WEBVTT - What To Expect From China's NPC 0:00:02.480 --> 0:00:10.480 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:10.520 --> 0:00:13.720 Daybreak Aisia podcast. I'm Doug Prisner. You can join Brian 0:00:13.800 --> 0:00:16.640 Curtis and myself for the stories, making news and moving 0:00:16.680 --> 0:00:19.560 markets in the APAC region. You can subscribe to the 0:00:19.600 --> 0:00:23.080 show anywhere you get your podcast and always on Bloomberg Radio, 0:00:23.320 --> 0:00:26.120 the Bloomberg Terminal, and the Bloomberg Business App. 0:00:26.960 --> 0:00:30.480 Jill Diesis who joins us Bloomberg China Eco Gov editor 0:00:31.080 --> 0:00:33.919 for the big meetings this week, the two sessions. So 0:00:34.120 --> 0:00:36.440 we've talked a lot about this generally, Jill, let me 0:00:36.479 --> 0:00:38.640 ask you something a little more specific here. 0:00:39.200 --> 0:00:40.120 Can we expect a. 0:00:40.200 --> 0:00:43.840 Kind of doubling down on the commitment from Chinese policymakers 0:00:44.680 --> 0:00:48.920 to become self sufficient in some key areas like AI 0:00:49.200 --> 0:00:51.280 and semiconductors and high tech? 0:00:52.800 --> 0:00:54.720 Well, yes, Brian. I think the one thing to keep 0:00:54.720 --> 0:00:57.720 in mind with this National People's Congress that we're gearing 0:00:57.800 --> 0:01:00.680 up for here is that a lot of these policy 0:01:00.720 --> 0:01:04.880 positions were likely charted out in December when key leaders 0:01:04.920 --> 0:01:07.640 met and kind of puddled together and laid out what 0:01:07.760 --> 0:01:10.399 the big priorities would be for twenty twenty four. We 0:01:10.520 --> 0:01:14.280 know that you know economic sustainability is certainly a major 0:01:14.319 --> 0:01:17.520 target for this year. We know that they really really 0:01:17.560 --> 0:01:19.640 want to play some big emphasis on growth, but a 0:01:19.640 --> 0:01:21.640 lot of those you know, mid to long term goals 0:01:21.680 --> 0:01:25.520 for China also rely on becoming more self sufficient, as 0:01:25.520 --> 0:01:30.520 you said, in particular areas like technology. We've seen, you know, 0:01:30.600 --> 0:01:33.639 over the last couple of years, a bigger push toward 0:01:34.319 --> 0:01:38.600 investments in electric vehicles, for example, or renewable energies, advanced technologies, 0:01:38.640 --> 0:01:40.880 those kinds of things. So I imagine that is going 0:01:40.920 --> 0:01:44.839 to continue to play a role in top policymakers thinking 0:01:44.880 --> 0:01:46.800 as they sort of you know, announced this big agenda 0:01:46.840 --> 0:01:49.880 for this year. Of course that the big balance, the 0:01:49.920 --> 0:01:53.240 tricky balance here for them, is going to be balancing 0:01:53.280 --> 0:01:55.880 those priorities against this need to also make sure that 0:01:55.920 --> 0:01:58.320 economic growth is sustainable for the course of the year. 0:01:58.600 --> 0:02:02.600 So, Jill, aside from espousing a lot of nationalism, which 0:02:02.600 --> 0:02:05.280 would be expected, I'm wondering whether our leadership is going 0:02:05.320 --> 0:02:08.320 to make any effort to be empathic, to say to 0:02:08.680 --> 0:02:12.480 the population overall, hey, we know that it's been challenging. 0:02:12.560 --> 0:02:15.440 We know that you're having a tough time believing in 0:02:15.600 --> 0:02:18.520 what we're doing. Maybe maybe that's an extreme example, but 0:02:18.600 --> 0:02:22.000 at least to kind of mirror the reality a little 0:02:22.040 --> 0:02:24.639 bit to saying, yeah, things are tough, we're on the case. 0:02:26.400 --> 0:02:29.079 Well, Doug, I think that at this point it would 0:02:29.120 --> 0:02:31.360 actually be a bit of a surprise if they go 0:02:31.440 --> 0:02:35.480 into a ton of details about economic challenges to say 0:02:35.520 --> 0:02:39.320 the least. But yeah, look, I think that you know, 0:02:39.400 --> 0:02:42.679 we've seen some measures. I mean, you know how this 0:02:42.840 --> 0:02:46.440 goes that Beijing is not necessarily you know, ever been 0:02:46.600 --> 0:02:49.239 incredibly transparent or candid about a lot of the ways 0:02:49.240 --> 0:02:51.480 in which they outline policy. A lot of it is more, 0:02:52.360 --> 0:02:55.320 you know, kind of plays out in actions that they take. 0:02:55.400 --> 0:02:58.040 For example, when we think back to just you know, 0:02:58.080 --> 0:03:01.079 this big multi trillion dollars doc route that we've been 0:03:01.120 --> 0:03:02.880 through within the past, you know, within the past eighteen 0:03:02.880 --> 0:03:05.120 months or so, and then a lot of the conversations 0:03:05.240 --> 0:03:06.800 or you know, a lot of the discussion around that 0:03:06.919 --> 0:03:11.520 within January February, what we saw in China in terms 0:03:11.520 --> 0:03:13.960 of reaction to that and acknowledgment of how much that 0:03:14.120 --> 0:03:17.400 was you know, an issue within the economy, within the 0:03:17.440 --> 0:03:21.120 stock markets, was you know, this big giant change at 0:03:21.120 --> 0:03:23.760 the top, you know, firing the market regulator or replacing 0:03:23.800 --> 0:03:26.239 with someone else. We saw a lot of you know, 0:03:26.360 --> 0:03:29.080 language from Premier Leagu Chong and others saying, you know, 0:03:29.440 --> 0:03:31.359 talking about the need to help. So I'd imagine that 0:03:31.400 --> 0:03:33.200 it would come in something in the form of something 0:03:33.240 --> 0:03:35.680 like that that feels you know, a little bit more, 0:03:36.320 --> 0:03:38.920 you know, Okay, then, yeah. 0:03:38.840 --> 0:03:41.360 I was chuckling as well, because you know, it's hard 0:03:41.400 --> 0:03:45.320 to think of Hijin Ping as an empathetic leader, you know, 0:03:45.440 --> 0:03:48.400 walking walking through the neighborhoods. You know, I feel your pain. 0:03:48.480 --> 0:03:52.320 I'm here to help. And Bill Clinton but but you know, yeah, exactly. 0:03:52.480 --> 0:03:54.640 But but actually I think Doug was spot on. I 0:03:54.640 --> 0:03:57.640 think in some way that's what investors are hoping for, 0:03:57.800 --> 0:04:01.120 that we'll get some sort of maya kulpa in a 0:04:01.200 --> 0:04:04.640 sense from policymakers that that you know, they want to 0:04:04.640 --> 0:04:06.480 make some changes, they want to make life a little 0:04:06.520 --> 0:04:10.280 bit easier for consumers. I'm just wondering. You know, we've 0:04:10.280 --> 0:04:13.600 seen a bounce in property here in Hong Kong after 0:04:13.640 --> 0:04:16.320 we removed a lot of these restrictions. Now they've done 0:04:16.839 --> 0:04:19.400 something of the sort in China, but maybe not quite 0:04:19.440 --> 0:04:23.520 as much across the board. Can we expect perhaps a 0:04:23.560 --> 0:04:25.320 few strong moves on property. 0:04:26.480 --> 0:04:28.680 I look bright and I think that I think that 0:04:28.720 --> 0:04:30.880 investors ultimately want a lot of things out of the 0:04:30.960 --> 0:04:33.760 Chinese government that they're not necessarily going to receive. And 0:04:33.800 --> 0:04:36.000 you know, I mean, we've seen that optimism play out 0:04:36.080 --> 0:04:38.200 time and time again over the past couple of years, 0:04:38.279 --> 0:04:41.040 only to be met with some disappointments. I will say, 0:04:41.400 --> 0:04:43.599 when it comes to the property sector, I'm not really 0:04:43.640 --> 0:04:46.720 sure that you would see massive amounts of new you know, 0:04:47.960 --> 0:04:50.479 you know, massive support for the property sector, a bunch 0:04:50.480 --> 0:04:53.600 of you know, unconventional measures to sort of help move 0:04:53.640 --> 0:04:56.920 things along. But we have seen I will I will 0:04:56.920 --> 0:05:00.640 acknowledge that we have seen Beijing, you know, take some 0:05:00.680 --> 0:05:03.720 measures already that at least, you know, it implied that 0:05:03.760 --> 0:05:06.240 they are thinking about new ways in which they need 0:05:06.279 --> 0:05:08.480 to you know, sort of transform the sector. I mean 0:05:08.720 --> 0:05:11.760 there's a new housing model that Beijing has been promoting 0:05:11.760 --> 0:05:15.760 fairly recently, involving building a portable housing, renovating urban villages. 0:05:16.600 --> 0:05:19.200 That could be something that comes up at this NPC. 0:05:20.120 --> 0:05:23.680 We've seen them also tap into different forms of funding. 0:05:23.760 --> 0:05:27.320 We have policy banks to try to facilitate a little 0:05:27.320 --> 0:05:30.240 bit more investment for the sectors. So through the through 0:05:30.240 --> 0:05:33.000 the people think of China. So there are some measures there. 0:05:33.000 --> 0:05:35.000 I'm just not really sure that we're going to see 0:05:35.000 --> 0:05:38.560 anything sort of radically new announced at this particulars. 0:05:38.720 --> 0:05:42.000 Yeah, so chill when it comes to government spending, do 0:05:42.080 --> 0:05:44.440 we know what we're likely to hear in terms of 0:05:44.920 --> 0:05:50.119 a deficit, you know, the amount of GDP that would 0:05:50.200 --> 0:05:53.600 I guess be sacrificed for a deficit. 0:05:54.920 --> 0:05:57.440 Yes, this is a really interesting one, Doug, and I 0:05:57.480 --> 0:05:59.360 think that probably one of the things that I'm most 0:05:59.480 --> 0:06:02.320 keen to look out for at the NPC this time around. 0:06:02.440 --> 0:06:07.680 So usually the government or historically the government hasn't really 0:06:07.760 --> 0:06:10.840 liked to see that fiscal deficit ratio so depth the 0:06:11.000 --> 0:06:13.800 GDP rise above three percent. That's been kind of a 0:06:13.880 --> 0:06:17.839 fairly fixed line for the government to consider. We did 0:06:17.920 --> 0:06:20.840 see that change though around the middle of last year, 0:06:20.880 --> 0:06:23.200 this is around October or so, where they made a 0:06:23.279 --> 0:06:26.920 very unusual media revision to the budget to essentially raise 0:06:26.960 --> 0:06:29.240 it to about three point eight percent. As they were 0:06:29.720 --> 0:06:32.080 you know, looking at you know, issuing a bit more 0:06:32.080 --> 0:06:34.880 sovereign debt sort of helped with an infrastructure projects. Now, 0:06:34.920 --> 0:06:40.080 the size of that, the amount actually you know, issued 0:06:40.120 --> 0:06:43.200 in debt wasn't massive by any stretch, but I think 0:06:43.200 --> 0:06:45.560 that it did signal something of a sea change in 0:06:45.600 --> 0:06:48.799 this philosophy about how much the central government actually actually 0:06:48.800 --> 0:06:50.520 has to help a lot of these debt ridden local 0:06:50.520 --> 0:06:54.599 governments with with spending and such. A lot of economistsy 0:06:54.640 --> 0:06:57.440 thinking that at this point, for the NPC, we might 0:06:57.520 --> 0:07:00.839 actually see them just chart the years start out saying, 0:07:01.080 --> 0:07:03.479 you know, maybe we'll we'll be willing to bend the 0:07:03.560 --> 0:07:05.480 rules a bit on that three percent line. Maybe we 0:07:05.560 --> 0:07:09.040 see something like that three point three percent physcal deficit ratio. 0:07:09.480 --> 0:07:11.720 So I think that that's that that's a really good 0:07:11.720 --> 0:07:12.400 one to look out for. 0:07:14.000 --> 0:07:16.960 I'll throw you a little bit of a curve ball. Demographics. 0:07:17.280 --> 0:07:20.000 Uh, is there a chance that we might see something 0:07:20.000 --> 0:07:24.640 along the lines of incentivizing young couples to have more children? 0:07:26.000 --> 0:07:29.200 Oh gosh, that's an interesting one. Yeah, I'm not sure. 0:07:29.360 --> 0:07:31.960 I think that, you know, certainly, there's been a lot 0:07:31.960 --> 0:07:35.800 of challenges to uh, you know, population growth within China. 0:07:35.960 --> 0:07:39.000 We you know, obviously saw indias or past China's the 0:07:39.040 --> 0:07:41.440 world with populist country. We've seen, you know, a lot 0:07:41.440 --> 0:07:44.200 of concerns about falling birth rates and the fact that 0:07:44.240 --> 0:07:47.440 you know, the removal of one child policies several years ago, 0:07:47.480 --> 0:07:49.880 and some other incentives haven't really done much to move 0:07:49.920 --> 0:07:52.840 the needle. I'm not I wonder whether that would actually 0:07:52.880 --> 0:07:55.480 come out of the NCC. It's a good question because 0:07:55.480 --> 0:07:59.000 what we have seen in the past from China is, 0:07:59.400 --> 0:08:03.760 you know, some more iterative policies announced on sort of 0:08:03.760 --> 0:08:06.160 an ad hoc basis. I think last year, maybe the 0:08:06.200 --> 0:08:09.840 year before, there were some announcements to try to encourage 0:08:09.840 --> 0:08:11.800 people to have more children, whether in the form of 0:08:11.840 --> 0:08:15.240 incentives or breaks on taxes and stuff like that. I'm 0:08:15.240 --> 0:08:17.040 not sure whether that's going to come out of the MPC, 0:08:17.280 --> 0:08:19.920 but I do think that that is pretty top of 0:08:20.000 --> 0:08:22.360 mind for policy makers because of a lot of those 0:08:22.440 --> 0:08:26.480 concerns about long term impacts that declining populations and Moller 0:08:26.520 --> 0:08:27.840 birth ranks can have on the economy. 0:08:28.160 --> 0:08:31.200 Have family for formation and the rest very quickly. Jill 0:08:31.280 --> 0:08:33.280 thirty seconds, what about military spending. 0:08:34.679 --> 0:08:36.920 Yes, I think that that's another one to look back for. 0:08:37.080 --> 0:08:40.480 I mean, look, national security is top of mind also. 0:08:40.800 --> 0:08:42.320 I mean there's many things that are top of mind. 0:08:42.320 --> 0:08:46.040 I feel for the Chinese government, but we've seen under 0:08:46.040 --> 0:08:49.400 sheet and pain obviously much more interest in building up 0:08:49.480 --> 0:08:52.280 national security. Will see if that translates into more militarios prodict. 0:08:52.920 --> 0:08:53.960 Jill, Thank you, Jill. 0:08:54.000 --> 0:09:06.719 Lisa Sloomberg, China ECOGOV editor, joining us in our studios now, 0:09:06.720 --> 0:09:07.840 Ben Sharple's. 0:09:07.400 --> 0:09:09.600 Bloomberry Energy and Commodities Editor. 0:09:10.200 --> 0:09:12.920 Ben. So, once again we see a little bit of 0:09:13.840 --> 0:09:15.760 back and forth between US and China. 0:09:15.840 --> 0:09:17.520 This is yet another one. 0:09:17.840 --> 0:09:20.280 There's something like three hundred and sixty million barrels of 0:09:20.280 --> 0:09:24.840 oil in the spr Not sure that the million barrels 0:09:24.880 --> 0:09:32.439 that China threw through its subsidiary Unipac America that Sinopek 0:09:32.520 --> 0:09:34.559 bought would make that much of a difference. Is this 0:09:34.559 --> 0:09:38.000 more symbolic or is this quite serious a development like this? 0:09:38.559 --> 0:09:41.200 I think you're right, Brian, it's more symbolic. It's politics 0:09:41.200 --> 0:09:44.840 at play here, point scoring if you like. You know, 0:09:44.880 --> 0:09:47.720 the White House pointed out that by law, the Energy 0:09:47.720 --> 0:09:50.840 Department is required to sell to the highest bidder, even 0:09:50.880 --> 0:09:54.480 if it's a foreign country, foreign country like China. So 0:09:54.880 --> 0:09:58.800 you've had during the Trump administration, they sold barrels to 0:09:58.840 --> 0:10:02.680 Petro China, which one of the biggest producers or consumers 0:10:02.760 --> 0:10:07.360 in China itself, and at the moment, the Energy Department 0:10:07.400 --> 0:10:09.840 is actually trying to fill the SPI. There was a 0:10:09.920 --> 0:10:12.640 huge release in twenty twenty two by the Biden administration 0:10:12.880 --> 0:10:16.760 to tame prices following the Russia's invasion of Ukraine. So 0:10:17.160 --> 0:10:19.439 it's not an actual They're not trying to sell barrels 0:10:19.440 --> 0:10:21.440 at the moment, They're trying to fill it, refill it. 0:10:21.440 --> 0:10:23.880 It's near a forty year low, So I think you 0:10:23.960 --> 0:10:25.960 hit the nail on the head early more early on. 0:10:26.240 --> 0:10:29.440 It is symbolic. It's politics a play in the meantime. 0:10:29.480 --> 0:10:32.280 When I think of China demand, I think of places 0:10:32.400 --> 0:10:36.520 like Iran, I think of places like Russia supplying the 0:10:36.679 --> 0:10:39.960 Chinese system. Are those sources still intact? 0:10:40.840 --> 0:10:44.640 Most certainly, China is a very opportunistic buyer, and they 0:10:44.679 --> 0:10:47.520 look for the cheapest barrels, and for those countries like 0:10:47.600 --> 0:10:52.360 Russia and Iran that have the barrels that have a 0:10:52.440 --> 0:10:55.200 range of sanctions on them, China is the logical place. 0:10:55.960 --> 0:10:57.559 There is a little bit at play at the moment 0:10:57.640 --> 0:10:59.880 that Russian barrels are getting a little bit cheaper than 0:10:59.880 --> 0:11:03.920 Ananium barrel, so there's almost a sort of head to 0:11:03.960 --> 0:11:07.400 heads of scenario going on there. So China is getting 0:11:07.720 --> 0:11:11.679 barrels even cheaper from both those those out there. So yeah, 0:11:11.200 --> 0:11:13.520 I know, if you want to sell barrels and you're 0:11:13.559 --> 0:11:15.240 selling it cheap than China, it's a place to go. 0:11:16.040 --> 0:11:18.679 So I think I mentioned the NPC meetings becaus we'll 0:11:18.679 --> 0:11:22.160 get the growth target. Somewhere around five percent is what's expected. 0:11:22.600 --> 0:11:24.520 I think a lot of people would be curious about 0:11:24.559 --> 0:11:28.280 how strong the demand is for oil in China, whether 0:11:28.360 --> 0:11:31.160 or not that's a decent barometer of economic growth there. 0:11:31.200 --> 0:11:33.360 And we know that China produces its own oil through 0:11:33.720 --> 0:11:36.920 Scenic Offshore and PetroChina Unshore and such, but they still 0:11:36.960 --> 0:11:39.440 import a lot of oil. How strong is the is 0:11:39.480 --> 0:11:40.559 the demand in China? 0:11:41.280 --> 0:11:44.960 China is the barometer in some sense of oil demand. 0:11:45.000 --> 0:11:46.920 It is the biggest importer in the world of oil. 0:11:47.040 --> 0:11:50.920 And what's happening in the property sector there the economy 0:11:51.040 --> 0:11:54.200 is of great concern for producers and people and sellers 0:11:54.200 --> 0:11:57.920 of oil. You had CNPC, the largest energy is China's 0:11:58.160 --> 0:12:04.160 largest energy producer, last week giving its lowest forecast in 0:12:04.240 --> 0:12:08.520 around a decade for all demand this year. Caveat being 0:12:08.559 --> 0:12:10.680 that it's coming off a high base in twenty twenty three, 0:12:10.760 --> 0:12:16.280 but a soft economy, the transition to electric vehicles. It's 0:12:16.320 --> 0:12:18.679 eating in to all demand for China at the moment, 0:12:18.720 --> 0:12:21.440 So it is course of concern and you can see 0:12:21.440 --> 0:12:23.319 that being reflected in prices at the moment. 0:12:23.679 --> 0:12:26.760 Yeah, it's interesting that you make that point because obviously 0:12:26.800 --> 0:12:28.760 this week we're going to learn a lot more on 0:12:28.960 --> 0:12:32.640 economic policy as the National People's Congress gets underway. But 0:12:32.720 --> 0:12:38.120 to the point about green technology and sustainable sources of energy, 0:12:38.400 --> 0:12:40.880 I would imagine as time goes on, China is going 0:12:40.920 --> 0:12:43.680 to become less and less a big buyer on the 0:12:43.720 --> 0:12:47.720 global market of crude and distalates. Is that a fair statement. 0:12:48.440 --> 0:12:50.400 That's a fair statement. But you also have to remember 0:12:50.400 --> 0:12:53.559 that China energy security is a big thing for China, 0:12:53.640 --> 0:12:56.920 so they will still keep buying and still keep buying 0:12:56.960 --> 0:13:00.720 crude to process into fuels. There will still be an 0:13:00.720 --> 0:13:03.040 element there. But if you look at it now and 0:13:03.080 --> 0:13:07.120 the transition, especially to electric vehicles, it's huge in China 0:13:07.160 --> 0:13:11.360 and it is displacing things like gasoline demand. You've had 0:13:12.320 --> 0:13:15.120 the CNPC saying that gasoline demand in China make peak 0:13:15.160 --> 0:13:17.920 this year. There's been a few forecasts over the last 0:13:17.960 --> 0:13:19.920 couple of years of the peak. They've called it early, 0:13:20.000 --> 0:13:24.960 but it's certainly looking like that gasoline demand is starting 0:13:25.000 --> 0:13:26.400 to wane in China. 0:13:26.559 --> 0:13:28.560 Then the other big story this morning on the oil 0:13:28.600 --> 0:13:31.560 front was OPEK Plus extending its oil cuts until the 0:13:31.640 --> 0:13:34.440 end of June. Speaking of Symbolis, I mean, what is 0:13:34.480 --> 0:13:37.160 the gap between what they say they're doing and you 0:13:37.240 --> 0:13:40.080 know how religious are these cuts with the actual output? 0:13:40.760 --> 0:13:43.000 Well, you know, the devil is in the detail there. 0:13:43.320 --> 0:13:45.600 We have to wait to see the numbers, the monthly 0:13:45.640 --> 0:13:48.040 numbers that come out from OPEC to see whether they 0:13:48.080 --> 0:13:53.280 are adhering to it. It was largely expected. The market 0:13:54.520 --> 0:13:56.760 has some problems with China demand at the moment, it 0:13:56.800 --> 0:14:00.440 has some problems with non OPEC supply, especially US shelled 0:14:00.520 --> 0:14:03.679 supply increasing. So there are those elements where it is 0:14:03.720 --> 0:14:05.680 putting pressure on the price. And you saw the reaction 0:14:05.720 --> 0:14:08.040 in prices today. It didn't do much right, It hasn't 0:14:08.040 --> 0:14:11.240 done much at all, and that's largely because the market 0:14:11.280 --> 0:14:15.240 is expecting it. Oil has traded in a narrow, tight 0:14:15.400 --> 0:14:16.640 range of about ten dollars. 0:14:16.440 --> 0:14:18.520 A barrel this year. Is the market just saturated now? 0:14:18.840 --> 0:14:22.200 The market is? You know what the market is looking 0:14:22.200 --> 0:14:24.880 out for is probably the question that a lot of 0:14:24.880 --> 0:14:27.240 people are asking. If you look at prompt time spreads. 0:14:27.320 --> 0:14:29.640 It is tightening. It is showing a tightening in the market. 0:14:29.720 --> 0:14:34.880 But usually when OPEK release says something like this, announces 0:14:34.920 --> 0:14:36.680 something like this, you get a strong reaction. But we're 0:14:36.680 --> 0:14:39.080 not seeing it this time, so there is some caution 0:14:39.120 --> 0:14:40.040 in the market at the moment. 0:14:40.280 --> 0:14:42.440 Are most of the refiners in China set up to 0:14:43.200 --> 0:14:45.560 work with sweet crude or sour crude? 0:14:46.600 --> 0:14:50.480 Look, you know, the Chinese are very good at adapting 0:14:50.640 --> 0:14:53.880 to whatever sources that they can get. You know, you've 0:14:53.880 --> 0:14:56.440 got the teapots, You've got a lot of the big 0:14:56.640 --> 0:15:02.200 new flash refineries that are huge in terms of global perspective. 0:15:02.280 --> 0:15:05.080 So you know, whatever crew that they need, they can 0:15:05.120 --> 0:15:08.080 adjust and they can work to process it because they 0:15:08.080 --> 0:15:10.080 are opportunistic bars and they use a lot of crew 0:15:10.640 --> 0:15:11.240 smart money. 0:15:11.280 --> 0:15:14.920 Now what's it saying for WTI a barrel. It's at 0:15:14.920 --> 0:15:17.600 eighty right on the button just about over the course 0:15:17.600 --> 0:15:18.120 of this year. 0:15:19.920 --> 0:15:22.600 I mean it's tough to say. It's tough to say. 0:15:22.680 --> 0:15:25.000 Yeah, if you look at the time spreads and you 0:15:25.040 --> 0:15:27.360 take that as a measure the market, it is showing 0:15:27.360 --> 0:15:30.080 the market tightening. So I would say prices are going 0:15:30.160 --> 0:15:31.240 up how far? 0:15:31.480 --> 0:15:32.120 How quickly. 0:15:32.280 --> 0:15:36.000 Is the big question here because there are competing factors. 0:15:36.040 --> 0:15:39.160 There's headwindsor's tailwinds. There's China, there's no OPEC supply. There's 0:15:39.160 --> 0:15:42.520 also the geo politics in the Middle East that are 0:15:42.560 --> 0:15:46.000 throwing up that element. So if if I had to 0:15:46.000 --> 0:15:47.760 make a call, I'd say it's going up, but it's 0:15:47.760 --> 0:15:49.000 going up slowly, maybe. 0:15:48.800 --> 0:15:50.280 Eighty to eighty five or something like that. 0:15:50.920 --> 0:15:53.760 All right, Ben, thanks very much, real pleasure. Ben Sharples, 0:15:53.800 --> 0:16:06.200 Bloomberry Energy and Commodities Editor. We're joined by I mentioned 0:16:06.320 --> 0:16:09.920 pay political scientists and fellow at Claremont McKenna College, and 0:16:09.960 --> 0:16:11.960 the Bloomberg opinion columnists. 0:16:12.320 --> 0:16:12.760 So mention. 0:16:12.960 --> 0:16:16.320 It's no small thing really to say that the economy 0:16:16.520 --> 0:16:18.960 will be the top priority. But I think a lot 0:16:19.000 --> 0:16:21.400 of investors would like to see, you know, put your 0:16:21.400 --> 0:16:24.000 money where your mouth is. Do you agree with that 0:16:24.160 --> 0:16:25.920 notion that we put there at the end of the 0:16:26.000 --> 0:16:31.200 story about basically economists expecting you know, growth friendly stuff 0:16:31.240 --> 0:16:33.800 but you know, no real big statement. 0:16:35.480 --> 0:16:39.000 Yeah, I think you're basically right, because why people hear 0:16:39.040 --> 0:16:44.520 a bunch of retic trying to boast of people's confidence 0:16:44.640 --> 0:16:49.880 in the leadership, but we are doing such empty talk 0:16:51.320 --> 0:16:55.200 is not going to do any anything to make people 0:16:55.240 --> 0:17:00.480 confident about the Chinese economic prospects. What we need is 0:17:00.560 --> 0:17:03.800 really a set of very specific policies. I think this 0:17:03.880 --> 0:17:07.520 is where the Chinese government will be challenged during the 0:17:07.560 --> 0:17:11.639 next ten days when the annual session of the parliament 0:17:12.000 --> 0:17:12.840 is actually going on. 0:17:13.560 --> 0:17:15.680 Minchen, Do you think that there will be an honest 0:17:15.680 --> 0:17:18.800 assessment of how weak the economy is right now? Will 0:17:18.880 --> 0:17:20.760 leadership kind of admit the challenges? 0:17:22.200 --> 0:17:25.159 Yeah, it's interesting. I think they will do themselves a 0:17:25.240 --> 0:17:29.120 favor by being honest, but this is unlikely. They're going 0:17:29.160 --> 0:17:33.760 to put out a brave phase to put the Spain 0:17:34.440 --> 0:17:38.320 on the economy, and they've been doing this for the 0:17:38.359 --> 0:17:42.120 last year, frankly, but the market has not turned. So 0:17:43.440 --> 0:17:45.639 I think we all hope they will be honest, but 0:17:45.920 --> 0:17:47.159 it's unlikely to happen. 0:17:48.480 --> 0:17:50.520 Mintion, you said that what we need, you know, what 0:17:50.640 --> 0:17:54.840 they need is very specific policies. They believe that they 0:17:54.880 --> 0:17:58.359 have been coming out with very specific policies, and in fact, 0:17:58.640 --> 0:18:01.280 it seems like investors are saying it's too specific. What 0:18:01.320 --> 0:18:05.440 we need is more muscle, and I guess you're suggesting 0:18:05.480 --> 0:18:06.639 it's not likely to happen. 0:18:07.640 --> 0:18:10.399 Yeah, well, my expectations are very low. Of course, I 0:18:10.440 --> 0:18:13.720 would like to be surprised. On the upside, I think 0:18:13.760 --> 0:18:18.639 what they'd be doing is some dribble dripping a little 0:18:18.640 --> 0:18:23.200 bit of stimulus, cutting reserve rates, cutting some interest rates. 0:18:23.800 --> 0:18:26.679 They're not putting real money, which is fiscal spending on 0:18:26.760 --> 0:18:30.840 the line. I think what is really needed is fiscal spending. 0:18:30.840 --> 0:18:34.520 We're not talking about huge package, but say two additional 0:18:34.560 --> 0:18:39.280 percent going into the pockets of consumers rather than building 0:18:39.400 --> 0:18:42.399 extra infrastructure, extra real estate. 0:18:43.080 --> 0:18:46.600 Does that necessarily mean that the government will allow the 0:18:46.800 --> 0:18:49.560 budget deficit to increase in a meaningful way. 0:18:50.800 --> 0:18:54.960 Yes, I think if they want to stimulate the economy, 0:18:55.000 --> 0:18:58.879 if they really want to change people's perception of groom 0:18:58.920 --> 0:19:04.680 and doom, have to incur a much bigger budget deficit. Otherwise, 0:19:04.720 --> 0:19:09.160 if it go forward with needed gross the budget deficit 0:19:09.280 --> 0:19:12.159 will continue to grow, because right now they do have 0:19:12.160 --> 0:19:16.560 a budget deficit of something like a leaf nominally four 0:19:17.080 --> 0:19:20.480 to five percent real term, probably close to eight percent, 0:19:20.560 --> 0:19:24.640 which is huge. If the growth goes up, the budget 0:19:24.680 --> 0:19:26.080 deficit will actually come down. 0:19:27.800 --> 0:19:29.840 So we'll probably hear from Lee Cheong, you know, these 0:19:29.880 --> 0:19:32.720 types of words that the economy is the priority and 0:19:33.119 --> 0:19:35.080 that you know, they'll be pulling out all the stops 0:19:35.080 --> 0:19:38.679 to get it moving. But do you think that Hi 0:19:38.760 --> 0:19:42.280 Jinping himself has the same sort of commitment to the 0:19:42.320 --> 0:19:46.320 economy And is there any sort of vehicle from which 0:19:46.359 --> 0:19:49.200 he can, you know, make those comments or statements. 0:19:49.880 --> 0:19:53.160 Oh yes, I think this is where the next few 0:19:53.240 --> 0:19:57.880 days will be really interesting time to watch because according 0:19:57.960 --> 0:20:02.440 to protocol or custom, she is going to visit several 0:20:02.800 --> 0:20:08.400 regional delegations and he'll give a speech. He's not going 0:20:08.440 --> 0:20:11.359 to give a long speech at the plenary session, but 0:20:11.400 --> 0:20:15.560 he's going to give a speech at regional sessions and 0:20:15.600 --> 0:20:19.280 we'll see how what he says about economy and what 0:20:19.359 --> 0:20:23.200 he says is really sort of going to be sort 0:20:23.200 --> 0:20:24.960 of a put on the microscope. 0:20:25.200 --> 0:20:26.879 One of the things that I think leadership has been 0:20:26.960 --> 0:20:30.439 challenged with is abandoning the old style playbook in favor 0:20:30.480 --> 0:20:33.840 of something that's a little bit more contemporary. Speaking of 0:20:34.040 --> 0:20:36.440 President She, one of the mantras that he has been 0:20:36.840 --> 0:20:40.959 issuing over the last year and a half at least 0:20:41.440 --> 0:20:44.240 is this notion of high quality economic development. Do you 0:20:44.280 --> 0:20:46.879 think that's going to remain key? Is that a critical theme? 0:20:47.600 --> 0:20:47.760 Oh? 0:20:47.840 --> 0:20:50.399 Yes, this is the mantra, this is the slogan, but 0:20:51.160 --> 0:20:54.760 you know, his understanding of high quality differs from a 0:20:54.800 --> 0:20:57.480 lot of other people's understanding of high quality. What he 0:20:57.600 --> 0:21:03.280 means by a high quality is ipech manufacturing, but that 0:21:03.440 --> 0:21:06.560 is a small segment of the Chinese economy. I think 0:21:06.600 --> 0:21:11.720 real high quality is overall productivity, rising income across the board. 0:21:12.200 --> 0:21:16.080 That is true high quality. But that is unlikely to 0:21:16.119 --> 0:21:18.760 be the government's policy mention. 0:21:19.640 --> 0:21:22.760 If that language isn't right, you know, let's pivot to 0:21:22.920 --> 0:21:26.600 what's the kind of language that global investors would need, 0:21:26.680 --> 0:21:29.000 because you know, there's really been a sense here of 0:21:29.119 --> 0:21:33.600 late that investors are kind of detaching from China. They're 0:21:33.640 --> 0:21:35.879 giving up to a certain degree. You know, you just 0:21:35.920 --> 0:21:40.520 hear it in comments from strategists, and you know outside 0:21:40.920 --> 0:21:44.480 the country and the West of people talking about the 0:21:44.520 --> 0:21:47.080 attraction of the Chinese economy is getting less and less 0:21:47.080 --> 0:21:50.520