Latest / Best of Business / Peter Lewis: Asia Business Correspondent on China's reaction to Trump's tariffs, the sale of TikTok, and Donald Trump and Xi Jinping's phone call

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Peter Lewis: Asia Business Correspondent on China's reaction to Trump's tariffs, the sale of TikTok, and Donald Trump and Xi Jinping's phone call · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks. It'd be
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  Speaker 1: follow this and our Wide Ranger podcasts now on iHeartRadio.
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  Speaker 2: Dickens, Let's go to Asia. Peter Lewis joins us. Hello, Peter, Hello, Andrew.
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  Speaker 2: Let's go to Donald Trump and China. So how is
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  Speaker 2: China reacting to the Prison's threat that he might put
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  Speaker 2: a ten percent tariff on China as early as the
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  Speaker 2: start of next month, which is early days away.
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  Speaker 3: Very calmly so far, and in fact, they've said very
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  Speaker 3: little about it, other than their Vice Premier, who was
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  Speaker 3: speaking at Davos earlier in the week, was saying that
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  Speaker 3: there will be no trade, no winners in a trade war,
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  Speaker 3: and that was repeated by China's Ministry of Finance. They
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  Speaker 3: did say they would look after their own interests, but
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  Speaker 3: apart from that, they've really said nothing at all, and
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  Speaker 3: I think there's several reasons for that. The first thing
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  Speaker 3: is actually Donald Trump hasn't put any tariffs on anyone
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  Speaker 3: just yet. He is threatened to, and clearly we'll have
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  Speaker 3: to see what happens on February the first, and everything
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  Speaker 3: could change then, But so far these are just threats
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  Speaker 3: and a lot of people think that maybe this is
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  Speaker 3: a tactic to get countries that come to the negotiating table.
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  Speaker 3: But also there is a feeling that so far China
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  Speaker 3: is coming out of this quite well. Donald Trump seems
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  Speaker 3: to be saving the worst of his threats in his
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  Speaker 3: if elsewhere. If you remember back in the election campaign trail,
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  Speaker 3: he was talking about sixty percent tariffs on China from
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  Speaker 3: day one, the first day he was in office. Well,
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  Speaker 3: so far all is talked about is ten percent, and
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  Speaker 3: they're still not there yet. And this is less also
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  Speaker 3: than the twenty five percent is threatening Canada and Mexico
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  Speaker 3: within So there is a feeling that he's backtracking a
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  Speaker 3: little on China. He doesn't really want a trade war
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  Speaker 3: and he would rather find a way in which he
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  Speaker 3: could do a deal, and the only way. The numbers
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  Speaker 3: we are talking about here are not huge. China's trade
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  Speaker 3: surplus with the US last year was about three hundred
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  Speaker 3: and sixty billion dollars. Now, even if Donald Trump imposed
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  Speaker 3: ten percent tarots on that, and even if you assume
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  Speaker 3: China responded in kind, Chinese GDP over the four years
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  Speaker 3: will be about one hundred and twenty eight billion dollars less.
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  Speaker 3: So that's thirty two billion dollars a year. When you
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  Speaker 3: take into account that China's economy is about eighteen trillion dollars,
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  Speaker 3: you are only talking about a loss of zero point
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  Speaker 3: two percent of GDP. So these numbers aren't enough really
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  Speaker 3: to get China excited, and they're not likely to make
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  Speaker 3: a huge difference even if they were to come to pass.
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  Speaker 2: And of course the tariffs will be paid by Americans
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  Speaker 2: for who will have to pay a higher price for
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  Speaker 2: their products as opposed to China actually having to pay it.
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  Speaker 2: But I did actually talk to a Republican strategist during
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  Speaker 2: the week who see, the thing about Donald Trump you've
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  Speaker 2: got to remember is that he's a businessman, and when
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  Speaker 2: it comes to negotiations, he starts high, but he often
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  Speaker 2: ends out low or even sometimes nowhere at all. So
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  Speaker 2: you're quite right, it's the opening salvoe, and well done
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  Speaker 2: to China for keeping calm so far. But meanwhile, in
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  Speaker 2: the battle between China and America, we've got the whole
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  Speaker 2: issue of TikTok. So where are we at with that?
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  Speaker 3: Well, this is interesting because TikTok and now appears to
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  Speaker 3: be key to doing some sort of trade deal. As
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  Speaker 3: we know they've been given US a seventy five day
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  Speaker 3: reprieve from having the law which would have forced them,
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  Speaker 3: basically forced Bike Dance the Chinese owner of TikTok to
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  Speaker 3: divest it and either sell it to an American owner
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  Speaker 3: or be banned. Now sort of, Trump is of the
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  Speaker 3: view that somehow America has ownership of this or should
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  Speaker 3: have ownership of it. He talks about a permit that
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  Speaker 3: in effect, Bike Dance needs a permit to operate in
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  Speaker 3: the US. Without that permit, TikTok is worthless, and therefore
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  Speaker 3: the US should have fifty percent of Byte Dance. Now,
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  Speaker 3: it's an odd way of thinking, because, of course you
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  Speaker 3: could argue that's true of every single company that operates
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  Speaker 3: in the US. They need ultimately government permission to do so.
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  Speaker 3: But nevertheless, he seems to feel that there is an
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  Speaker 3: ownership issue here and that for Chinese media companies to
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  Speaker 3: be able to operate in the US, they need to
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  Speaker 3: be able to have some sort of deal with the
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  Speaker 3: US government. Now, of course, you could say, well, China
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  Speaker 3: would never allow this. In reverse, they would never allow,
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  Speaker 3: for example, Google under complete American ownership to operate in China,
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  Speaker 3: and it doesn't indeed, but nevertheless, maybe there was a
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  Speaker 3: deal that could be done here that encompasses a number
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  Speaker 3: of things together. It could resolve the TikTok issue. And
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  Speaker 3: China seems that even there has so this approach. It's
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  Speaker 3: always in the past said it would never allow TikTok
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  Speaker 3: to be sold. It's now saying that this is a
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  Speaker 3: matter for the company and it should be left basically
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  Speaker 3: as a business decision. So the deal could perhaps involve TikTok,
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  Speaker 3: it could include tariffs, it could include export controls, and
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  Speaker 3: maybe even in some sort of dream scenario for Beijing,
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  Speaker 3: even US policy towards Taiwan and the South China Sea
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  Speaker 3: could be thrown into this all encompassing deal that Donald
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  Speaker 3: Trump does with China.
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  Speaker 2: And here's the thing, who might buy it?
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  Speaker 3: Well, that's interesting, He's mentioned before Elon Musk. Elon Musk
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  Speaker 3: is a little bit peeved at the moment because he's
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  Speaker 3: already started to complain about the fact that x Twitter
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  Speaker 3: isn't allowed to operate in China and therefore there isn't
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  Speaker 3: a level playing field. Now. In the past, he's always
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  Speaker 3: been very very careful about criticizing China, so this is
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  Speaker 3: quite unusual for him and Nevertheless, he is a supporter
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  Speaker 3: of Donald Trump. Oracle has been mentioned. Larry Ellison is
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  Speaker 3: also a supporter of Donald Trump. But there potentially could
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  Speaker 3: be several companies certainly big enough to be able to
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  Speaker 3: strike a deal and would have the money to do this.
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  Speaker 3: And TikTok is a very valuable asset. It's valued at
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  Speaker 3: maybe something like thirty billion dollars. It's got one hundred
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  Speaker 3: and thirty million US users, So certainly there should be
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  Speaker 3: companies that, if they were allowed to, if China agreed,
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  Speaker 3: could do a deal there.
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  Speaker 2: It's also got an awful lot of American content creators
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  Speaker 2: who make an awful lot of money from it and
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  Speaker 2: awfully peeved about the fact that they might have their
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  Speaker 2: income cut. So we wait to look at that. And finally,
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  Speaker 2: Donald Trump and jesimping as she had a chat on
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  Speaker 2: the phone this week. And do we know what they
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  Speaker 2: talked about.
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  Speaker 3: Well, they say in their readoubts that they spoke about
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  Speaker 3: a lot of issues. They did talk about TikTok, they
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  Speaker 3: talked about trade, they talked about fentannel, which is the
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  Speaker 3: reason why Donald Trump is imposing these ten percent tariffs
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  Speaker 3: on China in the first place. And again there there's
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  Speaker 3: reason to be optimistic because the readout from both sides
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  Speaker 3: was quite positive. On this call, President G said that
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  Speaker 3: you know, they can work together. He wants to do
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  Speaker 3: everything possible to wait and make the world peaceful and safe.
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  Speaker 3: That he can work with President G on that. President
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  Speaker 3: G said after the call that they both hoped for
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  Speaker 3: greater progress on US China relations, and Chinese State TV
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  Speaker 3: also painted a positive picture of the call. The one
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  Speaker 3: red line really and the one warning that was made
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  Speaker 3: was that the US has really got to take the
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  Speaker 3: Taiwan question with prudence. That's what Jinoil News agency said there.
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  Speaker 3: So clearly China is laying out where its red lines are.
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  Speaker 3: But all the vibes from that call tend to suggest
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  Speaker 3: a gain that there's a bit of a thawing of relations.
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  Speaker 3: It's not as bad nowhere near as bad as maybe
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  Speaker 3: people feared during the election campaign. And perhaps they're moving
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  Speaker 3: slowly through all sorts of back discussions, which for sure
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  Speaker 3: will be going on now towards some sort of deal.
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  Speaker 2: That is a very good point. People get very energized
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  Speaker 2: and exercise about Donald Trump, and many of their worst
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  Speaker 2: fears never come to pass. So Peter Lewis from the Asia.
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  Speaker 2: I thank you so much for your time today.
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