China Targets Domestic Demand; Trade Surplus Tops $1 Tln

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00:00James if China has expanded trade with other countries to replace the U.S. does it even

00:04need the U.S. anymore. I mean China is still Chinese companies I should say are still selling

00:11about a billion dollars worth of stuff to America every day. You know there's still a billion

00:16dollars of phones and you know everything from T-shirts to phones going into containers to

00:22cross the Pacific Ocean to go to L.A. port to go to the other ports in America. So you

00:28can't just take that away and have nothing and have nothing happen. Obviously the companies

00:34that are still selling those goods depend on American customers even though as you're saying

00:38you've seen double digit falls in exports to the U.S. for the last eight months. I mean there's

00:44still the America is still a substantial market for Chinese companies and lots of Chinese goods

00:49are making their way to America via third countries now. Vietnam being probably the most you know

00:54the biggest one. But you know Thailand Malaysia the Philippines Indonesia Mexico. There are lots of

01:01Chinese components and Chinese goods that are going to those places being transformed or not

01:05transformed and then eventually making their way into America. So you know the Chinese companies

01:09cannot do without America or they would be they would make a lot less money if they had to do

01:13completely without America's market. But you know I think what you're seeing here today is the data today is two

01:20things. One there are other markets in the world. You know America is not the only place that wants to buy

01:25things from China. There are other companies in other countries around the world that do value

01:29Chinese goods. They see them as increasingly good quality. They see them as cheap and they want to buy

01:35from China. And the second thing we're seeing is really the biggest story I think is how weak Chinese

01:40domestic demand is. Yeah. How much more they're able they're able to you know to fulfill their own needs

01:46domestically. Well they don't have to go and buy from other countries. I think that's where you're seeing

01:50this massive trade surplus coming from. So on that point the Pollock Bureau has also now decided to

01:54prioritize boosting domestic demand in 2026. But China has been trying to boost consumption for a long

02:00time. Right. So does this mean we're going to see some kind of stimulus getting rolled out or some kind of a

02:05one time incentive. I think you know if if I can't explain the difference between prioritizing

02:13domestic consumption this year and or sort of 2026 and last year's aim for 2025 which was boosting

02:20domestic consumption. You know these are very very you know it's kind of a how many angels can dance on the

02:25head of a pin kind of questions trying to pass the difference in that. I think the people who are looking at

02:29this you know saying that there's going to be a little bit more stimulus. There is going to be a little bit more of a

02:34focus on the domestic market. But it isn't really a massive change. And I think how the government is seeing the

02:39domestic economy. And also I don't think that's then going to flow through to foreign exporters who might want to try

02:46and export to the Chinese economy. And the reason for that is I said the stimulus that people are expecting is not very

02:52large. So the effect is not going to be that large. And secondly Chinese companies are more capable and more able to to fill

03:00those holes fill those gaps. China is less reliant than it's ever been really on imports. And so even if there is a boost in the

03:06domestic economy a lot of that is just going to be taken up by Chinese companies which which are more competitive

03:13and often cheaper than than their foreign competitors. So even if there is a domestic rebalancing in China the flow

03:20through effects of that to foreign countries is going to be much less than say in 2008 when you saw a massive stimulus

03:26from the government. And that flow through all over the world is one of the things that really bought the world out of the global

03:30financial crisis. I don't think we're going to see something like that this time.