China's leader continues the charm offensive

Summary

Marketplace Morning Report: China's Leader Continues the Charm Offensive
Hosted by Luke Wilson for Marketplace, April 15, 2025

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Introduction

In the April 15, 2025 episode of the Marketplace Morning Report, Luke Wilson delves into the intricate dynamics of international trade and economic strategies shaping Southeast Asia. The focal point of the discussion is Chinese President Xi Jinping’s ongoing tour of Southeast Asia, aimed at strengthening China's economic ties in the region amidst rising US tariffs. Additionally, the episode covers significant business developments in Europe and Asia, highlighting the broader implications for global markets.

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China’s Southeast Asia Charm Offensive

Xi Jinping’s Tour and Regional Reactions

Chinese President Xi Jinping is currently on a week-long tour of Southeast Asia, with his next stop being Malaysia. This visit is strategically timed amidst Malaysia grappling with a substantial 24% American tariff imposed on its exports. Luke Wilson introduces the segment with insights from Nick Marsh, Marketplace's business correspondent in Kuala Lumpur.

Economic Uncertainty in Malaysia

Nick Marsh (00:38) describes the prevailing sentiment in Malaysia as one of “apprehension” and “uncertainty.” He highlights the challenges faced by Southeast Asian nations due to fluctuating US tariffs and the critical role China plays as both an investor and a major trading partner. Marsh emphasizes the delicate balance Malaysia must maintain between its economic dependencies on both China and the United States.

Insights from Malaysia’s Trade Minister, Zafrul Aziz

Zafrul Aziz (01:25) conveys Malaysia’s surprise and concern over the sudden imposition of US tariffs. He states, “We understand the concerns of the U.S. we disagree. We believe that the information that they have is not accurate” (01:44). Aziz underscores the complexity of navigating relationships with both superpowers, noting that China and the US collectively contribute nearly 50% of global GDP and are Malaysia’s top trading partners.

Strategic Economic Positioning

Nick Marsh (02:42) elaborates on the strategic tightrope Malaysia and other Southeast Asian nations must walk. He explains that while China’s significant investments in infrastructure and manufacturing support local economies, the encroachment of cheap Chinese goods—resulting from US tariffs—poses a threat to local manufacturers and workers. Marsh remarks, “It's a real conundrum for countries in this region” (03:04), highlighting the nuanced challenges faced by Southeast Asian economies caught between two dominant economic powers.

Implications of US Tariffs

Luke Wilson (03:47) transitions to broader market impacts, discussing how US tariffs are directly affecting various industries. The marketplace reactions include stock fluctuations in European and Asian markets, reflecting the interconnectedness of global trade policies.

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Broader Business and Economic Developments

European Market Reactions and Auto Industry Tariffs

Shares of France's luxury giant, LVMH, dropped over 7% following a decline in first-quarter sales, despite analysts expecting slight growth across Europe. Contrarily, the Stoxx 600 index saw an uptick of more than 1%, with automotive companies like BMW, Mercedes Benz, and Volkswagen gaining over 2.5%. This positive movement is attributed to US President Donald Trump’s indication of a temporary pause in tariffs on the auto industry, providing a temporary respite for European car manufacturers.

South Korea’s Semiconductor Investment Amid US Tariff Threats

South Korea has announced an additional $5 billion investment into its semiconductor industry to bolster its position amidst looming US tariffs on imported chips. Jean MacKenzie (04:35) reports that South Korea, a leading chip manufacturer, heavily relies on exports to the US. The anticipated tariffs threaten key industries such as semiconductors and automotive, with Seoul and Washington set to commence trade negotiations soon.

Impact on Automotive Sector

The automotive sector in South Korea is particularly vulnerable, as highlighted by the surge in Hyundai’s stock by 4% following Trump’s signal to temporarily pause car tariffs. This development underscores the volatility within the automotive industry in response to shifting trade policies.

Nissan’s Production Adjustments and Japan’s Demographic Challenges

Nissan is reportedly considering scaling back production of its top-selling US model, the Rogue SUV, as detailed by Jean MacKenzie (05:02). While the company remains committed to adapting thoughtfully to market changes, this potential adjustment signals broader challenges within the automotive sector.

Concurrently, Japan faces significant demographic shifts, with the population of Japanese nationals declining by almost 900,000 in 2024—a record drop influenced by a declining birth rate and an aging society. Celia Hatton (05:43) highlights that Japan’s restrictive immigration policies have impeded population growth, resulting in nearly a third of the population being over 65 years old. This demographic trend poses long-term economic challenges for Japan, the world’s fourth-largest economy.

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Conclusion

The April 15 episode of the Marketplace Morning Report offers a comprehensive analysis of the geopolitical and economic tensions currently shaping Southeast Asia and beyond. From China's strategic outreach in the face of US tariffs to significant shifts in global automotive and semiconductor industries, the episode underscores the intricate web of dependencies and challenges faced by nations navigating between major economic powers. The discussions provide valuable insights into how these developments could influence global markets and economic policies in the near future.

Notable Quotes:

• Zafrul Aziz (01:25): “We understand the concerns of the U.S. we disagree. We believe that the information that they have is not accurate.”
• Nick Marsh (03:04): “It's a real conundrum for countries in this region.”
• Jean MacKenzie (05:43): “Japanese families aren't having enough babies to replace the numbers of older people who are dying.”

Transcript

[Luke Wilson]

The Chinese President's charm offensive across Southeast Asia continues. Live from the BBC World Service, this is the Marketplace Morning Report. I'm Luke Wilson in for Liana Byrne. Good morning. China's leader Xi Jinping is continuing his week long tour of Southeast Asia, arriving in Malaysia tonight which has been hit by a 24% American tariff. Among those welcoming the Chinese delegation will be Malaysia's Trade Minister, Zafrul Aziz. He's been speaking to the BBC's Nick Marsh who joins me now now from the Malaysian capital, Kuala Lumpur. Hi, Nick.

[Nick Marsh]

Hi, Luke.

[Luke Wilson]

What's the mood where you are?

[Nick Marsh]

Well, there's a lot of apprehension. Uncertainty actually is the word that I'm hearing quite a lot because obviously we're in uncharted territory. Things are changing day by day. Countries here in Southeast Asia were hit by some pretty hefty US tariffs until that 90 day pause was announced. And you know, if you're a government official like Zafri Lacif, the Trade Minister of Malaysia, who I was speaking to yesterday, you're going to be thinking, well, you know, what is the game plan when things are changing so quickly? And also, you know, how on earth am I going to get these tariffs removed when I go to Washington, whenever that is. And in fact, you know, the first thing I asked Mr. Zafrul was whether he ever imagined finding himself in a situation like this.

[Zafrul Aziz]

No. Short answer to that, no. But it is what it is. We have to deal with it. I must say it caught us by surprise to the extent of it. We understand the concerns of the U.S. we disagree. We believe that the information that they have is not accurate.

[Luke Wilson]

So President Xi arrives in Malaysia where you are later tonight. It was a pre planned visit, but it couldn't have come at a more crucial time.

[Nick Marsh]

Exactly. And now this is presidency's chance to really go on a charm offensive in this region. You know, we're talking about the best part of 700 million people in Southeast Asia. It's a really crucial economic region that's long been caught between two economic superpowers. On the one hand, you know, China has invested very heavily here in infrastructure, in factories. So countries need China very much economically. They also export a lot to China. It's the biggest trading partner for every country in this region. But you can never ignore the United States, can you? America is the number one export market for companies here. So the question is, what side do you go for in this tussle between economic superpowers? And I actually asked that to Mr. Zafrul and this is what he had.

[Zafrul Aziz]

To say I think we can't choose right and we will never choose. One cannot not deal with both. Just this two economic powers contribute close to 50% of the world GDP. And for Malaysia, even for ASEAN, these are the two top trading partners, the top two investors. Both countries are very important to our economy.

[Nick Marsh]

So as you can hear, it's a real conundrum for countries in this region. You know, during President Trump's first term, Southeast Asia actually did quite well because Chinese companies just started manufacturing in places like Vietnam and Cambodia to get round the tariffs he imposed. So it was pretty good for them. This time round, it's much more serious because the region is now directly in the tariffs firing line, both in terms of those direct US Tariffs, but also in terms of this flood of cheap Chinese goods that might pour in from China because they can't be sold to the US which is going to obviously be bad for local manufacturers here and workers here.

[Luke Wilson]

Nick Marsh, our business correspondent in Kuala Lumpur, thanks for joining us on Marketplace.

[Nick Marsh]

Thanks very much.

[Luke Wilson]

Let's do the numbers and shares in France's LVMH are down more than 7% after the luxury giant reported a fall in first quarter sales. Analysts had been expecting slight growth Europe wide, though the Stoxx 600 is up more than 1% with BMW, Mercedes Benz and Volkswagen all up more than 2.5% after Donald Trump signalled a temporary pause in tariffs on the auto industry as countries wait to hear what Donald Trump is going to do next on tariffs. South Korea has agreed to pump an extra $5 billion into its semiconductor industry. The US President said on Sunday he will soon be announcing tariffs on chips imported into the United States. Seoul and Washington are due to begin trade negotiations next week. The BBC's Jean MacKenzie reports.

[Jean MacKenzie]

South Korea is one of the world's leading chip makers and many of its semiconductors go straight to the U.S. seoul's economy relies heavily on exports, especially of chips and cars, two industries which stand to be hit hard by tariffs. The government is also rushing to prop up its carmakers, though overnight Mr. Trump suggested he might temporarily pause tariffs on cars. This caused stocks in Seoul's leading car company, Hyundai, to surge by 4%.

[Luke Wilson]

The BBC's Jean MacKenzie meanwhile, Nissan is considering cutting Japanese production of its top selling US Model, the rogue suv, according to the Reuters news agency. The car company hasn't confirmed the report, but told the BBC it's committed to adapting to changes in the market, adding its approach will be thoughtful and deliberate to deal with both immediate and long term effects. Staying with Japan and the country's population of Japanese nationals fell by a record amount last year, reflecting its declining birth rate and aging society. Excluding foreign residents, the population of the world's fourth largest economy fell by almost 900,000 in 2024, compared with the previous year.

[Jean MacKenzie]

WBC' Hatton reports Japanese families aren't having enough babies to replace the numbers of older people who are dying. And Japan hasn't loosened its strict immigration rules to allow its population to expand through external means. Last year, the numbers of Japanese nationals dropped at the sharpest rate since record keeping began in the 1950s. The one group that's expanding the number of people in Japan over the age of 65, reaching almost a third of the entire population.

[Luke Wilson]

Celia Hatton reporting there. That's all from us this morning. I'm Luke Wilson with the Marketplace Morning Report from the BBC World Service.

[Jannelli Espinal]

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