This trade war was the wrong trade war for the United States to start a fight to start with. My concern is that the greatest predictability in the world of today is the unpredictability of the United States, and the greatest certainty in the world of today is the uncertainty of the United States and unfortunately, President Trump. Hello and welcome to the
forecast. After months of a vicious cycle of mutual retaliation, as Xi Jinping has put it, Donald Trump and the Chinese leaders seem to have come to a truce in their first meeting in nearly six years. Speaking in South Korea, XI agreed to stop withholding China's rare earth exports for a year and start buying soybeans from America again, while Donald Trump said that he would reduce tariffs and suspend port fees on Chinese ships. But how long will this amicable relationship last?
Will all of this signal a closer tie between the world's two biggest economies? Well, to discuss this, I'm joined now by Victor GAO, vice president of the Centre for China and Globalization in Beijing, and Doctor Yujia, senior research fellow on China at Chatham House. Welcome to you both. Let me start with you, Yujia. Is the trade war over? Has it been suspended? And who's won, if anyone? Well, the truth is it's not over
yet. What we have right now is a temporary ceasefire between the world two largest economies. Really, if you're judging from the details the two side has been offered for now, I think we'll come to the stage that both end and realize how difficult it is and how dependent each other is towards the economy and has there's a necessary ceasefire for the moment.
However, I think really judging from the words of very cautious words from the Chinese state media here is to say the protracted competition with United States difficult relationship between Beijing and Washington is really here to stay. So I think what we have today is both the leader realise politically it's important to have this temporary ceasefire. Victor Donald Trump after the meeting said on Air Force One that the meeting had been amazing. Was it amazing for Xi Jinping?
No, definitely not. This trade war was the wrong trade war for the United States to start the fight to start with. China is on the receiving side, and whatever China's doing is in retaliation against the wrongful acts by the United States. And now the United States have felt the heat from the Chinese side has blinked again and again. I think the United States realized that it is futile for the United States trying to achieve a chokehold against China because China has enough
wherewithal to fight back. This is the reason why the two sides have decided to back off from each other, at least
temporarily. And I think going forward, the litmus test is whether the United States really orders whatever it has agreed in its summit meeting in the Republic of Korea. And that will decide whether China will again retaliate, retaliate against whatever the United States may want to change from what they agreed in South Korea. But as Julia said, they need each other and hasn't, you know, really the saga, the up and down the trade war of the last nine months since Trump took office
again shown us, Victor, that actually they do rely on each other. China needs America's markets. America needs China's rare earth metals. Just, you know, to mention two items. Absolutely. China and the United States can do each other better if they really respect each other and deal with each other as equal. If the United States wants to bully China and try to suffocate China, first of all, it will not
succeed. Secondly, it will really suffer the retaliation from China. China has never initiated this round of trade war or tariff war. It is always the United States which wants to fight against China, and I hope by now Washington has fully realized it is futile for the United States trying to suppress China by such wrongful acts of tariff war. And China has demonstrated its consistency in terms of its position and policy of fighting back whenever the United States wants to bully China.
And China demands to be treated as a complete equal partner with the United States, rather than anything less than an equal partner. Yujia, do you think that China holds stronger hands in this tussle or America? Or are they literally both equal, although they want different things obviously? Well, I think they're actually mostly equal and obviously they want different things.
And 1st of most for China, I think what they really want is to increasing its economic strength and also try to enhance in this capability on high end technology.
That is to say, it can't withstand geopolitical pressure from the United States and also from the connected W. Now secondly, I think in here as I said earlier, politically both leader won't have some kind of temporary truth and for Donald Trump and he's able to justify to his domestic audience that he has managed his relationship with China, managed tariff
issue. Whereas I think ready for Beijing, it's really a matter of taking this as a stalling approach, of taking a longer time to buy his time and try to strengthen his own domestic economic resilience. So I think both want this ceasefire, but for very different reasons in here. Do you think the whole trade war the last 9-10 months was completely pointless Juja? Well, no, it's, I think surely it is really a sense of testing who has the strengths and who blink 1st.
And obviously Beijing has really taken a playbook provided by United States, that is to say using the maximum pressure to your opposition to achieve what I want. And I think that's the playbook Beijing has learned. So it put in a way that I think United States has inadvertently become the best teacher for China and how to be a superpower. Victor, what's your response to that? Well, China does not need an
additional teacher. China does not want to be a superpower China. China just wants to be treated as an equal and on fair basis. Hang on a minute, I'm going to interrupt you. Then you said China doesn't want to be a superpower. Come on, China wants to be a superpower. China is a superpower. A superpower by Chinese definition. There's some country very abrasive, very much domineering against others, and never treats other countries as an equal.
Now, this trade war or the tariff war is completely pointless. It shows that the United States cannot win this trade war. And I hope President Trump will tell the American people that it is the American people who will eventually pay the bulk of all the tariffs charged by the United States against all the other countries, including against China. China will never pay a single penny of the tariff charged by the United States against China's export to the United States.
Therefore, I truly believe this trade war is really Much Ado about nothing. It demonstrates the United States doesn't care about free trade. It really wants to throw a wedge into free trade. For what? For damaging and growing its own reputation and respectability. How could he be so sure that China will go on? Go on. Yuja, please weigh in. Sorry, can, if I may, if I may add in here, I mean it's not to disregard or disagree with
Doctor GAO in here. I think it's what we have in here right now is a finally AG2 framework and has been admitted by United States. Really, I'm speaking from the evidence from the tweet that has been sent at the White House this morning by saying the G2 meeting is about to start. So I think really after this few months of trade war, United States certainly has treated China as that sense of
undisputed equal. So I think that's what China want and I think that's what Doctor Doctor GAO was saying about regarding the respect. I think it's that respect element what they have as of today. Victor GAO, you've been quite rude about America and its intentions in the trade war, but Donald Trump has been nothing but polite about your leader, Xi Jinping. You called him a strong leader, a great leader. Why doesn't Xi Jinping return the compliment? Why don't you return the compliment?
I always have the highest respect for the American people and for the ingenuity and the creativity of the United States as a nation. Now, sometimes I'm critical of President Trump and his trade policies. That doesn't mean that Victor GAO has any lack of respect for
the American people. Now for President Trump, while I applaud the fact that he used the nice words, present words about China against for President Xi Jinping, we always need to watch whatever he walks and we cannot purely depend on whatever he talks. Therefore, this is the time to see whether he talks to talk and walks the walk. And this will be the litmus test, I think.
And my concern is that the greatest predictability in the world of today is the unpredictable unpredictability of the United States, and the greatest certainty in the world of today is the uncertainty of the United States and unfortunately, President Trump. There are many things that Americans admire about China. You know, I myself was travelling through China for quite a long time in 1981 when it was a very, very different country.
And as I've seen the extraordinary transformation of China, it is, it's, it's mind blowing, literally, it's extraordinary. I wonder what you, Victor GAO, admire about America. Well, I have the highest admiration you can think about for the American people for their creativity, resourcefulness, as well As for their great natural endowment and very unmatched geopolitical positions in the northern parts of the United States.
And I think whatever China is doing is trying its best to make the United States love peace more rather than try to resolve to war to solve any problem between any other with any other country. This is why China never looks down on the United States and China always wants to engage with the United States as an equal partner.
And we truly believe that if China and the United States can this can set their sights of the same major issue in the world, there will be nothing in this world which cannot be resolved for our mutual benefits as well As for the benefit of mankind as a whole. Jujia, I mean, Viktor Gal loves to talk about, you know, the China and peace and how it's a peace loving country that wants to spread peace around the
world. But when you look at China's military buildup, which is also extraordinary, especially it's naval build up in the region, what is what story does that tell you? Well, there's a plenty of stories in here. I think for for the first layer is really that sense of China's obsession regarding neighboring countries because this is the country's share border with a 14 different countries and obviously having secure border and to couple to be paired with the modern army and I think
that's absolutely necessary. Now secondly, I think also given Chinese foreign policies obsession towards sovereignty and territorial integrity. So when they come to issues related to Taiwan and when they come to issues ready to solve China Sea of course and China will show a very assertive stance on that. So I think it's just the the way how the Chinese foreign policy and also the military contact as
operate as it is today. And of course, I think for many and particularly among the G7 countries when I look this and they would consider this probably bring more fear than admiration regarding China's military capability. What do you think? What do you think China wants to do with its military capability? What's the end goal here, Gigi? Well. The end goal is really about the deterrence to win the war without fighting.
I mean, if we come back to a month ago was that gigantic military parade to be put forward at Tiananmen Square? And one thing has been quite clear is that the message has been clear there and that China does have the capability when they come to the military competition. Was United States always the others? However, whether China decided to use it, that's an entirely
different matter. Victor GAO is Is that this parade of military hardware that we saw in Beijing, you know, is the language that comes out of your leader, Xi Jinping? Is that about respect? Is it about fear? Is it about domination in the region?
What's it about? Well, the victory parade on September the third has only one purpose, that is to defend China's sovereignty and national territorial integrity and to make the United States and the American people love peace more than what they used to. And this is the only purpose. China's National Defence is not a measure up against any of our neighboring countries. It is a measuring up against only one country. That is the United States.
And the only purpose of measuring up against the United States is to make sure that the United States will love peace and will no longer be happy to move to the gum and shoot from the hip, especially not vis A vis China. That's the only purpose. But hang on a minute, Victor. It is Chinese components that allow you, you know, the Russians to fire missiles and drones into Ukraine.
China could stop the war in Ukraine today if Xi Jinping picked up the phone to Vladimir Putin and said, you know, we can be the best of friends, but you cannot wage this war. He has refused to do that. He has met Vladimir Putin together with the North Korean leader at that parade on the 3rd of September. I mean, these are not exactly peace loving signals, are they? You are wrong with due respect. If China supplies weapons to the Russian side, Russia would have
won the war overnight. For example, China has this monster lethal anti drone weapon and system which can shoot down any or any group of drones en masse. And this is exactly what the Russians would need because drones launched and used by the Ukrainians have done havoc against the Russia not only inside the Ukraine but deep inside the Russia. This is ample proof to show that China does not supply weapons to either Russia or Ukraine.
And if China supplies weapon to either side, that side receiving China weapon will win the war immediately. Juju is any of that right? Well, I think regarding the Russia, Ukraine and China, and that's an entire separate question, but what we can really judging from the meeting what we had today, I think President Trump even mentioned that was much hoping that can work together with China to resolve this war in Ukraine related matters.
So let's see whether the G2, the framework which we just had this morning, we'll be able to solve the Ukraine Russia issue for now. But I think at the moment we have seen a lot of words floating around and very little deeds that how much, firstly Washington get involved and secondly, how much Beijing would like to get involved on European
security architecture. But but if China was not providing the kind of non overtly non military aid to Russia that it's been providing, you know, for the last two years or 2 1/2 years of the war, do you think that Russia would not be able to conduct this war as it has done so far?
Well, I think weapon is one thing, but another element in here is this regular trade between China and Russia and also the the volumes of trade and that Beijing has purchased from Russia that somehow give the bloodline of the to running the economy. So it's less about the weapon, but I think it's more about the trading relationship that Beijing has offered to Russia right now that seems to putting under the scope being further examined.
But to go why is Xi Jinping so friendly with Kim Jong Un of North Korea and Vladimir Putin of Russia? I mean, if he is this great, amazing world leader as Trump has described him, surely he should be keeping a different kind of company. Well, for the record, China and DPRK have the only blood treaty between China and any other
country. That means after the end of the Korean War, China and DPRK have signed mutual defence treaty whereby each side will need to come to the other side's defence if the other side is attacked. Now this treaty is automatically renewable after 20 years and it has never been terminated. That means between China and DPRK we do have this time honoured mutual defence treaty and China only has this defence treaty with DPRK, not with any other country.
That means if any country wants to second guess China's determination to come to DPRK's aid if DPRK is attacked militarily, then please read the national and the mutual defence treaty between China and DPRK. Now between China and Russia, we engage in normal trade with each other.
China will never allow any other country to disapprove or to disqualify China from engaging with any other country, including Russia, in normal trade relations unless it is being blocked by the United Nations Security Council. That is the only litmus test. China does not allow any sanction imposed by any other country except the sanctions blessed by the United Nations Security Council. I want to talk about nuclear weapons and nuclear testing a
little bit, if I may. Donald Trump actually, to many people's surprise, also announced today on his way back to Washington that he wants to resume nuclear testing immediately after having not done so for 33 years. Now, what does Beijing make of that statement? Well, Beijing's policy about nuclear weapons and use of nuclear weapons and non use of nuclear weapons against non nuclear weapon countries or nuclear weapon free zones is
well recorded. China will never use nuclear weapons against any other country ahead of time. And China will never allow any other country which uses nuclear weapon against China to survive China's nuclear retaliation. That means China has built up MAD capabilities to deter any country in the world which may be MAD enough to strike China
with nuclear weapons. China will never do this kind of thing against any other country, but China will never allow that nuclear power to strike China first to survive China's brutal, ruthless nuclear retaliation. I hope President Trump will get that message. And I hope the United States will never ponder the possibility of using nuclear weapon against China because that will trigger immediate nuclear annihilation of the United States by the Chinese
retaliation. I mean, the Americans have not even dropped the slightest hint that they might want to target anyone with nuclear weapons, let alone China. So. So why are you so robust in your language? No, it's not. My language is robust. It is. China's position is as robust as you can expect. China will not attack any country first with nuclear weapons, but China will never allow any nuclear power which strikes China first with nuclear weapon to survive China's
nuclear retaliation period. That's robustness you may be calling for. And just briefly on this, do you think that China will now also resume testing of nuclear weapons? China has never stopped nuclear testing. China's nuclear stockpile is a fraction of that of the United States or Russia. But China's position is very clear.
China will have enough nuclear warheads after the first nuclear strike by any nuclear power to make sure that that nuclear power which strikes China first will be annihilated by nuclear weapon. That is Armageddon, period. I think, yeah, I'd just like to adding on on this element in
here. So while we're talking about the PRK, while we're talking about China and we also talk about Russia and Moscow earlier, I think one of the biggest worry Beijing would have right now at this moment is that a close ties between the DPRK and Russia is does not serve China's interests very well. Now having both surrounded by nuclear neighbors and China's policy obviously is do not root out the first by not using the nuclear.
However, I think these things need to be said that what Russia and DPRK has been doing is not something at Beijing's best interest at the moment. OK, let's move on to, I want to get back to the, you know, the, the trade relationship between America and China, which is, you know, at the heart of the
meeting that we had today. And, and I just wonder, Victor GAO, whether you think at the end of the day, you know, American China can find some kind of mutual understanding where they both, you know, produce high end goods when it comes to, you know, artificial intelligence. You know, they both produce electric vehicles. You know, they help each other on things like climate change.
Or do you think that the competition between these two great powers is so intense that actually, whatever anyone says, we are slowly moving towards some kind of confrontation? No, I don't think so. I think about the end of the day, I truly believe in the inevitability of peace between China and the United States. I'm a complete opposer to the so-called destined for war scenario between China and the United States. Allow me to use soybean as an
example. China has the biggest demand for soybean and if the United States wants to wait tariff war against China, then China will not buy a single item of soybean to the great detriment of the soybean growers in the United States. That means the United States should give up any idea of weaponizing tariff against China because otherwise China will retaliate. China will be ready to see complete winding down to zero of the two way trading goods If the United States wants to weaponize tariff.
That is the bottom line. China wants to engage with the United States. China wants to buy as much soybean as the American farmers can grow and China's the only biggest market for soybean amazingly. Therefore, President Trump should really think about the well-being of the American farmers before he even thinks about the crazy idea of launching tariff war against China. We should go back to square one. That means China and the United States don't weaponize tariff
against each other. That is the better way between China and the United States. Right. But what about Chinese factories? You have a manufacturing bubble. You know, you after your property bubble burst, you put all your assets and all your investment into manufacturing. You want to become, you know, the, the world's, you know, single most important manufacturing power and you're brilliant at it. But you need to sell the stuff that you make.
And you can't sell all of it to China or even to Southeast Asia or to Europe. You're going to have to sell a lot of it to America. So that is where the Americans have a stranglehold over you, don't they? Because if you don't sell the stuff, your factories go bust and your workers get very unhappy. With due respect, I completely disagree with you, Sir. Why? Because the United States has been calling for decoupling for at least seven or eight years.
Do you think China will not prepare for that extreme situation? China's fully prepared if the United States really wants to decouple from China, meaning there will be no more trade between China and the United States, if that's what the United States wants to see, and China will be fully prepared. Do you know what we are talking about now? We are talking about landing persons on the moon ahead of any other country.
We are talking about fusion technology to generate power without limit and bringing the benefits to the 8 billion people in the world. We are talking about deep space, deep sea. We are talking about everything to be enabled by AI. We are not not talking about producing toys or garments or textiles or shoes anymore. We are talking really about the cutting edge technology, the breakthrough that mankind can think about. That will be the stabilizing factor for the Chinese economic
growth. I don't think there is any other country in the world which is so focused on what we call new qualitative productivity, which is a tongue twister, but which means you generate productivity through technological breakthroughs. That's what China is focused upon now, all. Right. Do you? Do you buy? Do you buy what Victor is selling? Just to putting this the not the tongue twister, but the new terms on the economic terms that Beijing has defined.
Putting it aside, I think what we have seen so far really again judging from the readouts we have from both and today is actually United States has promising to invested more in China. And that is actually not reducing the dependency, but actually increasing the dependency between China and United States.
And if we're talking about market behaviour and what United States been asking, asking China to purchasing extra soya beans, that is actually a market distortion that is not actually something that follow the market economy. So whether China's willing to do that, that is up to Beijing to decide. On one hand. Then I think on the other hand, Beijing has already learned from the sense of unpredictability and also the the economic behaviour that's set up by the Trump administration.
So what Beijing has decided is not to putting all the eggs in one basket. I think equally United States is playing on a similar strategy in here, do not overlay dependent on China and like likewise I think European Union does the same thing. So I think what we have right now is every single country, major economies in the world, they all become so inward looking and it has LED into the
situation where we are today. So it's less of the dependency, but it's more about setting the forgeries and how can I protect oneself. OK. Just finally, I want to spend a minute or two talking about Taiwan. First, you Juja Taiwan, as far as I can gather, didn't come up at all in the meeting. Certainly there was nothing in the official readout about Taiwan. Does that surprise you? No, it's not surprising me at all.
I think really judging from the the results and also judging from the mood was United States that obviously Taiwan is a major, major issue between the two. And then that's probably the fundamental agreement between the Beijing and the United States back to 1979 when they formally established diplomatic relations. So I think any major changes regarding Taiwan, firstly that would require to have some at least foundational level of trust between Beijing and Washington.
And moment I do not see that trust actually exist. And secondly, they are China Hawks around the Trump administration and WHO deliberately looking for changes in status towards Taiwan. So I think really for Donald Trump himself, and he's not really willing to make a very bold move for that. But you got a final question to
you. Do you think if you if your government were to encroach on Taiwan militarily, either through a naval blockade or an invasion, and we know that Xi Jinping is on the record for saying that he wants Taiwan to be reunified, as you put it, with the motherland at some stage before he leaves office. Do you think that President Trump, should he be in the White House at the time, will sit by and do nothing, or will he intervene and use American power
to stop you? First of all, let's be honest, the real status of the relations across the two sides of the Taiwan Strait is the unfinished civil war back in 1949. So if China really moves to achieve unification or liberation of Taiwan, it is the resurrection of the unfinished civil war. Do you really think the United States or President Trump or anyone else in the White House want to be involved in the civil war between the two sides of the Taiwan Strait? That's number one.
I'm completely ruling that option out on the table. Secondly, the status of Taiwan being part of China is carving stone in the Cairo Declaration and the Boston Proclamation. No one can change that. Whether you want to try that or not, that's another matter. But you can never change the final verdict of history in the Cairo Declaration and the Boston Proclamation, meaning China's completely on the right side of
history. If we want to have another civil war to finish the unfinished civil war back in 1949, that's China's internal matter. Taiwan will be liberated by peaceful means preferably, or by a resurrected civil war if it is necessary. But you don't. Want to be liberated, Victor Gow. They don't want to be liberated. They quite like living in their own country. The majority of Tiny do not want to be part of the People's Republic of China.
Well, the people in the Confederation did not want to join the Union, but President Lincoln decided otherwise. President Lincoln decided to bring them back to the Union with force if it is necessary. And this is exactly what the Union did against the Confederation. And that is the only logical conclusion for the relations between the Federation on the one side and the Confederation on the other side. The Confederation was defeated and now they are very much part of the Union.
And the United States after the Civil War has been one nation under God, indivisible. That is the truth of the United States. It will be the truth for China too. One day when China is reunited, you will see China will never be divisible and no one can ever dare to split any part of China away from China. Very quick one to you Jujo, to finish the podcast. In how many years from now do you expect Beijing to make a move on Taiwan? Well, I think we have the second
Centennial goal. So at some .2049 we have been reserved one way or another. Let me put in here. That's that's quite a long time frame, I think. I think Xi Jinping would like to be done sooner rather than later. Thanks very much to both of you. Victor GAO, who stayed up late for us in Beijing, thank you very much indeed. And Doctor Zhujia, Dr. GAO and Doctor Zhujia in London, thanks to you as well. That's it for this episode of THE Forecast. Until next time, goodbye.