Hello everyone, welcome to “News Talk”. I am Fu Yao. Today is February 4, Wednesday.
In today’s program, our guests are Dr. Wang Guochen, Assistant Researcher of the Chinese Academy of Economic Studies; Qin Peng, a current affairs commentator and senior political and economic analyst; In addition, the host of the overseas self-media “Gongzi Critical Review”, Gongzi Shen, also accepted our interview.
Today’s focus: Trump takes over Gaza! Major diplomatic communication between the US and China! Xi wants to talk to Trump? Economic transformation, Navarro has new moves; New policy: the US establishes a Sovereign Wealth Fund; Aid to Ukraine, rare earths in exchange for weapons!
Let’s first discuss the latest news. On February 4, US President Trump met with Israeli Prime Minister Netanyahu at the White House, marking Trump’s first official meeting with a foreign leader in his second term.
During the press conference following the meeting, Trump put forward a significant proposal, stating that the US hopes to take over Gaza and permanently settle the nearly 2 million Palestinians living in Gaza in surrounding Muslim countries.
Trump stated that Gaza is now in ruins, full of bomb threats, and no longer suitable for habitation. The US plans to demolish bombs in Gaza, clear the post-war ruins, and undertake large-scale construction projects to provide thousands of job opportunities for people in surrounding countries. Future Gaza will be a brand-new coastal resort and international city, welcoming people from all over the world, including Palestinians.
Upon Trump’s proposal, there has been widespread attention and discussion as it signifies a major shift in US-Israel policy. However, the plan faces challenges and controversies. How to relocate 2 million Palestinians permanently? How to address the issue of Palestinian statehood? With strong opposition from surrounding Muslim and Arab countries, is this plan feasible? These are big questions.
Q0: Dr. Qin Peng, Dr. Wang, what do you think of Trump’s proposal? Do you think it is feasible?
Since the US imposed tariffs on China, Canada, and Mexico, retaliations have been issued by all three. However, just before the tariffs took effect, there were sudden changes. Canadian Prime Minister Trudeau and Mexican President Obrador made new commitments on combating fentanyl smuggling and border security during phone calls with Trump, resulting in a 30-day postponement of the new tariff policy scheduled to take effect on February 4.
However, the situation with China is less optimistic as the US imposed an additional 10% tariff on Chinese goods. This new tariff policy has been implemented. Apart from previous measures, China reported the US to the WTO and implemented four trade countermeasures on February 4, including export controls on five types of metals, crucial in advanced industries and a key area of US-China competition.
For example, molybdenum, restricted from export, is used to make steel stronger and more resistant to corrosion. Tellurium is used in the manufacture of solar panels. Additionally, China announced a 15% tariff increase on coal and liquefied natural gas, and a 10% increase on crude oil, agricultural machinery, heavy-duty vehicles, and pickups.
Moreover, beyond imposing tariffs and export restrictions, China made unexpected moves in the online sphere. The State Administration for Market Regulation claimed that Google, the US search engine platform, is under investigation for violating China’s Anti-Monopoly Law, despite Chinese citizens not having access to Google within the firewall. This action against an entity outside its jurisdiction sparked surprise among many as China engages in sanctions against a non-domestic platform.
This action has left many surprised as it raises concerns over China’s monopolization in various aspects of people’s lives, dictating living conditions.
Regarding China’s retaliation, besides increasing energy taxes, restricting metal exports, and investigating Google, another measure was taken by China’s Ministry of Commerce. They added American fashion brands PVH Corp., the parent company of Tommy Hilfiger and Calvin Klein, and gene sequencing company Illumina, Inc. to the “Unreliable Entity List.” This move was justified as these US companies were said to have violated normal market trading principles by discriminating against Chinese enterprises, harming their legitimate rights and interests.
Q1: Dr. Wang Guochen
Now, on February 4, President Trump stated that he will have a major diplomatic communication with Chinese Communist Party leader Xi Jinping as soon as this week. However, he later mentioned there is no rush for the call. Currently, the two countries are attempting to reach an agreement to avoid a broader trade war.
Given the current situation, we ask Dr. Wang Guochen about his opinion on the ongoing tariff war between the US and China. Who is exerting more pressure, and which products are being affected first?
Q2: Dr. Wang Guochen
Given the slowdown in the Chinese economy, if the tariff war continues, what kind of impact do you foresee on the Chinese economy?
Q3: Qin Peng
Trump and Xi Jinping had a phone call just last month, reaching some agreements on issues like fentanyl. Why do you think this upcoming call between the two leaders is deemed urgent for major diplomatic communication? What are the key negotiation points this time?
Q4: Gongzi Shen
Thank you for the analyses. Trump’s tariff policies impact three countries: Mexico, China, and Canada, which is also having an election year. Earlier, we interviewed Gongzi Shen, a self-media person in Canada, to hear his views on the new tariff war and the President.
Gongzi Shen believes that the US imposing tariffs on Canada stems from Trump’s “America First” policy, dissatisfaction with trade deficits, and mistrust in the Trudeau government. However, as countries sharing similar ideologies and being allies, the conflict will likely be resolved through negotiation to avoid affecting the US strategic position in the new US-China “new cold war.”
Facing potential tariff threats and rising prices, will Canadians be pleased? Gongzi Shen shared his perspective, indicating that while prices for US products may rise due to tariffs, the short-term impact on Canadian citizens is minimal. As tariffs are not yet implemented, many US products have already entered the Canadian market without significant price hikes. Additionally, the impending resolution of the trade war and limited tariff adjustments are not expected to cause significant disturbance to the general population.
This year being an election year in Canada, even if the Conservative Party assumes power, the issue of national sovereignty remains a question. While many of the Conservative Party’s ideas align with Trump’s administration, there may still be debates on whether Canada would willingly join the US as the “51st state,” a notion mentioned by Trump before. We asked Gongzi Shen to share his views on this matter.
Gongzi Shen believes that Canadians generally prefer to maintain their independence and sovereignty, not eager to join the US federal system. Given Canada’s existing institutional frameworks, Commonwealth traditions, and current economic, diplomatic, and military integration models like NAFTA and the NORAD, fully joining the US federal structure may not be practical or easily accepted on a psychological or emotional level in the short term.
There are opinions suggesting that Canada’s response to formidable global adversary China has not been robust enough, prompting the US to take tariff measures possibly to prompt Canada to take a more assertive stance.
Despite perceived inadequacies, Gongzi Shen notes that such observations are insufficient reasons for independent action. Canada, being a middle power, cannot adopt a hardline stance on China like the US, the only country capable of directly confronting China. In practice, Canada has followed the US on issues related to Meng Wanzhou, banning Huawei, and shutting down “Overseas Chinese Police Stations,” albeit at a slower pace, maintaining a high level of alignment with US policy.
Once the Conservative Party assumes power, Canada is likely to enhance cooperation with the US in areas like countering Chinese infiltration, united fronts, and counter-terrorism. For instance, following the US’s 100% tariff on Chinese electric cars, Canada swiftly followed suit, surpassing measures taken by the EU, showcasing close cooperation with the US. Gongzi Shen believes that this alignment should not be a rationale for adopting independent policies.
The word “tariff” has become a hot topic lately. Since Trump took office, there have been substantial adjustments in US domestic and foreign policy. Judging from current reports, Trump views tariffs not merely as a tool but as a means to drive a deeper economic transformation in the US.
Why is this so? White House economic advisor Navarro recently expressed that if Trump’s vision materializes, there will be a structural change in the US economy from reliance on income and corporate taxes to tariffs and foreign taxes.
This transformation would be significant, with the establishment of an “External Tax Authority” announced by Trump on the eve of his inauguration, intended to collect US tariff revenue. Presently, Trump has signed related executive orders demanding officials study the feasibility of establishing this authority, with the feasibility report expected by April 1.
Trump and his advisors have been promoting the idea that future tariff revenue will replace personal income taxes, becoming the primary source of national revenue.
Q5: Dr. Wang Guochen
Upon hearing this news, US citizens are likely to view it favourably. The concept of no longer needing to pay personal income taxes, with the government supported by import tariffs, sounds appealing. However, whether US tariff revenue can genuinely replace income taxes to sustain government operations prompts skepticism. Dr. Wang, do you believe this is feasible?
Q6: Qin Peng
To garner sufficient tariff revenue, tax rates may need to be set high. Can the US sustain high tariffs against trading partners in the long term without damaging its economy?
Thank you, Qin Peng. On Monday, Trump signed an executive order related to the economy, directing the Treasury and Commerce Departments to establish a Sovereign Wealth Fund.
Indeed, what is a Sovereign Wealth Fund? Let me explain. A Sovereign Wealth Fund refers to an investment tool owned by a country, designed to invest for the benefit of the nation’s people. In simpler terms, as Treasury Secretary Mnuchin stated, “The purpose of a Sovereign Wealth Fund is to use the government’s existing assets to earn money for the American people.”
Sovereign Wealth Funds can be used to invest in airports, schools, financial instruments, or company shares, generating long-term returns and ensuring a continuous stream of funds for government budgets or national welfare programs.
This concept of the government using surplus funds to earn more for the people’s welfare sounds promising. Recently, President Trump signed an order on complementary economic measures, instructing the Finance and Commerce Departments to establish the US Sovereign Wealth Fund.
Q7: Dr. Wang Guochen
Will Trump’s initiative in setting up a Sovereign Wealth Fund bring a win-win outcome? Dr. Wang, where do you expect the fund’s financing to come from?
Q8: Qin Peng
Why didn’t the US previously have a Sovereign Wealth Fund, and why is Trump looking to establish one now?
Treasury Secretary Mnuchin stated that the US Sovereign Wealth Fund will be established within 12 months. Therefore, preparations for this initiative will likely take a considerable amount of time, which will require continuous monitoring.
Moving on, let’s discuss a diplomatic endeavor by Trump. On February 3, Trump announced efforts to reach an agreement with Ukraine to continue providing military assistance to help combat Russia. In return, Ukraine would provide crucial rare earth minerals to the US.
This exchange proposal resonates with strategies by Ukrainian President Zelensky, who vouched for Trump’s support by emphasizing that aiding Ukraine aligns with US economic interests, emphasizing that Ukraine’s abundant mineral resources could benefit American industries.
However, this sparked controversy post-announced proposal. With some mining areas in Ukraine occupied by Russia, extraction of these strategic resources is a challenge. Russian officials argue that this measure hampers peace efforts, while German Chancellor Scholz criticized the proposal as “selfish,” suggesting Ukraine still needs these natural resources to facilitate post-war reconstruction.
Q9: Qin Peng
Do you believe Trump’s “resource for aid” proposal will result in a win-win outcome? Or is it as critics claim, a “self-serving” action?
For more updates, please subscribe to our YouTube channel:
[Insert YouTube Channel Link]
And subscribe to our Clean World channel:
[Insert Clean World Channel Link]