Xi Jingping hits back at US tariffs
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Hello and welcome to World Business Report on the BBC World Service. I'm Will Bain. Thanks for being back with us on the programme. Coming up today, two countries who've borne some of the stiffest trade tariffs so far have perhaps been commiserating, but more importantly, consolidating their ties and talking about what comes next. So for Vietnam, Xi Jinping's visit presents both a risk and an opportunity for

Yeah, we'll hear more about President Xi of China's trip to Vietnam in just a moment. And we'll hear, too, why Japan's Sony says it thinks tariffs will mean more expensive PlayStation consoles all around the world in the future. And away from tariffs, a record amount of money was sent back to Pakistan in the form of remittances from expats abroad. But is that boosting Pakistan's economy?

It's not boosting it at all. It's basically, you know, fostering consumption and future. It can also lead to an increase in inflationary pressures. All that to come here on World Business Report before we leave you in the next half hour.

The trade war and tariff war will produce no winner and protectionism will lead nowhere. Those were the words of the Chinese leader Xi Jinping in Vietnamese media Monday as he kicked off a tour of East Asian neighbours including Cambodia and Malaysia as well as today's host Vietnam. Against the backdrop of ostensibly frozen trade between the world's two largest economies...

after Beijing responded to US tariffs on imports of Chinese goods of 125% by imposing the same import tax in return on US goods to China. President Xi set out on his first foreign trip of the year against that backdrop to meet other export-minded friends to discuss a path forward. And what does it mean for a country that's seemingly caught in the middle? Vietnam's biggest trading partner, for example, is China. But...

Its biggest export market, the United States. Our colleagues at the Marketplace program here at the BBC Business Unit have been speaking to Adam Sitkoff, who's executive director of the U.S. Chamber of Commerce in Vietnam, about what's at stake.

China's a major market for Vietnam's agricultural products, and Vietnam imports a lot of raw materials from China for the many factories that drive exports to the U.S. An example of that is that about 70 to 80 percent of raw materials for Vietnamese up

apparel that heads to the U.S. market comes in here from China. And that's the same with electronics and other goods. So all this is tied together. And you mentioned electronics there. A bit of uncertainty over the weekend. We've had this kind of temporary pause in U.S. tariffs on semiconductors, electronic goods, and then a suggestion that that temporary pause might be obviously very much that temporary. How important is sort of clarity in that area to Vietnam and that part of the world?

I think it's very, very important. I'll give an example. About a quarter of China's total exports to the U.S. would be exempt because of that waiving the electronics from those tariffs. 64% of exports to the U.S. from Taiwan would be exempt from the tariffs, 44% from Malaysia, and around 30% from both Vietnam and Thailand.

So electronics are made in this part of the world. And so it's very important. Um, there is some confusion. I mean, the president, uh, and some of his folks, uh, obviously said in the past hours that, well, actually they're not really being exempted those products. They're just being moved into a different tariff bucket. But, um,

You know, in reality, the U.S. is now negotiating with the bond markets and with itself. The rest of the world's going to wait and see how this plays out. I would like to see fewer barriers and more free trade because that's what I think raises standard of livings around the world.

That's Adam Sitkoff there of the U.S. Chamber of Commerce in Hanoi, Vietnam. Speaking to Marketplace is Luke Wilson. Well, for more on the visit, we spoke to Xiang Nguyen Huc, a visiting fellow at the Vietnam Studies Program at the ISEAS Yukof Ishak Research Institute in Singapore.

I think it will take a lot of time for Southeast Asian economies, including Vietnam, Malaysia, and Cambodia, three of China's destinations for President Xi Jinping, to diversify from American markets. But nevertheless, I think the move is already in action. And China's Chinese President Xi Jinping visit is very important in, I think, in three ways.

First, Chinese President Xi Jinping might want to reassure Southeast Asian economies that they will not try to dump their underpriced products because of the U.S. tariff on Southeast Asian economies and competing with local manufacturers. And second, China might offer

Southeast Asian economies an alternative market, 1.4 billion people in China to get import stuff from Southeast Asian economies. And third, I think they want to reassure about the political compromise, if any, especially on the South China Sea dispute, so that Southeast Asian economies and Southeast Asian people can trust China more and in the sense can

make China and ASEAN closer to each other, especially in the very uncertain time of trade disruptions. The message that President Xi wants to show to his Asian public is that

China is the only adult in the room, and they want to be a responsible stakeholder in contrast to the recent disruption by Trump's quote-unquote Liberation Day. So I think this is very important because they want to secure more cooperation from its neighbours, including Vietnam, which is China's biggest trade partner in ASEAN. Is there a risk, Dr Zhang, that actually they kind of stir up

the Trump administration here by being seen to be talking with the one country that has got those tariffs coming into force in terms of China? Well, I think Vietnam's space for balancing between great powers is increasingly narrowing down. So for Vietnam,

Xi Jinping's visit presents both a risk and an opportunity. So the risk is that, of course, all of those trade actions that Trump levies on China would be seen as something, you know, Vietnam moving closer to China when Chinese President Xi Jinping is in Vietnam and asks the Vietnamese counterpart to cooperate with China to tackle the trade disruption. So that's one very important risk because Vietnam depends so much on American export.

But the opportunity here is that China is a very big market. So if Vietnam cannot really depend on American export market, maybe in the next few years, and then the only option for them is to move to China. So I think Vietnam would have to balance really well in this discussion about the risk, you know, angering Trump and the opportunity of moving closer to Chinese biggest, you know, consumer market.

Difficult balancing at that, isn't it? Because we know and we just heard from the US American Chamber of Commerce in Vietnam and Adam Sitkov,

A lot of these companies doing the exporting are actually big American firms themselves from Vietnam. Yes, obviously. And also it's very important to note that the trade leadership between Vietnam and China has grown exponentially in the past few years. And last year they recorded $260 billion in trade volume.

But nevertheless, Vietnam actually has a huge trade deficit with China and which actually creates an impression of Chinese goods rerouting via Vietnam to re-export to the United States. At the centre of this as well, Dr Zhang, is this accusation, I guess, from Peter Navarro, who's President Trump's top trade adviser. He's basically seen by a lot of people as the architect of a lot of this terrorist policy. He wrote in the Financial Times last week about what he calls

transshipping, he says. We want to hear from countries including Cambodia, Mexico and Vietnam that you will stop allowing China to evade US tariffs by transshipping exports through your countries. Can you just explain what Mr Navarro means by transshipping?

And then your assessment of whether that is a fair criticism. What Peter Navarro said is that the Chinese products are made in China, then export to Vietnam and doing just very super special things in Vietnam and then relabel it as made in Vietnam and then re-exporting it to American markets.

I think there's a lot of research studies already debunk the impression made by Navarro that one third of Vietnamese exports are Chinese. I think it's not true. And I really want to see where the numbers that Peter Navarro takes from.

But most of the Vietnamese manufacturing companies, many of them are multinational companies. Many of them are Chinese as well. But the thing is that Vietnam imports a lot of input from China, and that creates a trade issue.

deficit from Vietnam and China, and then Vietnam used that to manufacturing things and export to America. And the impression is there, but the reality is that Vietnam doesn't really allow rerouting Chinese goods via Vietnam. And there's a lot of criminal actions against some companies that actually does, but the numbers is very, very small.

Our thanks to Dr. Zhang Nguyen-Huc, Visiting Fellow at the Vietnam Studies Programme at the ISEAS Yusof Ishak Research Institute.

in Singapore there. Well, let's see how financial markets have kicked off the week, shall we, as well. And not just stocks and share markets, so company equity markets, but let's take a look at what's going on with the oil markets too, because it's been an interesting few days for that. So Cornelia Meyer, the CEO and founder of Meyer Resources is with us, as is Jane Sydenham. Jane is the investment director at Rathbones Investment Management. Thanks both for being back with us on World Business Report. Jane, why don't you

pick up, first of all, because markets in the United States are open for the first time since the president sort of began to try and sketch out some carve-outs, I guess, for the tech sector in terms of his tariff policy. What's been the stock market reaction to all of that? Yeah, reasonably positive so far, with the S&P 500 up about 1.5% and NASDAQ, the technology index, is up just under

Two percent. I mean, I think it could have been more, I think, if Trump had said, yes, we're going to roll back any increases on prices for electronics completely as far as imports from China are concerned. So there's probably a slightly more modest rise than there otherwise might have been, but generally a better mood. And what about the picture here in Europe earlier in the day, Jane?

Yeah, I mean, you know, much more positive. Certainly, you know, markets. I mean, the euro stocks index is up nearly 3%. The euro has been stronger against the dollar. I think there's you know, there is more of a sense of of investors allocating more capital to Europe. They feel a bit more comfortable at the moment. Should be clear, though, these are sort of still in regaining losses territory, aren't they? They aren't sort of up overall in the period before.

from when these tariffs were announced? Oh, yes. I mean, it's very much recovery rather than moving ahead. I think that's right. It's more breathing out and a little bit of relaxation rather than pushing further. Good phrase there. Cornelia Meyer. Is it breathing out in the oil markets today? I saw Brent Crude, the one that we kind of track the most here on the programme, up a smidge today after lots of days of losses. Is it a similar picture for commodities as it is with oil?

company stocks and shares as well are kind of, okay, we've got a bit more of a picture here now. We've got a bit more of an assessment.

I don't think so. I think what you see is, you know, markets always overshoot, right? And when you saw this, especially this huge tariffs levied on China, markets reacted, oil markets reacted very strongly because look at it, China is the largest importer of crude. So if there are developments that adversely affect the economy of the largest importer of a commodity already,

Obviously, the commodity gets hit. That is then exacerbated by the general fear of a recession. It is also exacerbated by next month OPEC putting an extra 400,000 barrels a day on the market. So the news in terms of oil price was not good. It undershot, but it was tremendous volatility. It came from 75 down to below 60, and it's now at 65.

So the real issue here is the volatility. That's a really important point that you brought out in there, Cornelia, as well. Just explain a little bit more for people who don't follow it as closely as you guys do in terms of what they can extrapolate, I suppose, about what it might mean for the economy where they are, where they're living and where they're listening to us today. The oil price has been falling pretty steadily through all of this process. And as you said...

sort of sparking fears that that means that companies are going to stop buying as much of it to kind of do the activity that they use, right? Just explain that through. Yeah, exactly. You know, an economy that is going gambusters is good for the oil price, is good for oil demand. Interestingly, though, I just got the latest monthly oil market report out of OPEC, and

And although they were sort of basing everything on... And this is the biggest, this is the sort of cartel of the biggest producers of oil in the world. Well, it's not a cartel, it's the alliance of the biggest, of the biggest producers. And,

And their research basically showed that they based it on March and they only went down about 100,000 barrels a day. They said oil demand would grow in March, they said by 1.4 million barrels a day. Now they said by 1.3 million barrels a day. So they're playing

It's very, very cautiously. And so with your kind of economist hat on rather than your kind of former oil markets hat on, what is that telling you about what that's kind of signalling for all of us listening in terms of the direction of the global economy?

Well, to me, it's the direction of the global economies. Everybody is scared. Everybody is scared about the global economy. You have seen, you look at gold, there's huge inflows in gold. You saw when the markets really tanked earlier last week, there was a selling of gold, which means people were trying to meet their margin calls. So everybody is sort of sitting at the edge of their seats,

And I don't think the global economy is at this point in a happy place. Cornelia, thanks as always for your time. Cornelia Meyer, the CEO and founder of Meyer Resources there. Jane, just to that point that Cornelia was making at the end there, also seen that impact spread across into currency markets as well. And that can have a big impact again, regardless of...

Yeah, I mean, these huge amounts of dollars move around the world every single day to buy, as you say, commodities, whether it's oil, metals, food, you know, things like that.

All kinds of things. So much trade is conducted in dollars. So it's such an important currency and a reference point for the entire financial system, which is why this is why everyone is really quite sort of shocked by what's going on at the moment. And they're all trying to understand how it's going to play out. Right. And so, again, it speaks to what you guys both said at the start, really. It's that uncertainty, again, of the political direction of the fact that the twists and turns are coming so fast is what's kind of setting that backdrop.

Oh, for sure. I mean, you know, the fact that, as we were saying at the beginning of the programme, you know, semiconductors were being exempted.

then they're exempted, but with some caveats. Then, you know, Trump's saying we're going to maybe put them into a different bucket. It's this constant, you know, shifting from one position to another. Investors are finding that really hard to cope with. Away from tariffs directly, although, of course, they are a company that are impacted by exactly what you were just talking about, Jane. Meta, owner of Instagram, WhatsApp, used to be known as Facebook. Those former two important today because its share price not

kind of rallying quite as much as some of those other tech firms we talked about. And potentially that's because of the backdrop of this enormous court case, this antitrust case that's launching in the US. Just sketch out in sort of real layman's terms what's at stake here.

Sure. So Meta bought Instagram in 2012 and then WhatsApp in 2014, which obviously gave it an incredibly strong position in the sort of messaging market. And the Federal Trade Commission has launched this case effectively saying that Meta was intending to create a monopoly and put itself in such a strong position that it was unassailable.

The interesting thing about this is in the United States, competition law is all about does it disadvantage the consumer?

In Europe and the UK, it's more about actual market share. So the burden of proof is, you know, is Meta disadvantaging consumers by holding such a large market share of the messaging arena? And that's what's got to be proved here. Yeah, fascinating and pretty critical case that I'm sure Sam Fenwick and the team on the late edition of World Business Report and

Business Matters at midnight GMT, one o'clock BST, British Summertime. A little bit later on, we'll be chatting through in more detail as and when we get a bit more coming out from that court case because it's literally just kicked off, I think, in the last few minutes or so. You're with World Business Report on the BBC World Service.

Pakistanis living outside the country sent a record $4.1 billion back home in March as the economy continues to try and make a recovery after it came close to defaulting on its international debts in 2022. Pakistan's central bank expects remittances to hit $38 billion this year. Haroon Sharif is a former minister of state of Pakistan and a former chairman of its board of investment. And we asked him where this money was coming from and why it's so important to Pakistan.

Pakistan stands fifth in the low and medium-sized countries in the world in terms of receiving remittances. March was an unusual month where the remittances, you know, significantly rose. And there are four countries which contribute to it, which is Saudi Arabia, UAE, UK and the U.S.,

Interestingly, the highest increase is from the UK. So in my opinion, there are four factors to it. Number one, it is the factor because in March, it was the holy festival of Eid, where lots of people send money to their relatives. Number two, the government has eased the commission's

and margins of banks on receiving remittances. So lots of people have stopped using the informal channels and have moved to the formal channels. Third is that in the past five years, the consumption patterns have changed and, you know, the middle and lower level of income people's consumption has eroded because of first COVID. Then there was a shock of floods. And then as a very high

high inflation, you know, which so people needed more money. So there's a health factor coming up from the UK and other countries.

So you're saying these are coming back and people are using this really for everyday spending, for things like food,

electricity, schooling, all those kind of things, basics, rather than it coming back and it being invested in a business, some infrastructure, expanding, that kind of thing. That's absolutely right. You know, generally, when remittances come to a country, it contributes to GDP and the volume in Pakistan, you know, the projected $38 billion, it is about 10% of Pakistan's GDP.

Now, the second part is it does help the government, which is, you know, in a very tight balance of payment situation. They're a foreign flow, which is more than foreign direct investment, which is coming in. So they have, you know, foreign currency to pay back. But the real crux is that the recipient who are getting these remittances from relatives and friends and family mostly are using it for the consumption purposes.

And basically, that goes in paying utility bill that goes in transport costs, and also health expenditure. Now, these are the things where money is actually going because people's, you know, income levels have really, really struck hard in the past four or five years, because of shocks, exogenous shocks, and you know, internal inflationary shocks, which I had mentioned. But just to really spell it out, this is basically money that's just coming in sort of

ticking the economy over rather than boosting it, if you know what I mean. Not at all. Yeah, it's not boosting it at all. But it is helping the government pay its bills. Yeah. But it's basically, you know, fostering consumption and future it can also lead to an increase in inflationary pressures.

Our thanks to former Pakistani government minister Haroon Sharif there. Now, Jane Stidham still with us from Rathbones Investment Management here in the UK. And Jane talked a bit about the kind of big picture of tariffs in the stock market a little earlier. Interesting to hear decisions from individual companies starting to drip through, though, as well, including the maker of this. Get ready. Get ready. Get ready.

Yeah, get ready for price rises. If you're a fan of PlayStation video game consoles, Jane, this came a little bit out the blue from Sony, the maker of the PlayStation, but does kind of follow an industry trend, I guess. But interesting to hear companies sort of putting their heads above the parapet and saying it's tariffs and its prices are going up.

Yeah, I mean, this is the first sort of, I guess, major announcement really from a brand that's kind of was really well recognised on a global basis. Sony talked about increasing the price of the PlayStation by 25%. And what's interesting is that they've done this on a global basis. So they've increased prices in the UK, Europe.

Middle East, etc., rather than just in relation to their US customers. And so they've clearly made that choice. We've got to spread this burden across everyone. Otherwise, we will just lose all our US consumers. Yeah, another big company, also a Japanese tech company, Nintendo, of course, going to be launching a follow-up to its wildly successful Switch, a Switch 2. It was planning this summer all around the world. The company said a couple of weeks ago, you might remember in the early days of this tariff uncertainty, that it was going to press pause

on certainly the US launch bit of that, or potentially press pause on that, while it tried to reassess what it needed to do with price. And Alana Higgs is with us, Deputy Editor at the website and news site, Nintendo Life. Alana, thanks so much for being with us on World Business Report.

Hi, thanks for having me, Will. Bit of an industry trend then at this point. And yet you've got a little bit of cynicism about this, right? A tiny bit, yes. I think PlayStation's response this morning is certainly indicative of a response to the tariff situation. And Nintendo, as you said earlier, they said that these pricing is nothing to do with the tariffs. But of course, they've hit the pause button on the pre-orders in the US.

They've gone forward in the UK as per normal and no changes on the price there so far. But the price on video games, in particular for the Switch, like one of the launch titles, Mario Kart World, is the first Nintendo £80 or £74.99 game or $80 game for that company. And that's what's caused a few heads to turn there, I think. Yeah, that point that Jane made, Alana, just explain that for people because you understand this industry so much better than all the rest of us.

here is it in response then that say sony says all right we're going to sell the playstation at this price everywhere because they're worried that what us consumers would try and buy one from europe and that would kind of disturb their market in some way if it was cheaper somewhere else is that how it works they'd want to try and have as similar pricing as possible across the board i mean potentially i mean in response to that actually nintendo themselves in japan they have a really

essentially a region lock switch for Japanese only consumers and people who can read Japanese and that is cheaper than a US version which they are also selling a multi-language version in Japan which I think is like maybe $100 more expensive off the top of my head so that's a similar situation but for Sony in particular like

The price has increased across the world, but interestingly, it stayed the same in the US. So you have to wonder if it is trying to, as you say, even the playing field a little bit and stop people from importing for cheaper prices. And we've talked a lot about this trend on the programme, Alana, as well as this sort of shift to digitisation here, maybe the move away long term, these companies from physical consoles. Do you think things like tariffs would kind of incentivise that push, I guess?

Yeah, potentially. Again, saying Nintendo's, a lot of their digital games coming out on the Switch 2 will be cheaper digitally than physically. In some cases, £5 or £10. And then you've got like the digital upgrades for older Switch games that will cost a little bit of extra money as well. So...

It does look like there is a general trend towards the digital market nowadays. And we've seen over the years that digital games have been selling more and more than physical year on year. So, yeah, I think it's inevitability at this point. Interesting potential implications for gamers and, of course, for global inflation. Just a great little snapshot, isn't it? Big thanks to Alana Higgs, the deputy editor at Nintendo Life, and to Jane Sydenham from Rathbones Investment Management. And, of course, to all of you for listening to World Business Report.

As Africa stands on the brink of accelerated development, the 2025 Africa Markets Conference brought global and African investors, risk leaders, policymakers and regulators together to discuss our economic future. Discover key themes including how to meet the continent's structural needs while driving sustainable growth at standardbank.co.za forward slash cib. Standard Bank is an authorized FSP and registered credit provider.

Teas and Seas apply.