implemented tax and fee cuts totaling 10 .5 trillion yuan since 2021.
How have these relief measures affected China's economic recovery and shaped the broader business environment?
The tax and fee cut of this amount is highly significant.
It is a very important driver for the steady growth of the medium, small and micro enterprises.
It is also for individual individual business.
In this kind of small and micro enterprises and individual business, they are the major contributor of the Chinese economy activity, not only in terms of creating income for the country, but also creating employment and income generation for the ordinary people.
so you know she previously is the central government who are giving away the test revenue but in reality this tax revenue is trans you know transform into the production system and this producing system is able to produce even more output and this increased output is also contributed to the additional you know tax contribution basis, as I just discussed.
Well, we see that manufacturing has consistently contributed about 30 % of tax revenue, while the modern services sector, especially information software and technology services, has seen rapid growth.
So how do these trends reflect China's economic priorities and the structural transformation?
Over the last five years, the industrial transformation and structural change is fairly apparent by shifting away from manufacturing to the modern services, especially the production services like the information and technology computing, Internet of Things, and the digital economy transformation.
This is becoming more and more important for the Chinese economy, although the manufacturing sector has proved to be very steady and robust, resilient to the external structural change.
Manufacturing is still a pillar of the Chinese economy and still contributing almost one -third of the national tax revenue.
But as the structural transformation and structural change, you know, there will be more and more weight given to the production services and the traditional services sector.
So this change is basically the quality improvement of the Chinese economy in general and also the service sector in particular.
Well, the top 10 % of individual income earners contribute around 90 % of personal income tax, while those earning less than 120 ,000 yuan annually often pay little to no tax.
So how effective has China's tax policy been in promoting income redistribution and supporting middle and low -income groups?
I have to point out one fact, that the personal income tax contributed a relatively small proportion to the national tax revenue as compared to the more advanced industries like the United States and Western Europe.
Chinese wage earners are still relatively low in terms of paying tax to the country.
The division between the high income and the low income, it means that quite a majority of Chinese wage earners are evaded by the income tax system.
So the distribution effect is obviously in favor of the low -income people and also the individual enterprises.
Now this is reflecting the so -called socialist, you know, the socialism economy market system, which is quite favorable for the individual people, the public, and also the small and micro enterprises.
which is an important factor for the Chinese style modernization which is characteristic with the so -called common prosperity and also supporting the low -income also the relatively disadvantaged groups who are evaded by the tax system.
And this is good to support the general likelihood of all the people in the country Yeah.
And also the number of foreign investor tax entities in China has increased at 12 .7 % since 2020.
What does that suggest about China's business climate and openness to international investment?
Yeah, despite the difficulty in the international environment, especially the Unilateralism and also the trade protectionism, you know, promoted by, you know, Donald Trump, and some other countries.
China has been able to open the door even wider over the last five years by welcoming foreign investors to invest in China and protect their interest to make sure that this foreign entity they operate in China to have a significant return turn for the capital so that China is able to become the center, one of the global centers of attracting foreign capital and foreign technology.
So this is one part of the Chinese general openness policy.
Thank you, Dr. Yao Shujie, Chang Kong Professor of Economics at Chongqing University.
This is World Today.
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I'm Zhao Ying. The Houthi group in Yemen has warned that it will target any ships belonging to companies that do business with Israeli ports regardless of their nationalities.
Houthis described the warning as part of the fourth phase of their military operations against Israel.
In a televised statement on Sunday, a military spokesperson of the group said the ships would would be attacked if companies ignored their warnings, regardless of their destination.
Since Israel's war in Gaza began in October 2023, the Houthis have been attacking ships they deemed as bound or linked to Israel.
Joining us now in the studio is my colleague Ding Heng.
Thanks for being here.
Hello, Zhao Yin. What do you think has promoted the Houthis to issue the latest warning?
Well, the exchange of attacks between the Houthi and the Israeli side is something continuous.
The Houthis have been showing solidarity with Palestinians all along.
At a time when international anger and pressure against Israel over the war in Gaza is mounting, the Houthis want to seize the momentum here and do its part.
In some ways, we can see this as an escalation on Houthis' part in light of the situation on the Gaza Strip.
Then from Yemen's internal or domestic political perspective, showing solidarity with Palestinians represents a key step of the Houthis to enhance its own legitimacy.
And after a two -month U .S. bombing on them earlier this year from March to May, They also need to find ways to strengthen themselves.
Basically, the Middle East is faced with a sensitive moment right now.
A ceasefire in the war in Gaza is handing in the balance.
And in the meantime, we know Iran is weighing whether to restart negotiations with the United States over its nuclear program.
So for the Houthis, I think on one hand, they want to secure the continuation of support from Iran, while on the other hand, leveraging on the war in Gaza to increase their own profile.
So what could be the consequences to global trade if the Houthis fully carry out its policy to attack ships, as it has warned?
yeah so from november 2023 to the end of last year the hoofies attacked more than 100 commercial vessels with missiles or drones and sinking four of them the attacks really caused a sharp decline we're talking about a decline of more than 70 percent in terms of trade through the passing through the Red Sea.
Let's keep in mind that the Red Sea represents one of the world's busiest maritime corridors with an average of 1 trillion US dollars in goods passing through it annually.
And before the war in Gaza, cargo traffic through the Suez Canal which we know links the Red Sea with the the Mediterranean area, carried somewhere between 10 % to 15 % of global trade.
So, these numbers I have cited can give us some idea with regard to the impact on global trade.
I think it's no exaggeration to say that the Houthis' attack on commercial ships on the Red Sea are really the biggest cause of disruption to our global trade after the COVID -19 pandemic.
Now, the latest condition raised by the Houthis seemed to be tougher than its previous situations.
We're talking about, say, regardless of those commercial ships' nationality, regardless of their destination, as long as they belong to companies doing business with Israeli ports.
exports so with all those tougher conditions by the by the houthis i think the potential is is of course there in terms of causing bigger disruptions to trade well in may the u .s. announced a surprise deal with the houthis where the u .s. agreed to stop a bombing campaign against them in return for an end to shipping attacks does the latest warning by the houthis mean that the deal has has fallen apart.
So what you have mentioned here is actually a very, very limited deal.
The devil is in the details.
It seems the arrangements from that deal is that the Houthis only agree to halt attacking American military vessels in the Red Sea, and that's all.
The moment when the deal was announced by the Trump administration in early May, the Houthis actually made it quite clear that they would definitely continue their operations in the region in the Red Sea to show support to Gaza.
In particular, the Houthi emphasized that the deal did not in any way, any shape or any form apply to Israel.
So I think it's quite clear that in In Trump administration's negotiation of this particular deal with the Houthi, he actually sidelined the Israeli government, indicating once again regarding his America first policy or tendency.
Well, some observers say the Houthis' boldness in attacking ships has been encouraged by Saudi Arabia's current ambivalent policy on them.
What is your take? Well, I think this analysis to some extent has a point because, indeed, currently Saudi Arabia does have an ambivalent policy on the Houthis.
But in the meantime, I guess we also need to understand why Riyadh has such a policy of ambivalence.
Its previous policy to fight against the Houthis in Yemen didn't generate any positive results for Saudi Arabia itself.
Its key oil infrastructure was attacked by the Houthis, by the missiles from the Houthis, leading to a very, very significant economic losses and insecurity, a sense of insecurity for the Saudis.
Its war in Yemen also later became a point of criticism by Washington on the human rights ground during the Joe Biden administration.
Now, although Trump is more friendly to Riots than Biden, but I guess Saudi Arabia has really come to realize that no matter who is sitting in the White House in the Oval Office, it can't rely on the U .S. guarantee entirely.
highly. So it has adopted a more pragmatic approach to the Houthis, I think, by being somewhat ambivalent on the Houthis.
And we can also understand this kind of ambivalence from the perspective of the 2023 repression between Saudi Arabia and Iran, brokered by the Chinese government.
But putting aside the Saudi ambivalence, I think the root cause of the Houthi's operations in the Red Sea is really the war in Gaza, is really the crisis in Gaza.
I don't think the Saudi policy is the main issue here.
Okay, thank you, Jing Hong.
And that's all the time we have for this edition of World Today.
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I'm Zhao Ying. Thank you so much for listening.
See you next time. Thank you.
