00:00Let's talk a little bit about China's economy. It's facing pressure from U.S. tariffs and persistent deflationary pressure at home as Beijing is trying to soften the economic damage.
00:12Was it really important to reach a quick deal with the U.S. and de-escalate the trade war to kind of support themselves?
00:21It's a really good question. And I think it goes to this question that we've all been trying to sort of weigh up.
00:26Who hurts more in a big trade war? Is it the U.S. or is it China?
00:31And I think the answer is, is that the two countries can be hurt in different ways.
00:37There certainly is. There are some indications the Chinese economy is beginning to bottom out a little bit.
00:43That terrible property slump, which is sort of the start of where this deflation that we're seeing has come from.
00:49Looks like that might be bottoming out. We're seeing prices of homes in the biggest Chinese cities has stopped falling, maybe too early to predict a recovery.
00:59But I think there's a little bit more optimism than there was a couple of months ago.
01:05But the other thing to think about is what China exports to the U.S. is pretty low tech stuff, commodity stuff, things like steel, things like footwear, clothing.
01:15And those items are very easy to divert to other jurisdictions.
01:21So in the month of May, we saw a 35 percent decrease in Chinese exports to the U.S.
01:27That's that's over the same period a year ago. That is a massive, massive fall after that was after 21 percent in April.
01:34But some of that trade has been diverted to other markets.
01:38Some of it has gone to other Asian countries. Some of it has gone to Europe.
01:42Now, diverting trade hasn't made up for all the trade lost to the U.S., but it's done pretty well.
01:49And Chinese exports, in fact, are still growing just at a slower pace.
01:54So we're not seeing a real pressure point in the Chinese economy.
01:59And forget Xi Jinping has one thing that Donald Trump and the Republicans don't have is he doesn't have to subject himself to elections.
02:06And that does help with asking your populace to, you know, to put up with a little bit of economic pain.
