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Peter Lewis: Asia business correspondent on China's economy slowing due to slump in investment · 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 range of podcasts now on iHeartRadio.
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  Speaker 2: And as I say, Peter Lewis, our Asia business correspondent,
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  Speaker 2: is with me right now.
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  Speaker 3: Hi, Peter, Good evening, Heather.
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  Speaker 2: All right, So what's going on with the economy in China?
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  Speaker 3: Slowing? Slowing quite a lot, in fact, because if you
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  Speaker 3: look at the data that came out earlier this week,
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  Speaker 3: retail sales and industrial production at the lowest levels now
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  Speaker 3: of the year. And this has been going on for
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  Speaker 3: three or four months, so it's not just a one off.
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  Speaker 3: It's not just weather related factors. There clearly is a
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  Speaker 3: gradual slow down. The thing that's helping the economy is
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  Speaker 3: actually the first half of the year was pretty good.
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  Speaker 3: The economy grew about five point three percent. So unless
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  Speaker 3: we get a really sharp slow down now in the
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  Speaker 3: remaining few months of the year, which threatens China's five
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  Speaker 3: percent growth target, I don't think the authorities are going
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  Speaker 3: to be too worried. They're not going to rush out
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  Speaker 3: and do lots of stimulus. The reason why we're seeing
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  Speaker 3: this slow down is it comes down to that old
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  Speaker 3: theme again, property property, carries on falling. The price of
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  Speaker 3: new homes and existing homes just seems to keep on
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  Speaker 3: declining month after month. If you look at the data
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  Speaker 3: in Beijing property prices. New home prices now down nineteen
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  Speaker 3: percent from just one year ago, and that has a
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  Speaker 3: big drag on overall consumer household economic sentiments because property
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  Speaker 3: is the biggest part of a Chinese household's assets. Sometimes
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  Speaker 3: they have two or three properties in fact, which are
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  Speaker 3: owned by sort of several generations of the same sort
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  Speaker 3: of family. But this is really holding back the economic
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  Speaker 3: growth in the mainland. What is doing well, surprisingly maybe
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  Speaker 3: given that there's a trade war going on with the US,
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  Speaker 3: is exports are holding up very well. Now they've collapsed
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  Speaker 3: to the US, they're down by about a third now
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  Speaker 3: over the past few months, but they're really growing in
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  Speaker 3: other parts of the world, particularly the emerging markets of
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  Speaker 3: Southeast Asia, Middle East, Latin America. And this is deliberate
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  Speaker 3: part of Jijinping's policy to go and really move away
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  Speaker 3: from being dependent upon the US and finding new sources
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  Speaker 3: of business, sources of growth and where they can sell
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  Speaker 3: Chinese goods to and that's working very well.
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  Speaker 2: So that is.
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  Speaker 3: Holding up the economy. If it hadn't been for exports,
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  Speaker 3: the economy will be far worse.
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  Speaker 2: Yeah, And speaking of the relationship with the US, where
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  Speaker 2: are we at with TikTok?
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  Speaker 3: Well, Scott Bessens, who was in Madrid at the beginning
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  Speaker 3: of the week meeting his Chinese counterpart Hurley Feng, who
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  Speaker 3: is the Chinese Vice Premier and responsible for negotiating these
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  Speaker 3: trade deals, announced that a deal had been reached with TikTok. Now,
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  Speaker 3: you remember the bill that Joe Biden signed into law
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  Speaker 3: a year or so ago called for either TikTok to
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  Speaker 3: be sold by byte Dance, the Chinese parent company that
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  Speaker 3: owns it, to an American controlled company, or it had
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  Speaker 3: to shut down in the US. So discussions over this
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  Speaker 3: have been going on for a long time, and it
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  Speaker 3: appears that now TikTok will be put into a US
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  Speaker 3: company that's eighty percent owned by US investors like Oracle,
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  Speaker 3: and twenty percent by Chinese investors. So first site, all
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  Speaker 3: well and good, looks like, you know, they've done what
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  Speaker 3: they said they would do, divest the company out to
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  Speaker 3: byte Dance, put it into a US company. But here's
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  Speaker 3: the thing. The whole thing about TikTok is its algorithm.
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  Speaker 3: The algorithm is the secret source behind how TikTok works,
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  Speaker 3: which directs people to certain videos, and the US sees
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  Speaker 3: the algorithm as a national security risk because it could
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  Speaker 3: be used for propaganda purposes, could be used to mislead
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  Speaker 3: young people in the country, influence elections, and so on.
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  Speaker 3: So the law had always insisted that the algorithm is
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  Speaker 3: really what needs to be put into the US company.
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  Speaker 3: Now this is where it looks like it could well
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  Speaker 3: be another taco trade. In other words, Trump always chickens out.
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  Speaker 3: What it looks like according to the Chinese is that
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  Speaker 3: they will remain keep control over the algorithm. It will
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  Speaker 3: stay in Beijing, it will be owned by byte Dance,
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  Speaker 3: and they will license it to this American company. Now
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  Speaker 3: that is very different. A licensing agreement is very different
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  Speaker 3: from it being divested and sold to the American company,
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  Speaker 3: because it means the Chinese company Byte Dance, will still
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  Speaker 3: retain control over the algorithm. So it looks like, once again,
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  Speaker 3: this could be another win for China, and how it's
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  Speaker 3: been portrayed by Scott Bessant is not quite what was
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  Speaker 3: initially envisaged when the law was signed into effect by
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  Speaker 3: Joe Biden. We'll learn more today because Jinping and Donald
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  Speaker 3: Trump are going to speak about it on the phone
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  Speaker 3: and see if they can agree the terms of this sale.
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  Speaker 2: Fascinating. We'll keep an eye out for that. Peter, as always,
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  Speaker 2: thank you very much, and have yourself a lovely weekend.
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  Speaker 2: That's Peter Lewis, our Asia Business correspondent.
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