1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:09,720 --> 00:00:12,280 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:12,280 --> 00:00:15,040 Speaker 2: the top stories and becoming week from our Daybreak anchors 4 00:00:15,040 --> 00:00:17,599 Speaker 2: all around the world. Straight Ahead on the program, we'll 5 00:00:17,600 --> 00:00:20,119 Speaker 2: look at what to expect from the spring meetings of 6 00:00:20,200 --> 00:00:24,360 Speaker 2: the International Monetary Fund and World Bank. I'm Tom Busby 7 00:00:24,400 --> 00:00:25,000 Speaker 2: in New York. 8 00:00:25,360 --> 00:00:28,720 Speaker 3: I'm Stephen Carolyn London. We're looking ahead to German Chancellor 9 00:00:28,760 --> 00:00:32,720 Speaker 3: Olaf Schultz's trip to China amid trade tensions with the EU. 10 00:00:33,200 --> 00:00:35,440 Speaker 4: I'm Brian Curtis in Hong Kong. We look ahead to 11 00:00:35,479 --> 00:00:38,320 Speaker 4: a ton of eco data in China, and as usual, 12 00:00:38,400 --> 00:00:40,640 Speaker 4: we hunt for a catalyst that might fire up the 13 00:00:40,720 --> 00:00:42,000 Speaker 4: Chinese economic kitchen. 14 00:00:42,479 --> 00:00:46,440 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg, 15 00:00:46,479 --> 00:00:48,960 Speaker 5: E Loove the three Own, New York, Bloomberg ninety nine 16 00:00:49,000 --> 00:00:52,400 Speaker 5: to one, Washington, DC, Bloomberg one O six one, Boston, 17 00:00:52,479 --> 00:00:57,280 Speaker 5: Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Sirius 18 00:00:57,400 --> 00:01:00,280 Speaker 5: XM one nineteen and around the world on Blue Bomberg 19 00:01:00,400 --> 00:01:03,040 Speaker 5: Radio dot com and via the Bloomberg Business App. 20 00:01:07,040 --> 00:01:09,000 Speaker 2: Good day to you. I'm Tom Busby, and we begin 21 00:01:09,040 --> 00:01:13,040 Speaker 2: today's program with the Spring meetings of the International Monetary Fund, 22 00:01:13,120 --> 00:01:16,959 Speaker 2: the IMF and the World Bank. This coming week, central 23 00:01:17,000 --> 00:01:19,959 Speaker 2: bank leaders and finance ministers from around the world gather 24 00:01:20,040 --> 00:01:24,120 Speaker 2: in Washington, d C. To discuss interest rates, monetary policy, 25 00:01:24,240 --> 00:01:27,040 Speaker 2: and other issues of global concern. For more on what 26 00:01:27,120 --> 00:01:31,080 Speaker 2: to expect, we're joined by Michael McKee Bloomberg International Economics 27 00:01:31,160 --> 00:01:34,280 Speaker 2: and Policy correspondent Well Michael. In a written statement to 28 00:01:34,319 --> 00:01:37,479 Speaker 2: be delivered this week, the Managing director of the IMF 29 00:01:37,560 --> 00:01:42,600 Speaker 2: says it'll push its global growth forecast slightly higher, up 30 00:01:42,680 --> 00:01:45,560 Speaker 2: one notch to three point two percent in twenty twenty five. 31 00:01:45,880 --> 00:01:50,560 Speaker 2: That's despite stubbornly high inflation massive debt loads. What's behind 32 00:01:50,600 --> 00:01:52,600 Speaker 2: that rather upbeat assessment. 33 00:01:52,880 --> 00:01:56,560 Speaker 6: The fact that the economy of the United States in particular, 34 00:01:56,640 --> 00:01:58,680 Speaker 6: but other economies around the world have been able to 35 00:01:58,720 --> 00:02:02,680 Speaker 6: grow faster than people anticipated coming out of the recession. Now, 36 00:02:02,760 --> 00:02:05,480 Speaker 6: we've talked many, many times about the weirdness of this 37 00:02:06,400 --> 00:02:10,680 Speaker 6: pandemic recession and how it has upended all kinds of 38 00:02:10,760 --> 00:02:15,359 Speaker 6: economic ideas and forecasts, and the IMF is just reflecting 39 00:02:15,880 --> 00:02:20,040 Speaker 6: what reality is that, whether we understand it or not, 40 00:02:20,240 --> 00:02:22,600 Speaker 6: things are better than we had thought. 41 00:02:22,560 --> 00:02:25,360 Speaker 2: Well, the IMF predicting US growth this year two point 42 00:02:25,360 --> 00:02:27,600 Speaker 2: one percent. It's not going to blow anyone away, but 43 00:02:27,639 --> 00:02:30,680 Speaker 2: it's pretty steady and actually a drop in twenty twenty 44 00:02:30,680 --> 00:02:32,200 Speaker 2: five one point seven percent. 45 00:02:32,240 --> 00:02:34,920 Speaker 6: Why is that there's a feeling that we can't sustain 46 00:02:35,040 --> 00:02:37,239 Speaker 6: this growth level? But I don't think there's a whole 47 00:02:37,280 --> 00:02:40,679 Speaker 6: lot of confidence behind that prediction. The other thing that's 48 00:02:40,680 --> 00:02:45,360 Speaker 6: important to realize about the world economic outlook, which is 49 00:02:45,400 --> 00:02:48,440 Speaker 6: what the IMF will be putting out next week with 50 00:02:48,600 --> 00:02:54,400 Speaker 6: actual numbers. And basically nobody pays any attention to the 51 00:02:54,480 --> 00:02:58,760 Speaker 6: numbers they generate for the US and the European Union 52 00:02:58,880 --> 00:03:04,600 Speaker 6: and the United Kingdom, Japan, China, because there are people, 53 00:03:04,680 --> 00:03:06,919 Speaker 6: thousands of people paid around the world to do that. 54 00:03:07,280 --> 00:03:11,160 Speaker 6: Where the IMF does get some interest is especially people 55 00:03:11,200 --> 00:03:15,400 Speaker 6: who trade in emerging markets because those aren't covered as well, 56 00:03:15,600 --> 00:03:19,760 Speaker 6: and they really do have the depth of information about 57 00:03:19,800 --> 00:03:22,359 Speaker 6: what's going on in those countries. Is not a lot 58 00:03:22,360 --> 00:03:23,919 Speaker 6: of value add to say the US is going to 59 00:03:23,960 --> 00:03:26,040 Speaker 6: grow two point one percent when the FED is already 60 00:03:26,040 --> 00:03:28,200 Speaker 6: saying it's going to grow two point one percent, and 61 00:03:28,240 --> 00:03:30,960 Speaker 6: everybody on Wall Street is weighing in how much it's 62 00:03:30,960 --> 00:03:31,480 Speaker 6: going to grow. 63 00:03:31,919 --> 00:03:34,760 Speaker 2: So it's those sleeper countries, like you said, not Japan, 64 00:03:34,840 --> 00:03:39,160 Speaker 2: not the Eurozone, not China, but the ones maybe on 65 00:03:39,280 --> 00:03:40,320 Speaker 2: the back burner. 66 00:03:40,240 --> 00:03:42,640 Speaker 6: Right, yeah, frontier markets, emerging markets. 67 00:03:42,920 --> 00:03:47,280 Speaker 2: Okay, now, China forecasting pretty solid growth. That's not exactly 68 00:03:47,320 --> 00:03:49,640 Speaker 2: a sluggish economy, is it. It's just not what we're 69 00:03:49,760 --> 00:03:51,200 Speaker 2: used to seeing in China. 70 00:03:51,680 --> 00:03:54,360 Speaker 6: Right They've started to run into the law of large 71 00:03:54,440 --> 00:03:57,680 Speaker 6: numbers that it's really hard to keep improving at the 72 00:03:57,760 --> 00:04:00,360 Speaker 6: same rate when you start to get as large as 73 00:04:00,400 --> 00:04:04,680 Speaker 6: their economy is right now. They're also going through something 74 00:04:04,720 --> 00:04:08,920 Speaker 6: of a recession there and real credit issue problems, so 75 00:04:10,160 --> 00:04:13,160 Speaker 6: we don't know. There isn't a lot of faith put 76 00:04:13,200 --> 00:04:16,680 Speaker 6: it that way in Chinese economic data, so we don't 77 00:04:16,720 --> 00:04:20,160 Speaker 6: know for sure how fast they're growing, And it is 78 00:04:20,240 --> 00:04:24,360 Speaker 6: interesting to see what the IMF will say because there 79 00:04:24,400 --> 00:04:27,599 Speaker 6: are a lot of private sector economists who think China's 80 00:04:27,600 --> 00:04:30,320 Speaker 6: growing a lot more slowly than the numbers that China 81 00:04:30,400 --> 00:04:35,240 Speaker 6: will put out. So the only odd thing about it, 82 00:04:35,360 --> 00:04:37,560 Speaker 6: or not odd thing about it, but the only thing 83 00:04:37,640 --> 00:04:40,719 Speaker 6: is it's really hard to invest in China, so it's 84 00:04:40,760 --> 00:04:43,839 Speaker 6: not like you're going to be using a lot of 85 00:04:43,880 --> 00:04:47,680 Speaker 6: these numbers just to readjust your portfolio. 86 00:04:48,040 --> 00:04:48,400 Speaker 7: Got it. 87 00:04:48,720 --> 00:04:50,680 Speaker 2: Well, one thing that we know is going to be 88 00:04:50,680 --> 00:04:54,200 Speaker 2: talked about in that is interest rates. We saw Christine 89 00:04:54,240 --> 00:04:57,360 Speaker 2: Legard from the ECB just this week holding steady. We 90 00:04:57,400 --> 00:04:59,640 Speaker 2: know here we're in sort of a holding pattern in 91 00:04:59,680 --> 00:05:01,760 Speaker 2: the USA US on interest rates at least maybe eve 92 00:05:01,800 --> 00:05:04,520 Speaker 2: until later in the year. What's going to be the 93 00:05:04,520 --> 00:05:06,240 Speaker 2: big discussion, Well. 94 00:05:06,120 --> 00:05:08,600 Speaker 6: You know, when they were meeting last fall, there was 95 00:05:08,640 --> 00:05:11,559 Speaker 6: a lot of talk about interest rates eventually coming down 96 00:05:11,680 --> 00:05:15,800 Speaker 6: because we've sort of gotten through the recession and we've 97 00:05:15,920 --> 00:05:19,080 Speaker 6: sort of gotten through inflation and things were getting better. 98 00:05:19,120 --> 00:05:22,320 Speaker 6: And now the conversation is going to be different because 99 00:05:22,560 --> 00:05:27,760 Speaker 6: the major central banks are all stepping back from the 100 00:05:27,800 --> 00:05:31,400 Speaker 6: precipice of rate cuts, with the exception of the ECB, 101 00:05:31,600 --> 00:05:36,040 Speaker 6: because they're at this point still worried about the possibility 102 00:05:36,040 --> 00:05:40,680 Speaker 6: of inflation resurging. The conversations at the IMF meetings World 103 00:05:40,720 --> 00:05:45,680 Speaker 6: bank meetings will be basically around the idea of synchronicity. 104 00:05:45,720 --> 00:05:49,800 Speaker 6: Will everybody be moving at once or will somebody move 105 00:05:49,960 --> 00:05:54,000 Speaker 6: much faster than everyone else? And in her news conference 106 00:05:54,120 --> 00:05:57,000 Speaker 6: last week, Christin Laguard was asked about that because what 107 00:05:57,040 --> 00:06:00,480 Speaker 6: happens is if you cut your interest rate and others don't, 108 00:06:00,960 --> 00:06:05,960 Speaker 6: then your currency is going to fall and it's just 109 00:06:06,000 --> 00:06:09,160 Speaker 6: more attractive to invest in the higher rate countries. She 110 00:06:09,240 --> 00:06:11,320 Speaker 6: did not want to comment on that, but you can 111 00:06:11,360 --> 00:06:13,640 Speaker 6: bet that's going to be one of the discussion points 112 00:06:13,680 --> 00:06:16,839 Speaker 6: behind closed doors at the meetings. 113 00:06:16,960 --> 00:06:20,000 Speaker 2: And another one because of all this geopolitical risk out 114 00:06:20,040 --> 00:06:22,839 Speaker 2: there in the Middle East, Ukraine and Russia. I mean, 115 00:06:23,120 --> 00:06:25,480 Speaker 2: that has got to be also forefront on the agenda. 116 00:06:25,720 --> 00:06:27,240 Speaker 2: What to do and when to do it. 117 00:06:27,640 --> 00:06:30,719 Speaker 6: Well, this is an opportunity for a lot of discussions 118 00:06:30,800 --> 00:06:34,760 Speaker 6: because the finance and foreign ministers from all over the 119 00:06:34,839 --> 00:06:38,839 Speaker 6: world come and attend along with central bankers these meetings, 120 00:06:38,839 --> 00:06:42,200 Speaker 6: and they have a lot of meetings together, and so 121 00:06:42,480 --> 00:06:45,880 Speaker 6: that sort of thing will get discussed. You just can't 122 00:06:45,920 --> 00:06:52,000 Speaker 6: expect any kind of answers or conclusions about what should 123 00:06:52,000 --> 00:06:54,840 Speaker 6: be done, because if they haven't got it right now, 124 00:06:55,040 --> 00:06:58,160 Speaker 6: just a few more meetings in Washington next week are 125 00:06:58,320 --> 00:06:59,640 Speaker 6: going to make a difference. 126 00:07:00,279 --> 00:07:03,599 Speaker 2: And the meetings are here. What role does the US 127 00:07:03,720 --> 00:07:07,120 Speaker 2: play in these meetings and in the World Bank, in 128 00:07:07,160 --> 00:07:08,239 Speaker 2: the IMF. 129 00:07:08,040 --> 00:07:10,440 Speaker 6: Well, the US is the host. We're the biggest economy 130 00:07:10,480 --> 00:07:14,840 Speaker 6: in the world, and we have perhaps the best infrastructure 131 00:07:14,960 --> 00:07:17,760 Speaker 6: for bringing all of these people together from the disparate 132 00:07:18,480 --> 00:07:23,040 Speaker 6: countries of the world. And so twice a year they 133 00:07:23,040 --> 00:07:25,760 Speaker 6: come to the US and they hold the IMF and 134 00:07:25,800 --> 00:07:28,840 Speaker 6: World Bank meetings. We're the headquarters for the IMF and 135 00:07:28,920 --> 00:07:32,400 Speaker 6: the World Bank, so this is the place where they 136 00:07:32,480 --> 00:07:33,600 Speaker 6: can get things done. 137 00:07:34,000 --> 00:07:36,080 Speaker 2: Well, it's a lot to look forward to our thanks 138 00:07:36,080 --> 00:07:40,960 Speaker 2: to Michael McKee, Bloomberg International Economics and Policy Correspondent. Next 139 00:07:40,960 --> 00:07:43,120 Speaker 2: week we get a sense of how cautious consumers are 140 00:07:43,160 --> 00:07:46,000 Speaker 2: being with their money. We get US retail sales data 141 00:07:46,040 --> 00:07:49,400 Speaker 2: for March that's out on Monday. Also, how could this 142 00:07:49,520 --> 00:07:52,680 Speaker 2: possibly impact FED policy going forward? And for more we're 143 00:07:52,720 --> 00:07:57,440 Speaker 2: joined by Anawong, Bloomberg Chief US Economists. So Anna, what 144 00:07:57,480 --> 00:08:00,520 Speaker 2: are you expecting to see in the March retail sales number? 145 00:08:00,960 --> 00:08:04,880 Speaker 8: Right, we are expecting to see tapped number. I think 146 00:08:04,880 --> 00:08:09,360 Speaker 8: there are various signs pointing to consumers being exhausted by 147 00:08:09,400 --> 00:08:12,760 Speaker 8: the price increases over the past two years. We saw 148 00:08:12,800 --> 00:08:17,960 Speaker 8: that a March purchases of cars has fallen sharply, and 149 00:08:18,040 --> 00:08:22,640 Speaker 8: that was following a rebound in February after another slump 150 00:08:22,720 --> 00:08:26,080 Speaker 8: in January. But if you smooth over the first three 151 00:08:26,160 --> 00:08:29,600 Speaker 8: months of the year. It is clearly showing a slowdown 152 00:08:30,000 --> 00:08:33,439 Speaker 8: and that's consistent with what we're seeing and also auto 153 00:08:33,440 --> 00:08:38,720 Speaker 8: loans rejections. It's harder to get financing to auto loans 154 00:08:39,000 --> 00:08:43,080 Speaker 8: given that auto loan rates are still pretty high. And 155 00:08:43,200 --> 00:08:46,520 Speaker 8: for the category of retail that directly go into Q 156 00:08:46,600 --> 00:08:51,800 Speaker 8: one GDP, it's the control groups sales which excludes vehicles, gasoline, 157 00:08:51,840 --> 00:08:56,800 Speaker 8: food service, and building materials. We are expecting a tappit 158 00:08:57,000 --> 00:09:01,160 Speaker 8: zero point two percent gains that's versus zero percent in 159 00:09:01,200 --> 00:09:04,880 Speaker 8: the previous month. I think that overall the US consumption 160 00:09:05,000 --> 00:09:07,880 Speaker 8: will be growing at about the two percent pace in 161 00:09:08,000 --> 00:09:11,280 Speaker 8: the first quarter, and that's a slow down from the 162 00:09:11,320 --> 00:09:14,120 Speaker 8: more than three percent in the fourth quarter. And I 163 00:09:14,160 --> 00:09:17,040 Speaker 8: think that as we go into the year, to slow 164 00:09:17,080 --> 00:09:19,080 Speaker 8: down will further be more evident. And by the end 165 00:09:19,160 --> 00:09:21,880 Speaker 8: of the year, we're only expecting a one percent quarterly 166 00:09:21,920 --> 00:09:24,439 Speaker 8: growth in PCE spending, so. 167 00:09:24,480 --> 00:09:28,720 Speaker 2: A steady decline in spending. Do you attribute this mostly 168 00:09:28,760 --> 00:09:32,520 Speaker 2: to inflation? I mean everywhere you go everything costs more. 169 00:09:32,559 --> 00:09:34,600 Speaker 2: Every time you go to the store, you go out 170 00:09:34,640 --> 00:09:38,000 Speaker 2: to dinner, you look at a sticker on a car, everything. 171 00:09:38,320 --> 00:09:43,599 Speaker 8: Yeah, it's both a combination of inflation and also increasing 172 00:09:43,920 --> 00:09:48,760 Speaker 8: job in security layoffs announcements have risen in news headlines 173 00:09:49,000 --> 00:09:52,280 Speaker 8: and that naturally could make people more cautious, and that 174 00:09:52,360 --> 00:09:56,160 Speaker 8: would how that translate to spending behavior is that people 175 00:09:56,200 --> 00:09:57,960 Speaker 8: would think, Okay, I don't know if I'm on the 176 00:09:58,000 --> 00:10:01,719 Speaker 8: chopping block next, I better spend as much and so 177 00:10:01,920 --> 00:10:05,760 Speaker 8: saving rates should overall increase as a result of this caution. 178 00:10:06,360 --> 00:10:10,880 Speaker 8: So in the March CPI report that was released last week, 179 00:10:11,080 --> 00:10:16,199 Speaker 8: we saw that a few consumer categories prices fall. So 180 00:10:16,240 --> 00:10:22,079 Speaker 8: for example, recreational goods and consumer electronics, where two categories 181 00:10:22,160 --> 00:10:25,320 Speaker 8: in the core goods category. That's a very sharp decline 182 00:10:25,360 --> 00:10:29,800 Speaker 8: and prices, and I think that reflects that the discretionary 183 00:10:29,920 --> 00:10:34,240 Speaker 8: component of consumer budget is being slimmed down because they 184 00:10:34,240 --> 00:10:37,880 Speaker 8: have to pay you know, twenty percent higher for auto insurance, 185 00:10:37,920 --> 00:10:42,120 Speaker 8: and auto insurance is non negotiable. It's a big part 186 00:10:42,240 --> 00:10:45,520 Speaker 8: of consumer spending because everybody needs to drive a car. 187 00:10:45,960 --> 00:10:48,240 Speaker 8: And as a result, what we are seeing is less 188 00:10:48,240 --> 00:10:51,440 Speaker 8: spending on things that could be cut and that will 189 00:10:51,480 --> 00:10:53,600 Speaker 8: show up in the retail as well. That I think 190 00:10:53,679 --> 00:10:59,239 Speaker 8: the retail goods component discretionary good spending, we'll see a decline, 191 00:10:59,440 --> 00:11:03,280 Speaker 8: whereas most of spending is coming from services and which 192 00:11:03,320 --> 00:11:07,880 Speaker 8: is benefiting from the stock rally in the past couple months, 193 00:11:07,960 --> 00:11:12,200 Speaker 8: and people who are primarily spending and services are they 194 00:11:12,559 --> 00:11:15,959 Speaker 8: are the people who are benefiting from the market rally, 195 00:11:15,960 --> 00:11:19,959 Speaker 8: which they tend to be older people baby boomers though 196 00:11:20,360 --> 00:11:22,240 Speaker 8: that's a two track economy for you. 197 00:11:22,679 --> 00:11:24,600 Speaker 2: Well, another thing I want to talk to you about, 198 00:11:24,640 --> 00:11:27,520 Speaker 2: non discretionary is the price at the gas pump, which 199 00:11:27,559 --> 00:11:29,960 Speaker 2: has been going up steadily since the start of the year, 200 00:11:30,080 --> 00:11:33,320 Speaker 2: triple A predicting gas will average four bucks a gallon 201 00:11:33,559 --> 00:11:36,800 Speaker 2: by the summer. How will that affect budgets and spending? 202 00:11:37,200 --> 00:11:41,040 Speaker 8: So, gasoline and food, especially for the lower income household, 203 00:11:41,080 --> 00:11:44,320 Speaker 8: account for more than a fifth of their budget, so 204 00:11:44,760 --> 00:11:47,960 Speaker 8: it will definitely squeeze the budget. It's not a very 205 00:11:47,960 --> 00:11:51,800 Speaker 8: comforting thing for a household. The only thing that could 206 00:11:51,880 --> 00:11:56,079 Speaker 8: offset that somewhat is the hike and minimum wage across 207 00:11:56,120 --> 00:12:00,400 Speaker 8: many states early in the year. So in California we 208 00:12:00,559 --> 00:12:04,240 Speaker 8: just saw early this month in April that fast food 209 00:12:04,840 --> 00:12:09,360 Speaker 8: workers minimum wage have been increased by by almost twenty percent. 210 00:12:09,800 --> 00:12:13,320 Speaker 8: And in Florida, for example, early this year, the state 211 00:12:14,080 --> 00:12:17,800 Speaker 8: hiked minimum wage by seventeen percent, So there's still hope 212 00:12:17,800 --> 00:12:21,520 Speaker 8: for the lower income household who could see you know, 213 00:12:21,760 --> 00:12:24,360 Speaker 8: ten to twenty percent jump in their wages. 214 00:12:24,960 --> 00:12:27,880 Speaker 2: March retail sales data out on Monday, and our thanks 215 00:12:27,920 --> 00:12:32,320 Speaker 2: to Anawong Bloomberg Chief US economist, coming up on Bloomberg 216 00:12:32,400 --> 00:12:35,800 Speaker 2: day Break weekend. Why Germany's chancellor is heading to China. 217 00:12:36,200 --> 00:12:50,720 Speaker 2: I'm Tom Busby and this is Bloomberg. This is Bloomberg 218 00:12:50,760 --> 00:12:52,880 Speaker 2: day Break weekend, our global look ahead at the top 219 00:12:52,920 --> 00:12:55,959 Speaker 2: stories for investors in the coming week. I'm Tom Busby 220 00:12:55,960 --> 00:12:58,480 Speaker 2: in New York. Up later in our program a look 221 00:12:58,480 --> 00:13:01,720 Speaker 2: at some key economic data come out of China. But first, 222 00:13:01,880 --> 00:13:06,400 Speaker 2: as China's economy struggles to recover, diplomatic relations become more 223 00:13:06,400 --> 00:13:09,920 Speaker 2: crucial on the heels of US Treasury Secretary Janet Yellen's 224 00:13:10,000 --> 00:13:14,000 Speaker 2: visit to Beijing last week. German Chancellor Olaf Schultz set 225 00:13:14,000 --> 00:13:16,560 Speaker 2: to visit the region in the coming days. For more, 226 00:13:16,640 --> 00:13:19,000 Speaker 2: Let's go to London and bring in Bloomberg Daybreak Europe 227 00:13:19,000 --> 00:13:20,439 Speaker 2: Banker Stephen. 228 00:13:20,120 --> 00:13:23,520 Speaker 3: Carroll Tom Janet Yellen went to China with the message 229 00:13:23,559 --> 00:13:27,439 Speaker 3: that Beijing's manufacturing drive is a threat to other economies. 230 00:13:27,679 --> 00:13:31,400 Speaker 3: Her comments at times strongly worded, we're respectfully received by 231 00:13:31,400 --> 00:13:34,480 Speaker 3: her hosts, but aren't likely to result in a policy shift. 232 00:13:34,880 --> 00:13:37,959 Speaker 3: So as Germany's Chancellor Olaf Schultz makes the trip to Beijing, 233 00:13:38,040 --> 00:13:41,160 Speaker 3: can he hope for any more? European countries have taken 234 00:13:41,200 --> 00:13:43,920 Speaker 3: a different approach to their relationship with China versus what 235 00:13:43,960 --> 00:13:47,280 Speaker 3: the United States is doing. EU commissioned President our Slavanderlin 236 00:13:47,320 --> 00:13:51,319 Speaker 3: has described the strategy as de risking rather than decoupling. 237 00:13:51,840 --> 00:13:55,080 Speaker 3: That hasn't stopped the EU launching a competition investigation into 238 00:13:55,160 --> 00:13:58,800 Speaker 3: Chinese subsidies for green industries. Olaf Schultz will be conscious 239 00:13:58,800 --> 00:14:02,320 Speaker 3: that German companies are a major exporter to China, so 240 00:14:02,400 --> 00:14:05,520 Speaker 3: he must be cautious. A recent survey by the German 241 00:14:05,600 --> 00:14:08,760 Speaker 3: Chamber of Commerce in China highlighted the challenges that many 242 00:14:08,760 --> 00:14:13,240 Speaker 3: Western firms have mentioned before. Two thirds of those operating 243 00:14:13,280 --> 00:14:16,320 Speaker 3: in the country say they face unfair competition in the market, 244 00:14:16,600 --> 00:14:19,160 Speaker 3: a problem that threatens to push up their costs and 245 00:14:19,280 --> 00:14:22,640 Speaker 3: a road profit margins. Schultz's discussions in China will also 246 00:14:22,680 --> 00:14:26,560 Speaker 3: be set against a backdrop of geopolitical unrest. Continue. Tensions 247 00:14:26,560 --> 00:14:29,320 Speaker 3: in the Middle East and Russia's invasion of Ukraine are 248 00:14:29,320 --> 00:14:32,680 Speaker 3: set to feature heavily during the upcoming G seven Foreign 249 00:14:32,720 --> 00:14:35,880 Speaker 3: Ministers meeting in Italy. I've been discussing the implication of 250 00:14:35,920 --> 00:14:39,160 Speaker 3: Schultz's visit to China and that meeting with Bloomberg's EMEA 251 00:14:39,160 --> 00:14:42,560 Speaker 3: and THES director Rosalind Matheson. I started by asking her 252 00:14:42,760 --> 00:14:46,320 Speaker 3: how different Scholtz's time in China will be to that 253 00:14:46,560 --> 00:14:49,240 Speaker 3: of the trip by US Treasury Secretary Janet Yellen. 254 00:14:49,720 --> 00:14:52,680 Speaker 1: Well, it'll be similar, but also a bit different, as 255 00:14:52,720 --> 00:14:56,640 Speaker 1: you say, because the relationship between China and Germany is 256 00:14:56,680 --> 00:14:59,920 Speaker 1: a bit different to the relationship between China and the US, 257 00:15:00,360 --> 00:15:03,480 Speaker 1: although there are similarities in terms of the challenges around 258 00:15:03,920 --> 00:15:06,240 Speaker 1: the business environment, and so you can expect that the 259 00:15:06,280 --> 00:15:10,240 Speaker 1: German Chancellor Olive Schultz will be echoing some of what 260 00:15:10,360 --> 00:15:14,520 Speaker 1: Janet Yellen was saying on her recent trip, the challenges 261 00:15:14,680 --> 00:15:19,080 Speaker 1: for German companies operating their clarity around that business environment, 262 00:15:19,560 --> 00:15:23,360 Speaker 1: certain tier around supply chains specifically, though for him, the 263 00:15:23,440 --> 00:15:26,560 Speaker 1: issue of electric vehicles will probably come up again, and 264 00:15:26,600 --> 00:15:31,000 Speaker 1: the tensions over Chinese support for their companies and the 265 00:15:31,040 --> 00:15:35,000 Speaker 1: broader EU probe that's going on into that support. So 266 00:15:35,080 --> 00:15:38,560 Speaker 1: there'll be some similarities around the messaging that's going to 267 00:15:38,560 --> 00:15:42,600 Speaker 1: come from Olive Schultz, but also Germany's tended to take 268 00:15:43,080 --> 00:15:46,760 Speaker 1: a slightly more careful line about the overall relationship. The 269 00:15:46,840 --> 00:15:51,640 Speaker 1: US has been willing to criticize China more overtly on 270 00:15:51,680 --> 00:15:55,680 Speaker 1: the human rights front, for example, and over what they 271 00:15:55,680 --> 00:15:58,960 Speaker 1: see is its militarization of areas like the South China 272 00:15:59,000 --> 00:16:03,160 Speaker 1: Sea with Taiwan. That doesn't mean that Olave Schultz won't 273 00:16:03,480 --> 00:16:08,200 Speaker 1: bring those things up, but Germany is traditionally has just 274 00:16:08,320 --> 00:16:11,240 Speaker 1: been a bit more cautious about some of their rhetoric 275 00:16:11,320 --> 00:16:16,040 Speaker 1: because they really need the economic relationship with China to work. 276 00:16:16,280 --> 00:16:18,120 Speaker 3: Yeah, I mean, the President of the European Commissioners used 277 00:16:18,120 --> 00:16:20,880 Speaker 3: this expression de risking, not decoupling when it comes to 278 00:16:20,920 --> 00:16:25,600 Speaker 3: the relationship with China is I'll love Schultz likely to 279 00:16:25,640 --> 00:16:29,000 Speaker 3: step outside of that in his comments as he's muting officials. 280 00:16:29,400 --> 00:16:32,400 Speaker 1: Well, so far, he's really maintained by and large the 281 00:16:32,840 --> 00:16:35,960 Speaker 1: sort of the tone taken by his predecessor, Angela Merkle, 282 00:16:36,680 --> 00:16:38,840 Speaker 1: and she was very much about, you know, similarly with 283 00:16:38,880 --> 00:16:42,200 Speaker 1: other countries like Russia, I would add, keeping the dialogue going, 284 00:16:42,400 --> 00:16:47,080 Speaker 1: keeping the conversation going, preserving the economic and trade relationship 285 00:16:47,160 --> 00:16:50,480 Speaker 1: out of the view that if you bind yourselves economically 286 00:16:50,960 --> 00:16:53,760 Speaker 1: and through investment and trade, then you're more likely to 287 00:16:53,760 --> 00:16:55,640 Speaker 1: be able to behave better with each. 288 00:16:55,480 --> 00:16:57,080 Speaker 9: Other on the political side. 289 00:16:57,200 --> 00:16:59,280 Speaker 1: And that's very much the sort of the tone and 290 00:16:59,320 --> 00:17:03,000 Speaker 1: philosophy adopted by Olaf Schultz since he came to power, 291 00:17:03,040 --> 00:17:04,840 Speaker 1: and of course as someone who is very much part 292 00:17:04,920 --> 00:17:08,640 Speaker 1: of the Merkele era himself, he has gotten a bit harder, 293 00:17:08,680 --> 00:17:11,520 Speaker 1: i would say, than Angelo Merkele did on the political front. 294 00:17:11,960 --> 00:17:15,199 Speaker 1: But that's also because Germany is under pressure within Europe 295 00:17:15,240 --> 00:17:16,480 Speaker 1: to take that harder ligne. 296 00:17:16,520 --> 00:17:19,520 Speaker 9: You see France, you see the UK, you see the 297 00:17:19,560 --> 00:17:20,240 Speaker 9: EU as a. 298 00:17:20,200 --> 00:17:24,639 Speaker 1: Whole, pressing China quite heavily on its behavior over trade, 299 00:17:24,840 --> 00:17:29,120 Speaker 1: over market access, over its tech companies, and over its 300 00:17:29,160 --> 00:17:31,800 Speaker 1: behavior around things like human rights, and Germany has been 301 00:17:31,840 --> 00:17:34,200 Speaker 1: seen as a bit of an outlier, so he's been 302 00:17:34,200 --> 00:17:37,159 Speaker 1: pushed quite heavily by his French counterpart Emmanual Macron to 303 00:17:37,200 --> 00:17:37,520 Speaker 1: do that. 304 00:17:37,600 --> 00:17:39,720 Speaker 9: So you might see that slightly harder. 305 00:17:39,520 --> 00:17:43,600 Speaker 1: Tone, but generally he's been consistent with his predecessor's policy. 306 00:17:43,680 --> 00:17:45,639 Speaker 3: Because part of this trip will involve a love Schultz 307 00:17:45,680 --> 00:17:48,840 Speaker 3: also visiting German companies that operate in China, survey from 308 00:17:48,840 --> 00:17:50,960 Speaker 3: the German Chamber of Commerce and China found that two 309 00:17:51,119 --> 00:17:53,720 Speaker 3: thirds of German companies that operate in the country, so 310 00:17:53,800 --> 00:17:57,120 Speaker 3: they face unfair competition in the market. I mean, realistically, 311 00:17:57,119 --> 00:17:59,399 Speaker 3: does Olof Schultz have any leverage attack or something like that, 312 00:17:59,560 --> 00:18:02,119 Speaker 3: given the you know, even Janet Yellen seemed of difficulty 313 00:18:02,200 --> 00:18:03,800 Speaker 3: in getting any actual movement. 314 00:18:04,440 --> 00:18:05,120 Speaker 9: Very unlikely. 315 00:18:05,640 --> 00:18:08,080 Speaker 1: If Johanet Yellen can't succeed, I wouldn't imagine that all 316 00:18:08,080 --> 00:18:13,040 Speaker 1: Love Schultz will. I mean, those surveys that show that companies, 317 00:18:13,119 --> 00:18:16,360 Speaker 1: you know, German companies or British companies or American companies 318 00:18:16,800 --> 00:18:20,520 Speaker 1: are complaining about the environment in China are very very common, 319 00:18:21,119 --> 00:18:23,920 Speaker 1: and that sort of figure is not surprising because those 320 00:18:24,000 --> 00:18:28,160 Speaker 1: concerns are longstanding about the ability to have clarity around 321 00:18:28,240 --> 00:18:31,320 Speaker 1: market access and Chinese support for their own industry and 322 00:18:31,400 --> 00:18:34,280 Speaker 1: so on. So that's not going to I think affect 323 00:18:34,400 --> 00:18:36,800 Speaker 1: ol Love Schultz on his trip, although it does sort 324 00:18:36,800 --> 00:18:40,000 Speaker 1: of show again the need to really be showing that 325 00:18:40,080 --> 00:18:44,120 Speaker 1: he's listening to those concerns. But as a Chinese leadership 326 00:18:44,240 --> 00:18:47,440 Speaker 1: going to take their cues from Germany, probably not. What 327 00:18:47,600 --> 00:18:51,119 Speaker 1: they are interested potentially doing is bifurcating a bit, because 328 00:18:51,600 --> 00:18:53,719 Speaker 1: China's quite good at trying to play countries a bit 329 00:18:53,800 --> 00:18:56,080 Speaker 1: against each other. And what they might do is, you know, 330 00:18:56,400 --> 00:18:58,600 Speaker 1: they'll have a certain tone with Germany that they won't 331 00:18:58,640 --> 00:19:01,200 Speaker 1: have with the US for exams. They'll be keen to 332 00:19:01,359 --> 00:19:04,919 Speaker 1: keep Germany probably closer in the tent right now, because 333 00:19:05,359 --> 00:19:08,480 Speaker 1: that's to their advantage to have that kind of sense 334 00:19:08,520 --> 00:19:11,639 Speaker 1: of potential disunity in Europe over a China policy. So 335 00:19:11,840 --> 00:19:15,000 Speaker 1: it's all about playing those kind of games really, and 336 00:19:15,200 --> 00:19:18,360 Speaker 1: so they're not going to change their policy simply because 337 00:19:18,440 --> 00:19:21,359 Speaker 1: Olave Scholtz asks them to. They certainly wouldn't do it 338 00:19:21,400 --> 00:19:24,200 Speaker 1: even if Janet Yellen asks them to, because they're really 339 00:19:24,240 --> 00:19:28,120 Speaker 1: playing their own game there. It'll be interesting to see, how, 340 00:19:28,440 --> 00:19:31,560 Speaker 1: you know, whether they try and keep Germany peeled off 341 00:19:31,600 --> 00:19:33,240 Speaker 1: from the rest of the pack, because. 342 00:19:32,960 --> 00:19:35,639 Speaker 3: I mean, there is something in common that China and 343 00:19:35,760 --> 00:19:38,359 Speaker 3: Germany have is weakness in their economies as well for 344 00:19:38,480 --> 00:19:41,399 Speaker 3: slightly different reasons. Are there matters of common ground that 345 00:19:41,480 --> 00:19:45,640 Speaker 3: we could see sort of flagship announcements or issues where 346 00:19:46,000 --> 00:19:47,800 Speaker 3: they emerge at some positive cooperation. 347 00:19:48,480 --> 00:19:50,520 Speaker 9: Well, certainly it's not just a one way street. 348 00:19:50,600 --> 00:19:53,159 Speaker 1: And that's a really important point that you make I mean, 349 00:19:53,200 --> 00:19:58,200 Speaker 1: obviously Germany in the US need China economically and for business, 350 00:19:58,280 --> 00:20:02,000 Speaker 1: but China also needs them for business. The Chinese economy 351 00:20:02,119 --> 00:20:05,000 Speaker 1: has been quite weak of late. It's showing a few 352 00:20:05,119 --> 00:20:08,000 Speaker 1: green shoots at the moment, but certainly it's nowhere on 353 00:20:08,119 --> 00:20:11,000 Speaker 1: the level that it was some years ago pre pandemic, 354 00:20:11,280 --> 00:20:14,320 Speaker 1: and Cgping is very consciously aware of that. He does 355 00:20:14,480 --> 00:20:17,399 Speaker 1: need his economy to be stable, and so there are 356 00:20:17,520 --> 00:20:20,440 Speaker 1: some mutual interests there. You can imagine there'll be lots 357 00:20:20,480 --> 00:20:22,840 Speaker 1: of positive rhetoric in a way like there was with 358 00:20:22,960 --> 00:20:27,320 Speaker 1: Janet Yellen, also about the relationship about being open for business, 359 00:20:27,440 --> 00:20:32,360 Speaker 1: about China being ready to engage with these companies that obviously, 360 00:20:32,600 --> 00:20:35,720 Speaker 1: you know, doesn't necessarily reflect reality, but there'll be that 361 00:20:35,880 --> 00:20:38,680 Speaker 1: rhetoric and that sense of mutual need. You can also 362 00:20:38,760 --> 00:20:42,520 Speaker 1: imagine there'll be conversations around areas of mutual interest globally 363 00:20:42,800 --> 00:20:45,960 Speaker 1: between Germany and China. And one key one there obviously 364 00:20:46,080 --> 00:20:49,520 Speaker 1: is Russia's actions in Ukraine with the war there. You 365 00:20:49,560 --> 00:20:52,000 Speaker 1: can imagine there big conversation around that. There'll beg conversation 366 00:20:52,600 --> 00:20:55,000 Speaker 1: around the Middle East and the war in Gaza, There'll 367 00:20:55,000 --> 00:20:58,080 Speaker 1: be conversations around disruptions to shipping and global supply chains. 368 00:20:58,400 --> 00:21:00,680 Speaker 1: So some of those broader topics will definite they come up. 369 00:21:00,640 --> 00:21:02,560 Speaker 3: Of course, and some of those issues are also going 370 00:21:02,600 --> 00:21:04,879 Speaker 3: to feature with the other big geopolitical event in the 371 00:21:04,920 --> 00:21:07,680 Speaker 3: coming days, which is the G seven Foreign Minister's meeting 372 00:21:07,760 --> 00:21:11,320 Speaker 3: that's happening in Italy. What are we likely to hear 373 00:21:11,440 --> 00:21:13,960 Speaker 3: on things like Russia Ukraine at that meeting. 374 00:21:14,800 --> 00:21:19,000 Speaker 1: We'll certainly going to expect general expressions of support for Ukraine, 375 00:21:19,040 --> 00:21:21,880 Speaker 1: of unity because the G seven has been very unified 376 00:21:21,920 --> 00:21:25,560 Speaker 1: in general around the need to keep supporting Ukraine, and 377 00:21:25,640 --> 00:21:29,000 Speaker 1: what you may see, of course is disagreements over in 378 00:21:29,119 --> 00:21:32,000 Speaker 1: what way to keep supporting Ukraine, because of course the 379 00:21:32,119 --> 00:21:34,640 Speaker 1: US is sitting on a very very big aid package 380 00:21:34,720 --> 00:21:37,920 Speaker 1: for months that's unlikely to be unlocked anytime soon, in 381 00:21:38,000 --> 00:21:40,400 Speaker 1: a sense that maybe Europe is left holding the can 382 00:21:41,440 --> 00:21:45,080 Speaker 1: more than they did previously for military and financial support 383 00:21:45,560 --> 00:21:47,919 Speaker 1: for Ukraine. So that's definitely going to be one topic 384 00:21:48,080 --> 00:21:51,080 Speaker 1: for conversation, is that they all need to be pulling 385 00:21:51,119 --> 00:21:53,280 Speaker 1: their weight when it comes to that. There'll probably be 386 00:21:53,400 --> 00:21:56,840 Speaker 1: conversations with Ukraine on the table in terms of the 387 00:21:56,960 --> 00:21:59,159 Speaker 1: future of the war. Is there a need at some 388 00:21:59,359 --> 00:22:02,959 Speaker 1: point to crack open the door to negotiations with Russia. 389 00:22:03,160 --> 00:22:06,200 Speaker 1: Does there have to be some sense of getting a 390 00:22:06,320 --> 00:22:10,000 Speaker 1: deal as this war goes on and Ukraine certainly is 391 00:22:10,320 --> 00:22:11,920 Speaker 1: on the back foot a bit at least on the 392 00:22:12,000 --> 00:22:15,760 Speaker 1: ground inside Ukraine itself, So that will probably be the 393 00:22:15,840 --> 00:22:18,720 Speaker 1: two major topics when it comes to Ukraine. And then 394 00:22:18,800 --> 00:22:21,240 Speaker 1: that broord a conversation around how Europe can beef up 395 00:22:21,280 --> 00:22:23,359 Speaker 1: its own defense and its own defense spending. 396 00:22:23,920 --> 00:22:27,040 Speaker 3: That's our EMEA News director Roslind Mathieson knows Roz was 397 00:22:27,040 --> 00:22:29,320 Speaker 3: telling us geopolitical tensions high on the agenda at the 398 00:22:29,400 --> 00:22:33,240 Speaker 3: G seven meeting. The wars in Ukraine and Gaza led 399 00:22:33,240 --> 00:22:36,400 Speaker 3: to calls for countries to increase defense spending, and Bloomberg 400 00:22:36,440 --> 00:22:39,840 Speaker 3: Economics recently estimated that an increase to four percent of 401 00:22:39,960 --> 00:22:43,080 Speaker 3: GDP soort by some would cost governments of G seven 402 00:22:43,119 --> 00:22:47,040 Speaker 3: countries more than ten million dollars per year over the 403 00:22:47,119 --> 00:22:51,040 Speaker 3: next decade. Global economist to Bargabi Schuchtoweale joined us on 404 00:22:51,119 --> 00:22:53,679 Speaker 3: Bloomberg Daybreak Europe to discuss their forecasts. 405 00:22:54,200 --> 00:22:57,280 Speaker 10: We looked at two specific scenarios for defense spending, one 406 00:22:57,320 --> 00:22:59,280 Speaker 10: in the US and has partners spent at least two 407 00:22:59,280 --> 00:23:02,440 Speaker 10: percent of their day of their GDP on defense, and 408 00:23:02,560 --> 00:23:04,920 Speaker 10: then we lost at a more extreme scenario which emulates 409 00:23:04,960 --> 00:23:07,200 Speaker 10: the Cold War levels. So if they raise defense spending 410 00:23:07,240 --> 00:23:10,480 Speaker 10: to four percent, for countries like Germany and Canada with 411 00:23:10,680 --> 00:23:13,600 Speaker 10: relatively low levels of forecast to debt and physcal headroom 412 00:23:14,040 --> 00:23:16,880 Speaker 10: is higher, spending may be painful, but it's actually feasible. 413 00:23:17,359 --> 00:23:20,080 Speaker 10: But for a lot of governments, especially Japan, Italy and 414 00:23:20,160 --> 00:23:22,439 Speaker 10: maybe even France, it's they kind of struggle a lot 415 00:23:22,520 --> 00:23:26,520 Speaker 10: to increase defense spending substantially without there being additional spending 416 00:23:26,600 --> 00:23:30,240 Speaker 10: cuts somewhere higher taxes, additional debt, or some combination of 417 00:23:30,320 --> 00:23:34,200 Speaker 10: the lot. France, Italy and Spain would be particularly exposed 418 00:23:34,240 --> 00:23:38,040 Speaker 10: if if the extra funding spending is funded by borrowing, 419 00:23:38,359 --> 00:23:40,399 Speaker 10: which Italy is public debt jumping to one hundred and 420 00:23:40,440 --> 00:23:42,680 Speaker 10: seventy nine percent of output by twenty thirty four f 421 00:23:42,680 --> 00:23:45,200 Speaker 10: one hundred and forty four percent this year. For the US, 422 00:23:45,200 --> 00:23:47,879 Speaker 10: which is already spending three point three percent on defense, 423 00:23:48,320 --> 00:23:50,239 Speaker 10: debt could still increase to one hundred and thirty one 424 00:23:50,240 --> 00:23:53,360 Speaker 10: percent from ninety nine percent this year over the next decade. 425 00:23:53,760 --> 00:23:56,560 Speaker 10: If we pushed up military spending to four percent. That's 426 00:23:56,600 --> 00:23:59,280 Speaker 10: where we get potentrally indolar numbers from the US and 427 00:23:59,359 --> 00:24:02,119 Speaker 10: major allies together. If they were to reach such levels, 428 00:24:02,560 --> 00:24:03,760 Speaker 10: that's going to be a large number. 429 00:24:04,200 --> 00:24:07,760 Speaker 11: Is an increase of defense spending to two percent, which 430 00:24:07,840 --> 00:24:10,920 Speaker 11: is the sort of NATI goal. Would that be enough 431 00:24:11,160 --> 00:24:14,359 Speaker 11: to meet the challenges? What's the sort of thinking behind that? 432 00:24:14,880 --> 00:24:17,879 Speaker 10: In Europe, there's been this particularly in this need to 433 00:24:18,000 --> 00:24:20,560 Speaker 10: catch up because the industry has been shrinking at the 434 00:24:20,680 --> 00:24:23,600 Speaker 10: years of low spending on defense, particularly like we've been 435 00:24:23,640 --> 00:24:26,399 Speaker 10: see seeing these new style of wars in Ukraine with 436 00:24:26,560 --> 00:24:30,120 Speaker 10: a lot more focus on air defense, and allies will 437 00:24:30,160 --> 00:24:32,639 Speaker 10: need to invest in more on that in air defense 438 00:24:32,680 --> 00:24:35,000 Speaker 10: and ammunition. And there's also these plants for NATTER to 439 00:24:35,040 --> 00:24:37,800 Speaker 10: put as many as three hundred thousand troops on higher readiness, 440 00:24:38,000 --> 00:24:39,600 Speaker 10: and all of that is going to cost a lot 441 00:24:39,680 --> 00:24:42,000 Speaker 10: of money. And there's also promise of aid to keep 442 00:24:42,320 --> 00:24:45,440 Speaker 10: which needs to happen. And some officials are pointing to 443 00:24:45,480 --> 00:24:47,760 Speaker 10: Cold War levels where native allies spent about three to 444 00:24:47,840 --> 00:24:50,280 Speaker 10: four percent on defense as what may be needed to deal. 445 00:24:50,160 --> 00:24:50,720 Speaker 8: With these sets. 446 00:24:50,880 --> 00:24:54,080 Speaker 3: That was global economist at Bloomberg Economics Pargavi shops Well, 447 00:24:54,119 --> 00:24:57,639 Speaker 3: speaking to myself and Caroline Hepger. I'm Stephen Carroll in London. 448 00:24:57,720 --> 00:24:59,960 Speaker 3: You can catch us every weekday morning here for bloom 449 00:25:00,280 --> 00:25:02,480 Speaker 3: day Break. Here at begetting at six am in London 450 00:25:02,800 --> 00:25:05,880 Speaker 3: and one am on Wall Streets. Tom, Thank you, Steven, 451 00:25:05,920 --> 00:25:08,320 Speaker 3: and coming up on Bloomberg day Break weekend to look 452 00:25:08,359 --> 00:25:12,000 Speaker 3: ahead at some key economic data in China. Could there 453 00:25:12,080 --> 00:25:15,720 Speaker 3: be signs of recovery for the slumping Chinese economy? I'm 454 00:25:15,800 --> 00:25:17,760 Speaker 3: Tom Busby and this is Bloomberg. 455 00:25:28,640 --> 00:25:30,679 Speaker 2: I'm Tom Busby in New York with your global look 456 00:25:30,720 --> 00:25:33,120 Speaker 2: ahead at the top stories for investors. In the coming week. 457 00:25:33,280 --> 00:25:35,440 Speaker 2: We'll be getting a slow of economic data out of 458 00:25:35,560 --> 00:25:40,520 Speaker 2: China this week, including GDP, industrial production and retail sales data. 459 00:25:40,880 --> 00:25:43,800 Speaker 2: Let's get to Bloomberg Daybreak Asia hosts Brian Curtis and 460 00:25:43,960 --> 00:25:46,879 Speaker 2: Doug Krisner as we look for signs of recovery in 461 00:25:46,960 --> 00:25:48,000 Speaker 2: the Chinese economy. 462 00:25:48,320 --> 00:25:51,080 Speaker 4: Tom, China may be close to turning the corner on 463 00:25:51,160 --> 00:25:55,200 Speaker 4: its economic recovery, but the jury is still out. Manufacturing 464 00:25:55,280 --> 00:25:58,119 Speaker 4: picked up in March and risk assets have seen a 465 00:25:58,200 --> 00:26:01,080 Speaker 4: bounce of late, but consumer activity has lagged. 466 00:26:01,200 --> 00:26:04,160 Speaker 12: And in the coming week we'll get retail sales numbers 467 00:26:04,359 --> 00:26:07,120 Speaker 12: along with data on home prices that would be both 468 00:26:07,240 --> 00:26:10,080 Speaker 12: new and used. These data could give us some insight 469 00:26:10,280 --> 00:26:12,080 Speaker 12: into the health of the Chinese consumer. 470 00:26:12,440 --> 00:26:16,200 Speaker 4: Can consumers emerge from the doldrums and get the economy 471 00:26:16,280 --> 00:26:20,040 Speaker 4: going again? We put that question to Mark Conan at AIA. 472 00:26:20,160 --> 00:26:24,720 Speaker 13: Coming out of the pandemic and then uncertainty around policy, 473 00:26:24,960 --> 00:26:29,760 Speaker 13: the confusion around geopolitics, the weakness on the currency, the deflation, 474 00:26:29,960 --> 00:26:33,960 Speaker 13: the cut in rates, all of these have compounded upon sentiment, 475 00:26:34,119 --> 00:26:36,080 Speaker 13: and I think it's going to take a little bit 476 00:26:36,160 --> 00:26:38,679 Speaker 13: longer for people to recover from that and for us 477 00:26:38,720 --> 00:26:42,680 Speaker 13: to see a significant improvement within consumption. That's at an 478 00:26:42,760 --> 00:26:45,879 Speaker 13: aggregate level. But of course within that picture there are 479 00:26:45,920 --> 00:26:49,320 Speaker 13: those that are prospering, that are able to offer a 480 00:26:49,400 --> 00:26:52,840 Speaker 13: relative advantage and are continuing to make progress well. 481 00:26:52,960 --> 00:26:55,520 Speaker 4: Joining us now to discuss the plight of the Chinese 482 00:26:55,600 --> 00:26:59,640 Speaker 4: consumer is Eric ju Bloomberg economists covering China and Hong Kong, 483 00:27:00,040 --> 00:27:03,120 Speaker 4: and Jenny Marsh, team leader for a Greater China Eco Goz. 484 00:27:03,320 --> 00:27:05,439 Speaker 12: Welcome to you both. We're glad you can help us 485 00:27:05,560 --> 00:27:08,520 Speaker 12: take a look at what's happening with the Chinese domestic economy. 486 00:27:08,600 --> 00:27:11,240 Speaker 12: A moment ago Markcnin mentioned that there have been some 487 00:27:11,520 --> 00:27:15,080 Speaker 12: winners of late. Two areas of the economy seeing a 488 00:27:15,160 --> 00:27:17,960 Speaker 12: pickup are manufacturing and exports. 489 00:27:18,440 --> 00:27:21,480 Speaker 13: Exports so far this year have surprised on the upside 490 00:27:21,560 --> 00:27:23,639 Speaker 13: for China. As we've say in the rest of the 491 00:27:23,680 --> 00:27:27,920 Speaker 13: world has perhaps continued to grow more vigorously than was expected. 492 00:27:28,000 --> 00:27:31,880 Speaker 13: China has benefited from that, but that transition towards more 493 00:27:31,920 --> 00:27:34,800 Speaker 13: of a domestic focus for the economy is certainly a 494 00:27:34,920 --> 00:27:36,200 Speaker 13: long term policy. 495 00:27:36,720 --> 00:27:40,399 Speaker 4: That's Mark Conan at AIA talking about both internal and 496 00:27:40,680 --> 00:27:43,920 Speaker 4: external inputs into Chinese growth. We thought for the discussion 497 00:27:44,040 --> 00:27:46,680 Speaker 4: today that we would focus a little bit more on 498 00:27:46,920 --> 00:27:51,560 Speaker 4: domestic consumption and what it takes to get consumers going again. Jenny, 499 00:27:51,960 --> 00:27:55,400 Speaker 4: how important is it for the Chinese economy to see 500 00:27:55,480 --> 00:27:58,840 Speaker 4: some sort of turn up in consumption and is it coming. 501 00:27:59,240 --> 00:28:03,120 Speaker 14: It's absolutely crucial that they see turn up and upswinging 502 00:28:03,200 --> 00:28:06,879 Speaker 14: consumption because they cannot rely on the factory floor alone 503 00:28:07,000 --> 00:28:09,840 Speaker 14: to sort of turn the economy around. This year, there 504 00:28:09,920 --> 00:28:12,640 Speaker 14: have been some green shoots, you know, over the recent 505 00:28:12,760 --> 00:28:17,080 Speaker 14: Chingan holiday, torres spent more per trip than any time 506 00:28:17,200 --> 00:28:20,920 Speaker 14: since twenty nineteen, so you know that was encouraging, but 507 00:28:21,040 --> 00:28:23,600 Speaker 14: you know, outside these sort of big holiday events where 508 00:28:23,680 --> 00:28:26,439 Speaker 14: pent up demand is being released, there's still a lot 509 00:28:26,480 --> 00:28:29,840 Speaker 14: of pressures on people and the sort of the general household. 510 00:28:30,240 --> 00:28:31,600 Speaker 9: You know, the property crisis is. 511 00:28:31,600 --> 00:28:35,200 Speaker 14: Still weighing on confidence, you know, and you can see 512 00:28:35,920 --> 00:28:38,880 Speaker 14: that the CPI is sort of a reflection of that 513 00:28:38,960 --> 00:28:41,280 Speaker 14: week demand. You know that people are not buying enough 514 00:28:41,360 --> 00:28:44,760 Speaker 14: and there before prices are continuing to sort of feel 515 00:28:44,800 --> 00:28:46,400 Speaker 14: these deflationary pressures at the moment. 516 00:28:46,760 --> 00:28:49,640 Speaker 12: Eric, the service's economy is a very broad category. 517 00:28:49,760 --> 00:28:50,200 Speaker 1: We know that. 518 00:28:50,480 --> 00:28:52,280 Speaker 12: But when you look at the sentiment vis A VIV, 519 00:28:52,280 --> 00:28:55,640 Speaker 12: the official PMI data, what do we know about business 520 00:28:55,760 --> 00:28:57,840 Speaker 12: centiment in the services industries? 521 00:28:58,000 --> 00:29:00,760 Speaker 7: I think if you look to in my you know, 522 00:29:00,920 --> 00:29:04,760 Speaker 7: services in earlier this year, I think it's generally sure 523 00:29:04,880 --> 00:29:08,960 Speaker 7: that they're doing well. They'reing the holiday, but if you 524 00:29:09,240 --> 00:29:12,440 Speaker 7: look at peers outside of a holiday, you know, those consumption, 525 00:29:12,800 --> 00:29:16,200 Speaker 7: those high frequently data actually is show that people are 526 00:29:16,280 --> 00:29:19,560 Speaker 7: not really spending much except for the holiday. And even 527 00:29:19,600 --> 00:29:21,560 Speaker 7: if you look at holiday data, we just got the 528 00:29:21,640 --> 00:29:25,160 Speaker 7: early April holiday and the per day you know, the 529 00:29:25,440 --> 00:29:29,640 Speaker 7: capital spending was still not as strong as before, right, 530 00:29:29,760 --> 00:29:32,840 Speaker 7: so you see, yeah, lots of people are traveling, but 531 00:29:32,960 --> 00:29:35,920 Speaker 7: they're not really spending as much. So some part of 532 00:29:36,000 --> 00:29:38,680 Speaker 7: it can be, you know, some culture shift, right young people, 533 00:29:39,240 --> 00:29:41,920 Speaker 7: they no longer spend lots of money on shopping around. 534 00:29:42,080 --> 00:29:45,480 Speaker 7: They did more value experience, you know, in the travels. 535 00:29:45,880 --> 00:29:49,360 Speaker 7: And we also see similar patterns even in overseas tourism. 536 00:29:49,480 --> 00:29:53,720 Speaker 7: If we look at data from a visitor from China 537 00:29:53,880 --> 00:29:56,720 Speaker 7: in Hong Kong, in Japan, we did some anasis and 538 00:29:56,960 --> 00:30:01,280 Speaker 7: see it's a very similar story. People coming back to 539 00:30:01,600 --> 00:30:05,520 Speaker 7: those tourists vidits, but they're not already spending on the 540 00:30:05,560 --> 00:30:06,360 Speaker 7: mntrets before. 541 00:30:06,640 --> 00:30:09,120 Speaker 4: It seems like housing is at the root of a 542 00:30:09,160 --> 00:30:11,480 Speaker 4: lot of the spending issues. That people just don't feel 543 00:30:11,520 --> 00:30:14,960 Speaker 4: so confident with their overall wealth and about their security 544 00:30:15,280 --> 00:30:18,400 Speaker 4: economically going forward, and so we need to see some 545 00:30:18,560 --> 00:30:21,920 Speaker 4: improvement there. And Eric, let me put a question to 546 00:30:22,000 --> 00:30:25,280 Speaker 4: you that's tied to policy making. And we did see 547 00:30:25,640 --> 00:30:28,360 Speaker 4: a few newspapers talking about this just in the past 548 00:30:28,400 --> 00:30:31,480 Speaker 4: couple of days, about cities removing some of the lower 549 00:30:31,560 --> 00:30:34,680 Speaker 4: limits for mortgage rates on first time home buying and 550 00:30:34,880 --> 00:30:39,560 Speaker 4: generally just loosening the strings a little bit on housing policies. 551 00:30:40,200 --> 00:30:41,000 Speaker 4: Is that going to work? 552 00:30:41,160 --> 00:30:45,480 Speaker 7: I have to say, those incremental, those small steps. It 553 00:30:45,680 --> 00:30:49,000 Speaker 7: has proved that it's not working very well so far. 554 00:30:49,200 --> 00:30:51,760 Speaker 7: I think since the second half of last year, we've 555 00:30:51,840 --> 00:30:55,560 Speaker 7: seeing lots of you know, easing steps from local governments 556 00:30:55,600 --> 00:31:00,160 Speaker 7: and losing mortgage rates and you know, relaxing some home 557 00:31:00,200 --> 00:31:04,440 Speaker 7: purchaser rules. But it's all step steps, small loosening, and 558 00:31:05,200 --> 00:31:08,400 Speaker 7: we haven't seen any you know, big impacts from those policies. 559 00:31:08,760 --> 00:31:12,720 Speaker 7: So that's that suggests you probably need more aggressive, you know, 560 00:31:12,880 --> 00:31:17,000 Speaker 7: more proactive eating steps. Someone would suggest that you should 561 00:31:17,000 --> 00:31:20,200 Speaker 7: have relaxed, removed, just like Hong Kong, remove all the 562 00:31:20,360 --> 00:31:25,000 Speaker 7: home purchasing, you know, relaxed the restrictions especialty in the 563 00:31:25,080 --> 00:31:26,560 Speaker 7: Tier one cities in China. 564 00:31:26,760 --> 00:31:29,080 Speaker 12: Jenny. Last year, I think the government unveiled a plan 565 00:31:29,160 --> 00:31:33,560 Speaker 12: to boost household spending on everything from electric appliances to 566 00:31:33,680 --> 00:31:37,080 Speaker 12: furniture things like that. How is that working. Is it 567 00:31:37,240 --> 00:31:41,000 Speaker 12: been an effective prescription to try to revitalize a bit 568 00:31:41,040 --> 00:31:41,480 Speaker 12: of spending. 569 00:31:41,960 --> 00:31:42,479 Speaker 8: Not so far. 570 00:31:42,880 --> 00:31:45,440 Speaker 14: So this is the sort of cash for clunkers program 571 00:31:45,520 --> 00:31:47,720 Speaker 14: they rolled out, and it's really the government sort of 572 00:31:47,760 --> 00:31:52,520 Speaker 14: big swing at trying to boost consumer spending, essentially raising 573 00:31:52,600 --> 00:31:55,920 Speaker 14: the standards for electronics across a broad range of sectors, 574 00:31:56,360 --> 00:31:58,520 Speaker 14: forcing people to sort of hand in their old goods 575 00:31:58,560 --> 00:31:59,720 Speaker 14: and buy new ones. 576 00:32:01,200 --> 00:32:02,680 Speaker 9: It's very I think that it's going to. 577 00:32:02,680 --> 00:32:04,640 Speaker 14: Be rolled out sort of in a piecemeal way, province 578 00:32:04,720 --> 00:32:07,760 Speaker 14: by province, and we've been monitoring closely to sort of 579 00:32:08,000 --> 00:32:10,120 Speaker 14: watch for the beginning of this program, and we haven't 580 00:32:10,160 --> 00:32:12,600 Speaker 14: yet seen signs that it has sort of been put 581 00:32:12,640 --> 00:32:15,480 Speaker 14: into effect. But you know, the rollout has been quite 582 00:32:15,480 --> 00:32:17,520 Speaker 14: slow so far, so we're not going to see the 583 00:32:17,520 --> 00:32:19,440 Speaker 14: effects of it yet. It was a note this week 584 00:32:19,480 --> 00:32:22,280 Speaker 14: saying it could raise GDP by zero point nine percent 585 00:32:22,760 --> 00:32:25,320 Speaker 14: when you look at the industrial impact of everything that 586 00:32:25,360 --> 00:32:28,080 Speaker 14: would need to be manufactured for the program, so it 587 00:32:28,160 --> 00:32:30,040 Speaker 14: could be significant. But it's going to be rolled out 588 00:32:30,040 --> 00:32:32,880 Speaker 14: over a series of years and it hasn't yet come 589 00:32:32,920 --> 00:32:33,520 Speaker 14: into effect. 590 00:32:34,160 --> 00:32:38,240 Speaker 4: Recently, in a discussion about the latest CPI and PPI data, 591 00:32:38,280 --> 00:32:40,680 Speaker 4: we caught up with way Yaw, chief economist for the 592 00:32:40,720 --> 00:32:44,080 Speaker 4: Asia specific at stop Gen and it was kind of 593 00:32:44,160 --> 00:32:46,880 Speaker 4: interesting because you know, it was a mixed bag. You 594 00:32:47,000 --> 00:32:50,040 Speaker 4: had very negative PPI, but everybody expected that, and it 595 00:32:50,200 --> 00:32:53,920 Speaker 4: was in line consumer prices. As you mentioned earlier, Jenny, 596 00:32:54,200 --> 00:32:57,840 Speaker 4: they did advance, but only just just zero point one percent. 597 00:32:58,320 --> 00:33:01,920 Speaker 4: So what was interesting was I I mentioned to Wai yea, well, 598 00:33:01,960 --> 00:33:04,080 Speaker 4: at least that's a little bit of positive news, and 599 00:33:04,240 --> 00:33:06,920 Speaker 4: we can listen to her answer here. She also started 600 00:33:06,960 --> 00:33:08,400 Speaker 4: to bring in policy in China. 601 00:33:08,920 --> 00:33:10,680 Speaker 15: Maybe it's just a wee bit of good news, but 602 00:33:10,800 --> 00:33:14,360 Speaker 15: I think structurally things haven't really changed much. If you 603 00:33:14,440 --> 00:33:18,000 Speaker 15: look at economic situation in China, it continued to be 604 00:33:18,680 --> 00:33:21,440 Speaker 15: a challenge of not enough do miss the demand and 605 00:33:21,520 --> 00:33:25,360 Speaker 15: a lot of supply so and a policy on the 606 00:33:25,400 --> 00:33:29,640 Speaker 15: policy front, there is not much significant to address this issue. 607 00:33:29,960 --> 00:33:32,840 Speaker 4: So, Jenny, if we were looking at policy, if we had, 608 00:33:33,040 --> 00:33:35,200 Speaker 4: you know, a wish list of things that we thought 609 00:33:35,280 --> 00:33:37,600 Speaker 4: would be necessary to be done by the policy makers 610 00:33:38,040 --> 00:33:40,800 Speaker 4: to get consumers moving, what would be high on your list? 611 00:33:41,160 --> 00:33:44,160 Speaker 14: I think there are no quick fixes. I mean, they 612 00:33:44,200 --> 00:33:48,720 Speaker 14: could offer consumers sort of direct stimulus, I sort of 613 00:33:48,720 --> 00:33:51,200 Speaker 14: give them cash handouts to be spending. But you know, 614 00:33:51,280 --> 00:33:54,360 Speaker 14: if you do that, the underlyinging structural problems still remain right, 615 00:33:54,440 --> 00:33:57,960 Speaker 14: so you'll still have the property crisis, which is really 616 00:33:58,080 --> 00:34:00,640 Speaker 14: underpending household wealth and sort of the root of a 617 00:34:00,680 --> 00:34:03,240 Speaker 14: lot of the problems. You know, when Janet Yellen came 618 00:34:03,320 --> 00:34:07,360 Speaker 14: to Beijing last week, and she basically advocated sort of 619 00:34:07,400 --> 00:34:11,600 Speaker 14: a rethink of the Chinese economic policy in order to 620 00:34:11,680 --> 00:34:14,400 Speaker 14: boost consumption and rebalance the economy. And the things that 621 00:34:14,480 --> 00:34:17,840 Speaker 14: she was proposing were not short term suggestions. You know, 622 00:34:17,960 --> 00:34:22,440 Speaker 14: she was saying, improve pension security, make education more affordable, 623 00:34:23,120 --> 00:34:25,359 Speaker 14: you know, things that make people feel like they don't 624 00:34:25,400 --> 00:34:28,200 Speaker 14: need to keep saving. Because of this high household saving 625 00:34:28,280 --> 00:34:32,319 Speaker 14: rate in China, the social security net isn't there. If 626 00:34:32,360 --> 00:34:34,560 Speaker 14: something happens and you feel very ill, you know you're 627 00:34:34,560 --> 00:34:37,000 Speaker 14: going to have to pay for your medical care. You 628 00:34:37,080 --> 00:34:38,920 Speaker 14: know you need to say for your retirement because there 629 00:34:39,000 --> 00:34:43,120 Speaker 14: isn't a good state funded pension program. So this is 630 00:34:43,239 --> 00:34:46,040 Speaker 14: all part of the broader framework and there's no easy fix, 631 00:34:46,480 --> 00:34:49,239 Speaker 14: in my opinion, for getting people spending again. Obviously, if 632 00:34:49,239 --> 00:34:51,279 Speaker 14: things improve in the economy looks better, people will feel 633 00:34:51,600 --> 00:34:54,239 Speaker 14: more boyd. But you know, there's some big problems there, 634 00:34:54,280 --> 00:34:56,320 Speaker 14: and these are sort of deep seated spending habits. 635 00:34:56,520 --> 00:34:58,719 Speaker 12: So playing off that, Eric, I'm wondering, if you're a 636 00:34:58,800 --> 00:35:03,760 Speaker 12: policy maker, would you necessarily push banks into reducing deposit 637 00:35:03,960 --> 00:35:07,760 Speaker 12: rates as a way of discouraging savings and maybe forcing 638 00:35:07,880 --> 00:35:11,680 Speaker 12: some more money, more liquidity into the economy. 639 00:35:11,640 --> 00:35:14,120 Speaker 7: That could be helped. But I think the fundamental problem, 640 00:35:14,280 --> 00:35:18,200 Speaker 7: the Postumaker neutral address is the acceptation of the household 641 00:35:18,400 --> 00:35:19,360 Speaker 7: and the business. 642 00:35:19,640 --> 00:35:19,799 Speaker 8: Right. 643 00:35:19,920 --> 00:35:24,000 Speaker 7: So in the past, it's everybody is expecting that economy 644 00:35:24,040 --> 00:35:27,160 Speaker 7: is booming, right, the product market is booming, so I'm 645 00:35:27,200 --> 00:35:30,200 Speaker 7: going to you know, make more money and my property 646 00:35:30,320 --> 00:35:32,879 Speaker 7: is going to work more in the future, so it's 647 00:35:33,000 --> 00:35:35,640 Speaker 7: it's okay for me to you know, spend more now. 648 00:35:35,800 --> 00:35:38,239 Speaker 7: But I think now the expectation is kind of you 649 00:35:38,360 --> 00:35:42,240 Speaker 7: know reverse, right, So everybody was expecting, they're having probably 650 00:35:42,239 --> 00:35:46,680 Speaker 7: a harder time looking forward, especially you know, giving you 651 00:35:46,760 --> 00:35:50,080 Speaker 7: see lots of news about you know, some some financial 652 00:35:50,160 --> 00:35:54,120 Speaker 7: sector they're cutting salaries, right, They're cutting you know, payments. 653 00:35:54,239 --> 00:35:57,640 Speaker 7: So I think that the people's acceptation is not very 654 00:35:57,800 --> 00:36:00,719 Speaker 7: high at this moment with economy slow in with lots 655 00:36:00,760 --> 00:36:05,440 Speaker 7: of restrictive kind of regulation trying to you know, contain 656 00:36:06,040 --> 00:36:10,120 Speaker 7: the income growth, and that's put more pressure on you know, 657 00:36:10,239 --> 00:36:14,120 Speaker 7: people feeling if really my life is going to get better, 658 00:36:14,280 --> 00:36:17,480 Speaker 7: you know, looking forward, so I would probably you know, 659 00:36:17,920 --> 00:36:21,640 Speaker 7: spend save more and now just to prepare for words days. 660 00:36:21,760 --> 00:36:25,080 Speaker 4: There are some technical reasons too, sometimes where people don't spend. 661 00:36:25,120 --> 00:36:27,959 Speaker 4: For instance, the government just asked hotels to accept foreign 662 00:36:28,000 --> 00:36:32,040 Speaker 4: credit cards for people traveling. Could could the Chinese authorities 663 00:36:32,120 --> 00:36:36,040 Speaker 4: do more to to try to really stimulate domestic tourism, 664 00:36:36,200 --> 00:36:38,680 Speaker 4: light a fire there and even encourage people to go 665 00:36:38,760 --> 00:36:39,680 Speaker 4: to maccount. 666 00:36:39,640 --> 00:36:42,560 Speaker 7: I think people are really going there, but I'm not 667 00:36:42,600 --> 00:36:47,400 Speaker 7: sure if they're really spending to the casinos, because they 668 00:36:48,000 --> 00:36:51,200 Speaker 7: really they they're not as you know, as willing to 669 00:36:51,280 --> 00:36:54,800 Speaker 7: spend as before. So it's not only on spending money 670 00:36:54,840 --> 00:36:57,120 Speaker 7: I'm putting in good. It's also applied to, you know, 671 00:36:57,200 --> 00:36:58,480 Speaker 7: spending money around gambling. 672 00:36:58,760 --> 00:37:01,800 Speaker 12: Jenny, I'm curious about out the degree to which the 673 00:37:01,880 --> 00:37:04,680 Speaker 12: story on weak domestic demand is tied to a labor 674 00:37:04,719 --> 00:37:08,440 Speaker 12: market that may be struggling, particularly where young people are concerned. 675 00:37:08,560 --> 00:37:10,040 Speaker 12: Is that a part of the narrative here. 676 00:37:10,320 --> 00:37:13,920 Speaker 14: Yeah. You know, you've got very strong youth unemployment, and 677 00:37:14,080 --> 00:37:17,400 Speaker 14: even the overall employment rate last month erased all the 678 00:37:17,480 --> 00:37:20,600 Speaker 14: gains that had made since the previous six months, so 679 00:37:20,680 --> 00:37:24,440 Speaker 14: you're seeing declined and employment rates overall. So you have 680 00:37:24,560 --> 00:37:27,360 Speaker 14: this weak labor market. So the overall landscape for the 681 00:37:27,440 --> 00:37:30,520 Speaker 14: Chinese consumer is pretty poor. I do think on the 682 00:37:30,560 --> 00:37:32,600 Speaker 14: sort of the sentiment side, the flip of it is 683 00:37:32,800 --> 00:37:35,920 Speaker 14: after three years of COVID, there is pent up demand 684 00:37:36,280 --> 00:37:39,480 Speaker 14: for experiences and people are sort of excited about traveling. 685 00:37:39,560 --> 00:37:42,000 Speaker 14: We're seeing that in the numbers, but they're changing how 686 00:37:42,040 --> 00:37:44,600 Speaker 14: they're spending, so they're preferring to go to third and 687 00:37:44,680 --> 00:37:49,320 Speaker 14: fourth tier cities. It's not as high value spending as before. 688 00:37:50,000 --> 00:37:51,719 Speaker 4: We'll have to leave it there, Jenny, thanks so much 689 00:37:51,719 --> 00:37:54,479 Speaker 4: for joining us. Jenny Marsh, team leader for Greater China 690 00:37:54,600 --> 00:37:58,960 Speaker 4: ecogov at Bloomberg, and Eric ju Bloomberg economists covering China 691 00:37:59,120 --> 00:38:02,319 Speaker 4: and Hong Kong. I'm Brian Curtis here in Hong Kong 692 00:38:02,400 --> 00:38:05,440 Speaker 4: along with Doug Krisner. You can catch us every weekday 693 00:38:05,560 --> 00:38:08,239 Speaker 4: for Bloomberg Daybreak Asia, beginning at eight am in Hong 694 00:38:08,360 --> 00:38:11,120 Speaker 4: Kong and eight pm on Wall Street. Tom. 695 00:38:11,600 --> 00:38:13,920 Speaker 2: Thank you Brian, and thank you Doug. And that does 696 00:38:13,960 --> 00:38:16,680 Speaker 2: it for this edition of Bloomberg day Break Weekend. Join 697 00:38:16,760 --> 00:38:19,000 Speaker 2: us again Monday morning at five am Wall Street time 698 00:38:19,040 --> 00:38:21,560 Speaker 2: for the latest on the market's overseas and the news 699 00:38:21,640 --> 00:38:24,839 Speaker 2: you need to start your day. I'm Tom Buzby. Stay 700 00:38:24,920 --> 00:38:27,719 Speaker 2: with us. Top stories and global business headlines are coming 701 00:38:27,840 --> 00:38:28,640 Speaker 2: up right now.