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As Chinese officials reportedly weigh in a new wave of stimulus to counter US tariffs, according to Bloomberg. The potential measures come as deepening fears of a widening trade war with the US has roiled global markets. Hong Kong's Hain Seng index led declines among Asian stocks on Monday morning, suffering its biggest one-day drop since 1997. Leland Miller, China Beige Book co-founder and CEO, is joining us now. Leland, great to speak with you this morning. Thank you for joining us.

Um, I I want to start on what we're seeing in terms of China reacting to the United States here.

Do you think that there is any opportunity to make a deal with China when it comes to tariffs, or has the US kind of overplayed its hand when it comes to Beijing?

I don't think this is, this is pro or negative a deal. Uh, there was always going to be run up in any negotiation or any run up to a negotiation. There was always going to be an increase in leverage. US is going to raise tariffs. There was going to do a bunch of other things and then it was going to offer to take some of this stuff off if Beijing did what Trump wanted him to. So I think that the, this doesn't really tell a story about whether there could be a phase two deal negotiation or not. Uh, what you are seeing is, is a ramp up in tariffs, very dramatic, much more than markets expected. And then an unexpected Chinese response, which was, which was meant to look reciprocal, but really hits tariffs and a bunch of other things. So I don't think this tells a story about a phase two negotiation or not. I think it tells a story that China has not yet been, but will soon be the story when it comes to, to tariffs.

And so China, as you know well, has several kind of measures that they can enact here. They can retaliate, capitulate, devalue their currency, or issue stimulus or a combination of all of them. Which do you think is most likely from China or do you think it's all of the above?

Well, it depends whether what happens. I mean, right now, you're, you're, what China's been doing for the last several months has been arming the gun. It's been prepping the ground for bigger fiscal stimulus if they need it. It's been offering up the idea that monetary stimulus will continue and accelerate. Uh, so there's all these things that are, you know, arming the gun for when they see how the landscape plays out. Uh, look, Wall Street has predicted 25 of the last two big stimulus blasts. So you know, the headlines are always going to be the same, China's going to do stimulus, China's going to do stimulus. It's never really been true. It's interesting now because if you look on our latest data, we're actually seeing transport construction firms, which are best proxy for infrastructure and fiscal spending. Uh, they did start ramping up their borrowing last month and, and the month before, they are looking at the possibility of doing something bigger, but I think you're actually have to see what the landscape is before China sort of pulls the glass on any, pulls the, pulls the lever on any of these sort of bigger, bigger moves.

What, Leland, what about this idea that this is going to force China to reinvent their economy, move away finally from that export-driven model primarily to an infrastructure more to this sort of consumption-based model? This is been a bit of chatter in the markets over the last six months accelerating in the last few weeks or so. Is it, is it possible that China can drive their own growth that way rather, you know, tapping all those household savings and so on rather than the, the old model of infrastructure and exports? Where would you be on that debate?

I think the debate is total nonsense. There's no evidence whatsoever that's been happening beyond constant statements that we are going to shift from investment to consumption, which we've been hearing for a decade now. If you see some of these very large tariffs continue, then yes, China will have to restructure its economy, but it's not going to restructure its economy toward consumption, it's going to restructure its economy toward sending its overcapacity everywhere else around the world. So the second the US shuts itself off or partially shuts itself off, they're going to start sending more to Europe, more to Southeast Asia, more to the rest of the world. So unless the rest of the world has a policy response, which it might in time, then China's going to just double down on its double down, which is more production, more exports. And look, this is not going on out on some crazy limb. She, she and the and the government and the party have said this over and over and over again that they wanted to rely on new quality productive forces, they wanted to produce more, they wanted to have a whole of government effort to export the manufacturers to dominate the fourth industrial revolution. These are things they've been saying. I think we should finally listen to them.

How willing do you think China is to address their surplus if that is kind of the end goal of Trump's tariffs?

I think that if the ask from the US administration is simply, you know, buy more commodities, do more purchases, et cetera, I think China would be very open to that. It doesn't require any type of restructuring, it just has to require sort of a short-termish agreement to narrow the trade deficit and make the numbers look better. I, I think that if all their problems went away from this administration and that was all they were asked to do, they would be very interested in that type of deal. The question is, is that the type of deal that Trump administration is going to offer them? I think it's very hard to believe that all you're going to see in a, in a potential phase two would just be phase one all over again. So I think that there has to be an a set of asks from the Trump administration before we can evaluate this. Uh, but it very much depends on what the Trump administration is asking Beijing to do.

All right, Leland, we got to leave it there. Thank you so much. Really appreciate it.

Pleasure.