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You gotta talk to China. I mean, okay, so the President did announce a ninety day pause on higher reciprocal tariffs that hit dozens of trade partners. After midnight, Tho'll raise duties on China to one hundred and twenty five percent. Shazad Kazi is COO and a managing director for China Bagbook International. The company provides data that tracks the Chinese economy. He joins us here in the Bloomberg Interactive Brokers Studio. This is a very big trading partner of the United
States that was not affected positively by today's announcement. Still, we saw Stock's link to China move higher. We saw Apple move higher today. How does the how does the fight between the US and China?
And yeah, that's a big question. I don't think it does. This is a new era for sure, or I don't think there's a very high chance of there being what I call a deal for the ages of centuries between these two. You know, where they decide they're going to make structural changes to their economy, and they're going to you know, get rid of you know, market barriers for American companies, et cetera, et cetera. You know, start buying a lot of commodities. Perhaps they'll buy a lot of commodities.
Perhaps they'll buy a lot of advanced chips if you sell it to them. But those that big deal concept, it doesn't happen. Instead, maybe what you get are a series of mini deals between the two countries, and then you're still on a course where these are two hostile powers. Decoupling.
Is it happening.
Decoupling is absolutely happening. It's happening in complicated ways. Obviously. One thing is you see you know, bilateral trade for example, between the two if you know, on paper, looks like it has come down a bit. But you have the problem of transshipment, which is essentially China has completely re routed.
It's traded the US through Southeast Asian countries, which by the way, means that you could go from the one hundred and whatever percent to you know, one thousand and some percent, and it may not make a difference because at this point you're relying on transhipming to get the goods to the US anyway, so that number at some point is less impactful.
How vulnerable is the Chinese economy right now? In this what right now is a trade war between the United States and China.
Big picture, the economy is obviously slowing down. They didn't have a very hot March. That said one month of week data. You know, it may bother markets, it does not bother the Communist Party or sheet. I think they have the capacity to weather the storm for now. Let's keep in mind that counter to what we were hearing all of flast fall, there was no big bang stimulus bazooka this and that. People like to hear that Turma.
It didn't happen. They have the firepower in reserve because they knew they're going to need it this year and next year.
Probably is he also willing, President g willing to deal with a little bit of pain in order to kind of have a spine here, and.
Which they have.
He's obviously already shown in terms of the retaliatory tariff like will to kind of go the distance, even if it does mean some pain at home.
President she is not afraid of pain, as we've seen with what he's done to his own economy right, and China cannot capitulate. As far as he's concerned personally, and as far as I think the Communist Party is concerned, they will not come to Bision with the begging bowl. They're not going to pick up the phone and beg for a deal.
The move today from Apple has been a little puzzling to me, and I've been talking to everybody about it. I've been asking everybody about it. I know you don't cover individual companies, but Apple is a very important company in China. It had its best day since nineteen ninety eight today, shares rallied by fifteen point three percent. Is the optimism that Apple could see an exemption, Is the optimism that Apple could move production outside of China and
more into India, at least for US bound smartphones. You're nodding a little bit. Is it all of the above? Like why is there optimism for a company that is so enmeshed in China when it comes to its supply chain?
You know, my gut feeling is that markets still don't really take this US China tariff war seriously, that there is this continuing. Let's keep in mind they did not think Trump was going to do all of this. The market was ultimately caught by surprise when the big tariff announcement in the Rose Garden happened. And I think a big chunk of people ultimately think that there is a big US China deal that's going to happen, like a phase one or a phase two, of course, and things
are going to go. But I think part of it is that sentiment out there. It could be just overplaying the thing that the manufacturing can be moved out of the India. Stuff is very short term and you know, again you're going to recreate you know, iPhone city somewhere else. That's going to take a very very long time. So I don't truly buy the optimism as much as I can understand it.
Do you not buy the optimism as a whole for the market not understanding the ramifications of this trade where like you still say that the market doesn't fully grasp the tension with China, Yeah that's not price then.
Well, of course that was a big positive reaction because global tariffs is essentially paired back to a large degree. So I get it. But the next few days, the next few weeks, if the tension with China remains at this level or intensifies, I don't think the market should be getting much relief in that.
In that case, Shiza, let me throw out some numbers. It was in a story buyer and a curran who follows the global economy and knows China really well. Two economies US and China, with a combined GDP of forty
six trillion dollars locked in a game of chicken. His words at stake, almost seven hundred billion dollars in two way annual goods trade, China's estimated one point four trillion dollars of portfolio investments in the United States, and less obvious but no less significant variables such as people to people links forged over decades at businesses and universities, and public opinion that's seering on both sides. I've said this
a lot on air. I started my career and it was all about global companies wanting to get into the Chinese market. President Clinton the wto the fight to get China in there. It was all about tapping the domestic economy in China. That's what everybody wanted to do. They've set up shop, they made deals. Is all of that at risk? Is that all of that likely to go away? And is should we think that that US China relationship.
It's just kind of this is the beginning of the end, or maybe it's already started a few years ago.
You know. I don't think this all goes away. But one point to consider is have US companies have these CEOs really contemplated what their own future in China looks like, because it seems like that they never understood that China would actually do the technology transfers, do the jvs, et cetera, and ultimately have its local companies prop up that would be competing with their American counterparts and would be heavily subsidized and would eventually go on to grab a bigger
and bigger share of the domestic market. Foreign companies in general are struggling against local companies and various sectors in China today. So what does that future look like? I would suggest the CEOs contemplate that, But no, I don't think this means everything's coming to an end and no American companies in China.
All right. Chazak Ka Kazi, of course, the chief operating officer and Managing director for China Facebook International