US tariffs won't change China economy's big picture

00:00 Speaker A

As Chinese officials reportedly measurement successful a caller question of stimulus to antagonistic US tariffs, according to Bloomberg. The imaginable measures travel arsenic deepening fears of a widening commercialized warfare with the US has roiled planetary markets. Hong Kong's Hain Seng scale led declines among Asian stocks connected Monday morning, suffering its biggest one-day driblet since 1997. Leland Miller, China Beige Book co-founder and CEO, is joining america now. Leland, large to talk with you this morning. Thank you for joining us.

00:32 Speaker A

Um, I I privation to commencement connected what we're seeing successful presumption of China reacting to the United States here.

00:44 Speaker A

Do you deliberation that determination is immoderate accidental to marque a woody with China erstwhile it comes to tariffs, oregon has the US benignant of overplayed its manus erstwhile it comes to Beijing?

00:56 Leland Miller

I don't deliberation this is, this is pro oregon antagonistic a deal. Uh, determination was ever going to beryllium tally up successful immoderate dialog oregon immoderate tally up to a negotiation. There was ever going to beryllium an summation successful leverage. US is going to rise tariffs. There was going to bash a clump of different things and past it was going to connection to instrumentality immoderate of this worldly disconnected if Beijing did what Trump wanted him to. So I deliberation that the, this doesn't truly archer a communicative astir whether determination could beryllium a signifier 2 woody dialog oregon not. Uh, what you are seeing is, is simply a ramp up successful tariffs, precise dramatic, overmuch much than markets expected. And past an unexpected Chinese response, which was, which was meant to look reciprocal, but truly hits tariffs and a clump of different things. So I don't deliberation this tells a communicative astir a signifier 2 dialog oregon not. I deliberation it tells a communicative that China has not yet been, but volition soon beryllium the communicative erstwhile it comes to, to tariffs.

02:14 Speaker A

And truthful China, arsenic you cognize well, has respective benignant of measures that they tin enact here. They tin retaliate, capitulate, devalue their currency, oregon contented stimulus oregon a operation of each of them. Which bash you deliberation is astir apt from China oregon bash you deliberation it's each of the above?

02:35 Leland Miller

Well, it depends whether what happens. I mean, close now, you're, you're, what China's been doing for the past respective months has been arming the gun. It's been prepping the crushed for bigger fiscal stimulus if they request it. It's been offering up the thought that monetary stimulus volition proceed and accelerate. Uh, truthful there's each these things that are, you know, arming the weapon for erstwhile they spot however the scenery plays out. Uh, look, Wall Street has predicted 25 of the past 2 large stimulus blasts. So you know, the headlines are ever going to beryllium the same, China's going to bash stimulus, China's going to bash stimulus. It's ne'er truly been true. It's absorbing present due to the fact that if you look connected our latest data, we're really seeing transport operation firms, which are champion proxy for infrastructure and fiscal spending. Uh, they did commencement ramping up their borrowing past period and, and the period before, they are looking astatine the anticipation of doing thing bigger, but I deliberation you're really person to spot what the scenery is earlier China benignant of pulls the solid connected any, pulls the, pulls the lever connected immoderate of these benignant of bigger, bigger moves.

04:12 Speaker B

What, Leland, what astir this thought that this is going to unit China to reinvent their economy, determination distant yet from that export-driven exemplary chiefly to an infrastructure much to this benignant of consumption-based model? This is been a spot of chatter successful the markets implicit the past six months accelerating successful the past fewer weeks oregon so. Is it, is it imaginable that China tin thrust their ain maturation that mode rather, you know, tapping each those household savings and truthful connected alternatively than the, the aged exemplary of infrastructure and exports? Where would you beryllium connected that debate?

04:53 Leland Miller

I deliberation the statement is full nonsense. There's nary grounds whatsoever that's been happening beyond changeless statements that we are going to displacement from concern to consumption, which we've been proceeding for a decennary now. If you spot immoderate of these precise ample tariffs continue, past yes, China volition person to restructure its economy, but it's not going to restructure its system toward consumption, it's going to restructure its system toward sending its overcapacity everyplace other astir the world. So the 2nd the US shuts itself disconnected oregon partially shuts itself off, they're going to commencement sending much to Europe, much to Southeast Asia, much to the remainder of the world. So unless the remainder of the satellite has a argumentation response, which it mightiness successful time, past China's going to conscionable treble down connected its treble down, which is much production, much exports. And look, this is not going connected retired connected immoderate brainsick limb. She, she and the and the authorities and the enactment person said this implicit and implicit and implicit again that they wanted to trust connected caller prime productive forces, they wanted to nutrient more, they wanted to person a full of authorities effort to export the manufacturers to predominate the 4th concern revolution. These are things they've been saying. I deliberation we should yet perceive to them.

06:27 Speaker A

How consenting bash you deliberation China is to code their surplus if that is benignant of the extremity end of Trump's tariffs?

06:41 Leland Miller

I deliberation that if the inquire from the US medication is simply, you know, bargain much commodities, bash much purchases, et cetera, I deliberation China would beryllium precise unfastened to that. It doesn't necessitate immoderate benignant of restructuring, it conscionable has to necessitate benignant of a short-termish statement to constrictive the commercialized shortage and marque the numbers look better. I, I deliberation that if each their problems went distant from this medication and that was each they were asked to do, they would beryllium precise funny successful that benignant of deal. The question is, is that the benignant of woody that Trump medication is going to connection them? I deliberation it's precise hard to judge that each you're going to spot successful a, successful a imaginable signifier 2 would conscionable beryllium signifier 1 each implicit again. So I deliberation that determination has to beryllium an a acceptable of asks from the Trump medication earlier we tin measure this. Uh, but it precise overmuch depends connected what the Trump medication is asking Beijing to do.

07:57 Speaker A

All right, Leland, we got to permission it there. Thank you truthful much. Really admit it.

08:03 Leland Miller

Pleasure.