What About China?

by | May 12, 2025 | Real Estate

What About China?-"China Real Estate Development"


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What About China?

Welcome to The Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce. On today’s show we’re looking at global trade. The current global trade war is widely misunderstood. Today’s announcement that progress has been made between the US and China in their negotiations is a positive step. But it raises the obvious question, positive in what direction?

For now, the tariffs have been reduced to 10% for a 90-day period, allowing the negotiations to continue. Many real estate investors and developers have questioned the impact of tariffs on construction costs. If you’re a regular listener of this show, you’ll know that I’ve been consistently saying I believe that tariffs will be a non-issue when it comes to construction costs.

I do not believe the US is about to start supplying Wal-Mart with Christmas ornaments anytime soon. The trade deal is expected to focus on reducing the trade imbalance between the two nations. What that will look like will probably center on commodities. The President is looking for a quick win that will make a good headline and a great announcement.

The US has agricultural products that can be exported, and it also has a growing capacity to export liquefied natural gas. China, being one of the largest consumers of natural gas in the world, means that an increase in the global supply of LNG may lead to lower prices, and a few strategic deals aimed at reducing the trade imbalance would be a win for the President.

However, let’s be clear about one thing, China is not about to start importing Dodge RAM pickups or Jeep Wagoneers. Last week, I had dinner with a senior executive from the Ford motor company, who had spent several years living in Shanghai. From our conversation, it’s clear that China is playing the long game.

They’ve made significant leaps in technology prowess, leaps that many of us in the West are unaware of. Companies in China are also making long-term investments, building substantial infrastructure to allow independent companies to leverage technology sharing between products across a few well-developed platforms.

When we talk about China’s technological advancements, let’s not forget about Huawei. About a dozen chip designers who used to work for me have ended up at Huawei Design Center in Ottawa, Canada. Huawei’s stated ambition is to become a top-tier automotive supplier in the age of Intelligent Electric Vehicles, similar to what Bosch has done in the traditional automotive world.

They’ve established a platform called Harmony Intelligent Mobility Alliance, or HIMA, and instead of building cars itself, Huawei collaborates extensively with established automakers to create new vehicle brands that heavily rely on Huawei’s technology. Despite not being in the business of manufacturing, Huawei’s extensive involvement in design, R&D, and supply gives it significant influence over the vehicles produced through its partnerships.

However, this is a real estate podcast, not an automotive one. The reason we’re discussing manufacturing and supply chains in the auto industry is that they affect millions of jobs across North America and thus affect real estate. Especially if the community has exposure to the design and manufacture of vehicles. I hope you’ve found this enlightening. Have a great rest of your day, go out and make some great things happen. We’ll talk to you again tomorrow.

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