Is Japan’s Shigeru Ishiba staying or going? | East Asia Tonight (Jul 23)

Is Japan’s Shigeru Ishiba staying or going? | East Asia Tonight (Jul 23)

This is East Asia Tonight. Good evening. I’m Atalia Edwards. Tonight’s top stories from East Asia. A Japanese leader, Shigeru Ishaba, is strongly denying media reports that he plans to resign as pressure grows on him to step down following his ruling LDP’s historic defeat in the recent upper house election. Meanwhile, Japan hails a trade win. Prime Minister Isha secures a 15% tariff deal with the US, calling it the lowest ever for a US trade surplus partner. President Trump also calling it the biggest deal yet. So, Japanese investors cheering all that agreement. The Nikay rallying and automakers surging by doubledigit percentages. The optimism also spreading to Europe with auto stocks tracking strength in Asian rivals. Now, EU officials are in Japan and China this week with low expectations for the summit in Beijing. But in Tokyo, the Europeans are eyeing a deeper alliance to boost trade and security ties. And South Korea, known for its low fertility rate, reports a record birth rate growth of nearly 7% for the first five months of this year. That’s the biggest jump since data tracking started in 1981. [Music] Also in East Asia tonight, Hong Kong’s well- reggarded universities are seeing an influx of students from mainland China, but their presence is causing rental rates to surge in a city that’s already short on housing. Is there a solution for this pressing problem? Plus, India will resume issuing tourist visas to Chinese citizens from Thursday after a 5-year pause. A sign that both the nations are working to mend the ties following a deadly military clash along a disputed Himalayan border. [Music] The Japanese Prime Minister Shigeru Ishiba has denied media reports that he will resign to take responsibility for a bruising upper house election defeat over the weekend. Now, the loss means that Mr. The issue’s ruling coalition now lacks a majority in both houses of parliament. He says that media reports that he had decided to resign were completely unfounded. The Japanese leader added that he decided against quitting to prevent instability. He made the denial just as Japan secured a trade deal with the US ahead of Donald Trump uh August’s deadline for higher tariffs. For more on this, we are joined now by CNN’s Mitch Ishida live from Tokyo. So uh Mitch, I’m curious to know what else did Mr. Ishba say about all those rumors that he is stepping down? Well, Prime Minister Shigaru Ishba met his predecessors Fumio Kishida, Yoshihi Desuga and Taro Aso this afternoon, meeting three former prime ministers at the same time had local media talking that Mr. Ishiba would likely consult with them about when to resign and they talked for an hour and 20 minutes. Now, when Mr. Ishiba came out of the meeting, he told reporters there was not a word said about my course of action, quote unquote. Now, Mr. Ishiba has been under pressure to step down as his LDP has lost three major elections in a row under him with the latest Sunday’s upper house election. And with no control of the more powerful lower house either, it’s a weak government. But this morning, we woke up here in Japan to a surprising news. His trade negotiator Jose Akazawa, Minister of Economic Revitalization, met with US President Donald Trump for 70 minutes and agreed on a deal. And Tokyo promised a huge investment worth 550 billion US dollars in the US, stressing the Japan that Japan was the biggest foreign investor in the US and will continue to be. That was Mr. Ishba’s strategy and Mr. Trump agreed to reduce the 25% tariffs he was going to impose on August the 1st is to 15% most important for Japan. Car and car component exports which was already slapped 25% tariffs from April will also benefit with reduced tariffs from of 15%. And Mr. Ishiba uh probably told reporters is the lowest tariffs among nations with a US trade surplus. So yeah cuz M uh Mitch yesterday you did say that uh Mr. Ishaba’s fortune this could perhaps change or his popularity could improve if they have this good uh tariff deal with the US. So going forward now what can we expect to happen in a in your country’s political scene going forward? Well, there are political analysts here saying that with the US tariff deal achieved, this would be the best time for Mr. Ishiba to step down um to take responsibility for the lose uh for the loss in the election. But still, he has achieved something. Uh he still needs to hear details from his um tariff negotiator, Rio Akazawa, when he returns from Washington. Mr. Trump’s deals are often fluid. Then there are talks Mr. Ishiba might have to fly to Washington for the final confirmation of the deal. As to domestic politics, uh, Liberal Democratic Party Secretary General Hiroshimyama told reporters the date for Mr. Ishiba’s dialogue with parliamentarians of both houses that it has been set on July 28th. Already there are statements issued from young parliamentarians, leaders of local chapters of the LDP for Mr. Ishba to step down and that meeting could strengthen that call. If he agrees to step down, a party presidential election is likely to take place. Names of candidates floating are those who contested against him last September. Uh they include incumbent agriculture minister Shinjiro Koisami, the hawkish former internal affairs minister Miss Sai Takaii, former economic security minister Takayyuki Kobayashi, and incumbent chief cabinet minister Yoshima Sahayashi, but they may not be elected prime minister. There are LDP members who think the party should give up its ruling party status and revamp itself to regain public trust. So going forward, the political scene is really unpredictable, right? Uh thanks so very much Mitch Ishida for that report live from Tokyo. Uh Japan Prime Minister Sherro Isha has hailed a trade triumph after he secured a deal with US President Donald Trump for a 15% levy on Japanese exports to America. Now Mr. Trump has called it the biggest agreement ever made. While Mr. The issa noted it is so far the lowest ever applied among countries that have a trade surplus with the US. Now the new tariff is significantly lower than the 25% Mr. Trump threatened in a letter earlier this month. However, it is still above the 10% rate set by Washington in April when Mr. Trump announced what he called reciprocal tariff rates for dozens of economies. Additionally, Japan will invest 550 billion US into America. Mr. Isha says the investment will enable Japanese firms to build resilient supply chains in key sectors like pharmaceuticals and semiconductors. Now Japan’s autos sector will also see existing tariffs cut to 15% from previous levies totaling 27 12%. More than a quarter of Japan’s exports to the US or automobiles. Washington says that Japan will also increase purchases of agricultural products such as US rice. Japan’s prime minister on the other hand said that the share of US rice imports may increase but emphasized that the agreement did not sacrifice Japanese agriculture. The deal however does not cover steel and aluminium tariffs which are subject to a 50% tariff. Now defense spending commitments from Japan are not included in the deal as well. Japanese investors welcoming the trade deal with the US. The NIK stock average jumped 3.5% reaching its highest closing level in roughly a year. The broader topics also gaining more than 3%. The yen holding broadly steady against the US dollar. Now let’s talk about automakers now such as Toyota and Honda leading the way surging by doubledigit percentages as a deal is seen as less punishing for the car industry than some had feared. Now banking shares uh that also gained as trade clarity bolsters case for the BOJ rate hikes. TS’s banking index surged by uh 4.4% 4% making it the second biggest gainer among the boss’s 33 industry groupings. The central bank will meet on policy next week. Now this trade deal also raising hopes of a breakthrough for European auto giants. Germany’s Volkswagen and Mercedes-Benz up more than 6% while BMW up 5%. Luxury automaker Porsche and Milan listed shares of Jeep maker Stalantis also rally. All right, for more insights uh on this we are joined by Sururi Shiraai, professor of economics at Ko University and she’s also a former board member at Bank of Japan. Well, thanks Prof for joining us. So this 15% levy lower than a 25% that Trump had earlier threatened, but it is still higher than the 10% rate that had been uh in forced uh what the countries were negotiating. So all in professor, is this a good bargain for Japan? So on surface it looks uh very good for Japan because uh you know tariffs are lowest to you know 15% and Japan will increase more agriculture product but they don’t need to change existing policies such as the import quarter for the rice and the tariffs. So it looks very good for Japan but uh Japan is going to invest about 550 billion US dollars that is huge amount right and uh it takes many years and then it’s not clear how uh US government is going to get some assurance uh with regards to this huge investment it’s many of the money will come from private sector and the Japanese government cannot enforce the uh Japanese company to you know do a lot of investment right so uh and also very uh one concern signs that uh Mr. Trump said that 90% of profit related to this 50 uh 550 billion investment uh will be uh allocated to the US. What does it mean? Uh this is also involving a lot of private sector init uh you know activities. So it’s a lot of uncertainty to be honest. Yeah. And pro steel and aluminium tariffs 50% that still remains and there’s also uh no clarity on defense spending commitments which is a sticking point in bilateral relations. So how do you see this playing out uh at later stages? At this moment I’m not very you know satisfied. I mean I was very uh surprised to see this high increase in stock prices but nothing is really clear. So we have to see a final document. I hope the government the Japanese government is going to uh show us some agreement otherwise you know there’s a lot of uncertainty and Mr. Trump may change his mind you know if they don’t see a lot of investment and from Japanese uh you know private sector you know a lot of uncertainty so I’m not very satisfied with what’s happening right now right and uh professor also picking up what you said about how Japan you know they have to invest 550 uh billion in the US and keep 90% of the profits uh from these ventures uh it appears to be using these deals not just to even out the trade deficit but also to drive uh strategic spending in the US uh your thoughts on that? Yeah. So uh this 550 billions include a lot of things. Uh it increase the uh purchase of you know gas and uh energy from Texas state and also maybe uh purchasing some airplane and uh you know military uh spending uh equipment. So a lot of things included but it’s nothing really clear at this stage. Yeah. So I think what is clear to us is that there is just no real clarity on how uh the tariffs are being uh calculated. But what do you think other countries um you know in the discussion queue what can they learn from this? What can they glean from this uh especially in terms of striking balance? It’s very different from uh you know Indonesia and Vietnam. It was much clearer and uh what Indonesia and Vietnam are going to do and the commitment was much clearer. But in the case of Japan on sur it looks like Japan get a lot of you know concession from US but the 550 billion is huge and then it’s simply it’s very difficult to achieve this target. So uh it’s very a lot of uncertainty it’s great uncertainty compares to Indonesia and Vietnam deal. All right thanks so very much for sharing your insights so Yuri Shereai professor of economics at Ko University and also a former board member at Bank of Japan. Well, we are going to go for a short break now, but coming up next on East Asia tonight, US tariffs likely to weigh on ASEAN’s growth this year. That’s the prediction from Emro. Plus, Taiwan setting its sights on driving AI to new heights and generating hundreds of billions of dollars for the economy. [Music] Hello again. You’re watching East Asia Tonight and it is now time for your business news with Roland Limb. So Roland Beijing apparently has been scrutinizing the red hot competition in the EV uh sector. So how is it affecting the car makers? Well, I’ll tell you the government is sternly looking at the discounting practices and that might crimp profits despite the explosive growth in EVs. But first, the Azan plus 3 region. That’s including China, Japan, and South Korea’s forecast to register growth of more than 3% for the next two years. That’s according to the latest report by the Azan Plus 3 Macroeconomic Research Office or Amro. The figures published today by Amro forecast growth this year at 3.8%, next year 3.6. And that’s around half% lower from the office’s earlier report in April, which it says did not include the impact of freshlyannounced US tariffs. Aside from the direct impact of tariffs, the report cites ripple effects resulting in consumption slowing down in Europe, high US inflation leading to high interest rates, Middle East tensions causing volatility in global oil prices, as well as China’s sluggish property sector weighing down on its economy for the revised forecast in its July report. The growth outlook for developing economies in Asia has worsened in the second half of the year and the main drag are tariff related uncertainties looming large in the region. The Asian Development Bank or ADB has downgraded its growth forecast for the region to 4.7% from nearly 5% just three months before. of growth this year in the region’s biggest economies that’s China and India are also projected to take a hit from the trade uncertainty. The growth forecast for China was kept at 4.7% still below the country’s official target of around 5% this year. India’s growth projection also downgraded the bank revising India’s growth to 6 and a half% that’s down 0.2% 2% from its April report. But the country is still maintaining momentum as one of the fastest growing major economies with domestic consumption tempering the effects of US tariffs. Price levels in India also expected to decelerate on the back of lower food prices brought on by increased agricultural yields. Now, Taiwan is gearing up to launch 10 groundbreaking AI initiatives with a goal of generating $510 billion by 2040. Under the initiative, Taiwan has identified three core technologies as strategic priorities, including silicon photonics, quantum technology, and AI robotics. Now, silicon photonix is a technology that Taiwan’s TSMC and many other firms in the industry are actively developing. Taiwan also plans to leverage its hardware and ICT supply chains to become a key hub for AI robotics. Government also calling for expanding investment in AI innovation with more than $3 billion in venture capital funding. The initiative aims to create half a million jobs and establish three international level research laboratories. Amazon is reportedly shutting its artificial intelligence lab in Shanghai, making it the latest American tech giant to scale back operations in China. The firm has been cutting staff globally. But the move also comes as the US government intensifies scrutiny of AI work by American firms in China. Last year, IBM and Microsoft scaled back their China based research and development efforts and trimmed headcount in the country. Another American firm also giving in to government pressure. Consulting giant McKenzie has reportly barred its staff in China from taking on projects involving generative AI. The firm has come under fire for its work with Chinese stateowned enterprises which also hold contracts with US defense department. Now this despite the recent easing of export restrictions of AI chips to China by the US. Now turning our focus to China’s electric vehicle sector where a fierce price war is reshaping the industry landscape and under pressure EV brands Neta and Zika this week they were caught inflating those sales figures. Well our um ever diligent Roland Lim has been tracking the story uh very closely. So I got to ask you Roland how widespread um is this particular practice? Well it is actually more widespread than you think. I mean NESA small EV player had actually been inflating their sales figures for the past 15 months that period by more than half. So they got away with it for that long. And then we had also Zika which is the high-end brand of uh Jilei, another big automaker. And they were caught uh with their December sales both in Siaman and Sunjen by inflating their figures by 14 times what they normally sell in any given month. So uh and for the uninitiated I should say that this so-called zero mileage uh sales scheme basically means is that automakers uh start registering their cars that they haven’t sold to buyers yet uh for the mandatory tree traffic insurance policies and that allows them to book the sales into their books but no buyers for those cars yet. So so those book uh keeping tricks I mean is there more to it than meets the eye? Well, obviously I mean it’s obviously a symptom of uh cutthroat competition in China’s EV market. I mean there are many automakers fighting to gain market share. They have internal sales targets that are very very aggressive. They are also trying to meet the subsidy targets that the government dishes out for EV cars. On top of which they are also trying to please their shareholders. So some of these buyers uh discovered later on when they bought these cars uh that oh their insurance had run out or you know it was already halfway through and they had just bought a new car. So that’s how this whole thing came about and it is a a cutthroat industry as you’ve mentioned the pressure just isn’t on automakers but on suppliers as well. Yep. the price war has actually forced the automakers themselves to actually delay payments to their suppliers. Uh and then by months and then on top of that they were instead of paying cash they were giving out promissary notes. So that came to a head when the suppliers brought this to attention of the regulators. The regulators dragged all 16 major automakers into a closed door meeting and mandated that they need to pay their suppliers by 60 days. And that’s what happens and that’s what happened since I think so 60 days I mean uh can they afford to keep that promise is it realistic? Well they can barely do it. I mean there was a a financial times analysis which actually said that more than a third of Chinese listed automakers in China were actually had negative working capital. Take BYD for example the biggest uh they are 7.5 billion dollars in deficit. So what they’re doing is that they’re actually funding their expansion program by actually delaying payments to their suppliers because they are actually gaining more money doing uh gaining more money from that instead of uh borrowing from say the banks or from the markets. So how much uh longer do you think this can go on for? Uh not much. Uh uh there was a report by Alix Partners that says that 10 out of the 129 or more Chinese automakers out there will not turn a profit by 2030. So there’s going to be a period of consolidation. So that’s basically one in every 13 is probably going to go under or they’re going to be bought up. Uh already uh Neta’s parent uh on uh is already filed for bankruptcy. So there are more to come or more is expected. Wow. So um what sort of uh industry shakeup uh can we look forward to a major one I suppose it it is I mean China’s EV sector is it is very close to a tipping point. I mean we are talking about the perfect wave here of chronic over capacity a race to the bottom for profits in terms of getting market share and then of course on top of that piling on is more regulatory scrutiny. So industry associations now telling uh the larger automakers don’t crowd out the market make sure that the smaller guys can survive and then on top of which we also have market regulators telling the automakers now no this so-called zero mileage scheme will not work and we don’t and we want it to stop. So some analysts say that maybe in the next 12 months we’re going to see a huge consolidation of these uh automakers simply because they cannot uh with the uh crash cash crunch as well as the intense competition survive for much longer and one even likened it to the property sector bubble with the demise of top developer China Ever Avagran when it went bust and that caused uh you know a a negative effect throughout the property sector. So some are also warning that could happen to the auto sector unless these big automakers start taking their cash flow situation very seriously and prudently. Oh, great analysis there. I know you’ve done your homework. Thanks so very much for that. I was just talking to Roland Lim there. Well, we are going to go for another short break now, but coming up on East Asia Tonight, Hong Kong’s growing appeal as the educational hub in the greater Bay Area driving an influx of students, but also exacerbating the city’s housing challenges. [Music] This is East Asia Tonight and here are the headlines we’re following. Japanese Prime Minister Shigaru Ishiba denies media reports saying he has decided to resign. The leader under pressure to step down as head of the ruling party to take responsibility for losing a coalition majority in the diet’s upper house. But a major trade achievement for Ishuba’s administration, the country securing a 15% levy for Japanese goods for the US, hailing it the lowest ever for a US trade surplus partner. President Trump also calling it the biggest deal yet. And the US Japan trade deal providing massive relief for Japanese automakers. Shares surging to double digit percentages helping to lift the benchmark K225 to its highest close in about a year. But with Japan now securing a deal, the pressure is on for the rest of the region to secure their own as a clock ticks down to Washington’s August deadline. The South Korean negotiators will be scrutinizing that deal with Japan as they head to the White House to talk into a lower tariff rate. The nation’s industry minister has voiced optimism of gaining progress in a trade deal to benefit its energy and industrial sectors. Eyes will also be on whether Soul can secure a similar tariff figure of 15% or even lower from the current 25% threatened. But sticking points do remain. Washington has repeatedly asked Seoul to open up its agriculture market and import more American farm goods and energy just as Japan had ultimately agreed to. And China says it’s hoping to strengthen cooperation with the US during trade talks in Sweden next week. Beijing has signaled its commitment to promoting a healthy and sustainable development of bilateral ties. A US Treasury Secretary Scott Bessant is aiming for a postponement of the mid August deadline. He said um he is confident of upcoming talks with China and that trade with Beijing has in its words settled in at a good level. Japan and the EU shoring up ties as both sides meet for annual talks in Tokyo. Japanese Prime Minister Shigaru Ishiba is hosting European Commission President Ursula Vanderellayion and Council President Antonio Costa as part of the 30th EU Japan summit. Both sides have announced a new Japan EU competitive uh alliance to advance their industries by enhancing trade and economic security ties. They have also restated their commitment to a rules-based order amid global trade tensions following US President Trump’s global tariff blitz. We are united in defending a predictable rules-based economic order with the WTO at its core. And in a world of growing uncertainty, we are also stepping up joint efforts to boost economic security and resilience. In today’s world, competitiveness has to be built with trusted partners. such trusted partners as Japan. Together, Europe and Japan represent a fifth of global GDP and a market of 600 million people. So, we have the scale to shape global rules on trade and technology in line with our values of fairness and openness. And that’s indeed why we are launching our competitiveness alliance today. Now, the gathering comes hot on the heels of Japan’s trade deal with Washington. While the EU continues to battle an agreement with the Trump administration as the first August deadline looms large. Talks in Tokyo taking place a day before EU representatives head to China with the blocks discussions with Beijing are expected to be trickier. Now the European Commission President Ursula Vanderlayion and Council President Antonio Costa are expected to meet Chinese President Xi Jinping and Premier Li Chang in Beijing during Thursday’s high level summit. This year marks the 50th year of diplomatic ties between both sides, but trade disputes and geopolitical differences have soured relations. William Denslo has more from Brussels. It’s a trade relationship that’s grown 300fold over the past half century. The European Union China relationship today accounts for nearly 30% of global commerce. But EU officials say that issues including a trade deficit of more than $450 billion, subsidy disputes, limited market access, restricted exports of rare earth elements, and over capacity are creating an unstable trading environment. European Commission spokesperson Olaf Gil says the upcoming summit is an opportunity to raise these concerns. That relationship and the development and growth of that relationship must be based on fair competition on and on a level playing field. And there are a number of uh trade distorting measures uh unfair competition and unlevel playing field challenges that the EU wants China to meaningfully address. But the European Commission has played down hopes for a swift resolution. This summit was originally buil as a two-day affair, but now the program’s been squeezed into a single day. No major trade announcements are expected, but EU officials say the opportunity for leaders to have frank, honest conversations is a positive step. A number of industries are pushing for relations to get back on track. Last year, the EU imposed duties of up to 38% on Chinese electric vehicles, citing unfair state subsidies. Beijing accuses Brussels of protectionism and has subsequently slapped a 35% duty on EU brandy following an anti-dumping probe of its own. China imports roughly 1.6 billion of cognac from Europe each year. But Pauline Bastidong, director of trade and economic affairs at Spirit Europe, says exports have roughly halved from October to May due in large part to this measure. Since our members have done nothing wrong, uh we’re still asking for the whole thing to to disappear and I think it’s also a strong request uh of the EU as a precondition to see an improvement in the relationship between the U and China. Geopolitics will also be on the summit agenda with the EU looking to persuade Beijing to distance itself from Russia over its war in Ukraine. EU officials say the two sides don’t see eye to eye on a number of issues, but environmental policy is an area where common ground can be found. Chairman of the Belgian Chinese Chamber of Commerce, Bernard Dit says it’s a key area for collaboration. We are now confronted to decisions to be taken for a greener uh economy for instance for some common research in these fields because it’s uh our interest here on earth to have a common solution and to join forces to fight that. The EU says it seeks to derisk not decouple from China. Bilateral ties may have entered choppy waters, but European leaders say the summit is an opportunity for real engagement to achieve a balanced relationship that delivers for both sides. William Denlo, CNA, Brussels. Meanwhile, India is set to resume issuing tourist visas to Chinese citizens from Thursday for the first time in 5 years. This comes amid a thaw in ties between both countries following heightened tensions after military clash along a disputed Himalayan border back in 2020 that saw soldiers from both sides killed and injured. A China responding to the move said that Beijing is ready to maintain communications with India and that it is constantly improving the level of personal exchanges between the two countries. During the earlier years of tensions, New Delhi imposed restrictions on investments from China, banned Chinese mobile phone apps, and halted passenger routes. China on its part kept tourist visas uh restricted for Indian nationals in place until March this year, even as it began issuing visas for visitors after lifting cobs in 2022. Now, China’s visa resumption coincided with an agreement to resume direct air service between the two sides. Bilateral relations have notably improved in the past year. A high level meeting between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi took place in Russia in October. And earlier this month, Indian foreign minister sanka visited Beijing for the first time in 5 years for a Shanghai cooperation organization gathering. Now, the number of South Korean newborns reached new highs in May, marking a sharp turnaround for a country with one of the longest life expectancies and lowest birth rates. Some 20,000 babies were born in May, marking a 3.8% increase on year. Well, that’s its sharpest growth in 14 years. The total number of babies born from January to May coming in at a 6.9% increase from the same period a year ago. is the largest jump since data tracking that began all the way from 1981. Well, officials have attributed the spike in newborns to a population increase of women in their early 30s, which is linked to an overall increase in marriages. Seoul has also invested billions of dollars to maintain population stability with government policies encouraging women to have more children. Well, the news continues right here on East Asia Tonight. We’re going to go for a short break. Do stay with us. [Music] And China’s push to develop the greater Bay Area has enabled a greater flow of talent across 11 Chinese cities, including Hong Kong. With four Hong Kong universities going up the world ranking this year, the city has emerged as a popular education hub in the mega region. But in a place that’s already short on housing, the arrival of new students is transforming part of Hong Kong’s real estate market. Deborah Wong with more. Nearly 8,000 mainland students were given approval to study in Hong Kong in the first quarter of this year, compared to just over 3,000 in the same period last year. Rental prices have spiked in neighborhoods near universities by up to 12%. Making finding affordable housing a real challenge for incoming students. Now, a new category of private student host is emerging to fill the gap. Investors like real estate giant Center are starting to convert two or three star hotels into student host. There are 10 such projects providing nearly 3,000 beds at the end of last year. The government has also recently loosened a zoning policy to speed up hotel conversions to student host because as a hotel we we we got some we call you know back of the houses spaces that really needs to house those mattress you know um linen cleaning things but for student housing we don’t need that right so but this is the first thing that we we need to make you know the the license compliant the building compliant for hotel but which is not actually necessary. We are actually running it as a student housing. So students stay here for a year instead of like those traveler just stay here for a night or two or three. So actually the the the preference and what they need is different. Santalin investment bought over a mid-tier hotel last September. The project will eventually offer 121 bids for students complete with a communal kitchen, laundry and study areas. Senteline plans to offer about 3,000 bids in the next two to three years setting up a platform to help asset owners with conversions. So what we do the platform is actually you know help them to like you know do visibility studies and from the the zoning perspective from the layout and also in terms of the locations is it really a fit for student housing and then we will work out a business plan and the renovation plan and operate the project as a student housing. Lawmakers are eyeing office buildings with high vacancy rates next. It’s all part of plans to establish Hong Kong as an education and talent hub in the mega region. And for more, we are joined now by CNA’s Deborah Wong in Hong Kong. Uh Debs, the enhanced connectivity under the greater Bay Area plan, I’m sure that changes not just student housing in the region. Is that right? Absolutely. So we do see mainland students coming into Hong Kong. But you know we’re also seeing more people from Hong Kong and Macau eyeing properties in the mainland. And I think this is where policy has sort of facilitated demand. You know we know we’ve known for years now that China’s property sector has not been doing well. So the Chinese government they actually lowered some purchase restrictions for non-local buyers and on top of that they’ve also um lowered uh you know the the mortgage rates as well as uh down payments. So it has opened some doors and you know in the mainland we’ve been traveling there around the greater bay area for a while now and we’ve seen some advertisements you know from um crossborder uh property real estate agencies you know increasing their sales increasing their outreach to Macau and Hong Kong residents and even in uh the Chinese city uh of Tuhai there’s this little island called Hong Singh it’s co-managed by Guangdong and Macau authorities there’s even a neighborhood built up exclusively for uh those people holding Macau residency so you know high property rises is one thing that’s pushing them, but clearly the the the the policy is also intentional in driving the integration. And Deborah, I believe you’ve got an expert with you who uh could help us shed more light on the housing situation. Absolutely. Uh Atalia, I want to introduce you to Martin Wong. Martin, thank you for joining us here. Uh Martin is the head of research and consultancy at NightFrank’s Greater China office in Hong Kong. Thank you, Martin, for for being here. Now Martin, uh, let’s start off talking about Guangong’s recovery. We do know that the real estate sector in Guangong has sort of pulled down the GDP a little bit. In the last couple of days, we also saw that Tiang Su overtook Guangong uh to be, you know, the top provincial um city in terms of e economic development. How optimistic are you about the property sector’s recovery in the region? Well, looking at the um peer sectors in Guangdong, so traditionally it relies on two sectors. one is real estate and another one is manufacturing. So I think China overall in the past one or two years is transforming uh the economy to lower its reliance on real estate and then convert it to into other uh emerging sectors. So I think the transforming is going on but at the same time it has to tackle how to maintain its GDP target to reach 5%. So Guangong is actually a a very important province in terms of the overall production in China and I think uh China in order to uh rescue the economy is actually uh relaxing some of the policies like uh encourage some overseas buyers to buy it and then uh remove some of the restrictions and it’s helping the uh economy uh to some certain extent. So when you see uh for taking Senzhen as a example, you see the transactions actually raise up a little bit u back to 5,000 transactions per month but compared with peak time they got more than 7,000 transactions per month. There’s still some distance um to return to that level. So I think uh it’s coming back but I think the kind of real estate is not is still dragging down the overall economy at the moment. I want to take a moment to bring the conversation back to student housing. I know you at NightFrank, you wrote a research paper on this uh some time back and um you you also wrote that two or three star hotels could be a good fit for conversions. But at the same time, let’s take a step back and talk about hotel conversions. Is this does this also signal something that is uh not too good for the hotel industry? Well, I think for the uh say Hong Kong the is also transforming the uh economic structure. uh we are try based on the policy address we try to uh we brand ourself as a place for universities and overseas students to come for education and I think uh in terms of the existing offering we are we don’t really have enough uh accommodation to um uh host those uh uh overseas students. So and at the same time if you look at the commercial sectors it’s not really performing well. So why not just convert some of the commercial assets into student accommodations to help the uh sectors which need help. So I think in terms of the student accommodation is uh is uh is really uh working uh they got more high yield high returns compared with traditional uh assets like office sectors. So and uh at the same time the government is trying to encourage more overseas students to raise the ratio from 20% to 40% of overseas students coming to Hong Kong. So I think it’s really working in Hong Kong. So you know raising that quartile also means a much higher demand right and and do you think how far do you think this new asset class can help to perhaps cushion the impact on the rental market as we know in in neighborhoods near universities rent prices have gone up at least like 12%. it could help the market to uh a little bit internal stabilization because now if you look at the brands for private residential it’s really uh growing quite quite fast especially for those uh districts close to or locations close to universities uh sometimes if for some students they don’t really have a chance to look at the price before it’s already rent out so I think uh if you give them more student accommodation it would definitely help to stabilize the market Martin uh we just have one more time for uh one more question. I just wanted to ask you about you know conversions uh of office buildings as well. You know lawmakers raised that possibility. Do you think that that’s feasible? I think it depends on what kind of office building we are talking about. If we talk about top tier grade A office, it’s not going to work because the cost is too high. But if we are talking about some uh conversion from grade B or even grade C offices, it would work because of lower cost. Thank you very much Martin. Now, Martin Wong uh is the head of research and consultancy at NightFrank’s Greater China office in Hong Kong. Thank you very much for joining us, Delhi. Oh, that was a really good conversation there. Thank you so very much. CNA’s Deborah Wong in Hong Kong as well as Martin Wong, head of research and consultancy at NightFrank Greater China. Uh, China’s young adults are rewriting shopping trends, one Laboo doll at a time, as emotional appeal drives the success of new age brands. CNA’s Liz Neo takes a closer look at the retail boom that’s reshaping China’s consumer landscape and the government’s big plans to ride the wave. From EVs to dolls to bubble tea, Chinese consumers are spoiled for choice when it comes to spending. And one domestic product in particular is generating global attention in the form of a snaggletooth doll. Laboos a creepy collectible or profit producer. The monster plushies have almost tripled their makers profits and sent its stock market value jumping by more than 520% in the past year. Now, the furry monster has become the poster child for a cultural phenomena known as emotional spending, which is powering growth in China’s retail sector. A low price drinks, that’s another one, soft drink and ice cream chain Mishra has seen its stock more than double since its Hong Kong debut in March. And experts say that young adults in the country are battling the rise in inflation and global uncertainty through small accessible indulgences. And another breakout player has been Lahu Gold. The jewelry maker brands itself as China’s air and has gained an eye watering 900% in the past year as caters to the country’s genz population which lies at the heart of retail consumption in the country. Now China has declared its ambition to become a mega-sized consumer powerhouse and the government is supporting this transition with subsidies and other incentives. We are on track to become a highincome country in an all round way supported by robust demand for consumption upgrade. We are intensifying our efforts to implement the strategy of expanding domestic demand by launching special initiatives to boost consumption. This will make China a mega-sized consumption powerhouse on top of being a manufacturing powerhouse. And that’s all we’ve got for you in East Asia tonight. Don’t forget your headlines anytime at cna.asia. And you can always find us on Facebook and YouTube. I’ll see you again tomorrow. [Music]

The Japanese leader says reports of his resignation are rumours as he faces increasing pressure to step down after a historic election loss. Also on East Asia Tonight: Tokyo secures 15 per cent tariff deal with Washington, with Donald Trump calling it the “biggest deal yet”; India to resume tourist visas for Chinese citizens for the first time in five years, starting Jul 24; South Korea’s birth rate jumps with 20,000 babies born in May; and Hong Kong real estate gets a boost from mainland Chinese students.

00:00 Headlines
02:03 Japan PM under pressure
06:51 Sayuri Shirai on the US-Japan tariff deal
19:01 CNA’s Roland Lim on Chinese EV-makers fudging sales figures
32:35 India issues Chinese tourist visas
33:54 South Korea’s baby boom
35:05 Hong Kong’s student housing boom