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Speaker 1: Let's talk about the China economy though. Tal Wang joins

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Speaker 1: US Head of Asia Economics and Chief China Economist at

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Speaker 1: UBS Investment Bank to discuss China's economic growth and outlook.

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Speaker 1: We have had Nomura already this morning cutting their forecast

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Speaker 1: for twenty three and two, but we're almost at the

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Speaker 1: end of that year. How do you see, teal Wang?

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Speaker 1: I guess the ongoing concerns about COVID, particularly when you

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Speaker 1: look at these protests at the fox con plant hampering growth. Hi, yes, um,

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Speaker 1: good morning, good evening. So on China, we have already earlier,

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Speaker 1: I think, when we saw the high frequency data from

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Speaker 1: out of October being very weak, we already expected the

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Speaker 1: fourth quarter and first quarter next year to have a

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Speaker 1: weaker growth momentum compared to the third quarter. So our

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Speaker 1: growth outlook is around three percent growth for this year

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Speaker 1: and four and a half percent for twenty three UM.

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Speaker 1: Although I think the the COVID restrictions has been tied,

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Speaker 1: I think the recent signal shows confirms our baseline forecasts

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Speaker 1: that they will be easing from the spring next year onwards.

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Speaker 1: And property policy of course have turned and that also

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Speaker 1: affirms ourgue that property activity should um stabilize soon and

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Speaker 1: rebound from second quarter next year onwards. But maybe we

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Speaker 1: have easing as soon as the weekend. I mean, is

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Speaker 1: it possible that we get a cut in the triple R. Yeah.

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Speaker 1: On macro policy, yes, I think the State Council already

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Speaker 1: called for using triple R and other monetary policy measures

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Speaker 1: so on. On the macro policy front. Indeed, we could

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Speaker 1: expect we could see a triple OUR cut um. I

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Speaker 1: think compared though to the property policy easing and the

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Speaker 1: signaling of an exit plan on COVID policy. Uh, the

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Speaker 1: triple OUR cut may may not be um as significant

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Speaker 1: I think for activities, but of course everything helps. Um,

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Speaker 1: we could see further monetary and fiscal easing ahead COVID policy,

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Speaker 1: and this adherence district committing to these lockdowns or snap

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Speaker 1: lockdowns kind of just offsetting the positivity that we've seen

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Speaker 1: on their own sixteen point plan for the property sector

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Speaker 1: for example. I mean, you've kind of got this sort

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Speaker 1: of trying to help the economy at the same time

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Speaker 1: you're stifling it too well. I think on COVID policy,

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Speaker 1: we never expected um significant easy in the winter months,

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Speaker 1: given that cases are you know, unlikely to rise and

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Speaker 1: we are seeing that increasing, but getting rid of the

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Speaker 1: quarantine of secondary close contact is very important to prevent

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Speaker 1: shouting down more areas and quarantine more people. And most importantly,

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Speaker 1: I think that COVID policy announcement was about getting people

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Speaker 1: UH to increase vaccination UM, increasing booster shark preparing drugs

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Speaker 1: and hospital facilities. I think it's very clear that the

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Speaker 1: government has an accent plan, but in the winter months,

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Speaker 1: I think they're not ready UM and cases are rising,

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Speaker 1: so the implementation of current restrictions will still be relatively tied.

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Speaker 1: But I think the most important thing is the end

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Speaker 1: is inside. Well, the COVID story really is the dominant

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Speaker 1: theme here. I mean, we can talk about the property

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Speaker 1: market and whether or not you're expecting stability going forward.

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Speaker 1: Given the fact that after the Party Congress some initiatives

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Speaker 1: a plan at least was rolled out, I'm wondering whether

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Speaker 1: or not they're going to be persistent credit worries away

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Speaker 1: from property for some time given the economic weakness that

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Speaker 1: we're describing. Well, I think in the economy, the biggest

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Speaker 1: you know, credit risk is related to the to the property.

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Speaker 1: The government had been easy throughout this year, it was

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Speaker 1: not sufficient, so the sixteen point announcement was really a

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Speaker 1: turning point in our view in their attitude towards the

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Speaker 1: property developers, and has been a very comprehensive approach including

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Speaker 1: you know, extending those more loans, more bondy issuance, trust products,

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Speaker 1: and the easing of the pre sales proceeds. So I

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Speaker 1: think that will help significantly delivering funding to developers and

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Speaker 1: hence reduced the credit risk and therefore also the spill

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Speaker 1: over effect into the rest of the economy. Um for

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Speaker 1: the rest of the economy, I think some sm e

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Speaker 1: s obviously have been suffering, but there they usually don't

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Speaker 1: get a lot of loans and they're you know, the

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Speaker 1: bank's exposure to sm E s H in terms of

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Speaker 1: size is relatively small. So I think the turning point

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Speaker 1: on property policy easing is very significant. Yeah, you've done

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Speaker 1: a bit of research into this, so just tell us

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Speaker 1: a little bit more about the impact of the role

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Speaker 1: the banks are going to play in supporting the property sector,

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Speaker 1: because you're saying some of the large s a banks

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Speaker 1: could be could be laggeds here. Uh So, the largest

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Speaker 1: of events has been told by the regulators again this

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Speaker 1: weekend right to increase landing um. They have been reluctant

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Speaker 1: to land to the developers given the risk associated with

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Speaker 1: with the property sector. But now I think the regulators

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Speaker 1: are telling them that they should extend the loans the

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Speaker 1: expiring and their loan classification would not be changed. They

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Speaker 1: should lend to these ongoing projects or suspended projects that

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Speaker 1: need funding to continue construction, and then should there be

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Speaker 1: MPOs rising from it, credit offers or would not be

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Speaker 1: held responsible for lack of due diligence, so giving them

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Speaker 1: a lot of leeway um, and also basically telling them

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Speaker 1: that the loan concentration ratio, which was another limit imposed

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Speaker 1: on banks in twenty that will be extended until further

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Speaker 1: notice as well. So they are telling banks to basically

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Speaker 1: support the property sector, and I think that's UM, that's

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Speaker 1: going to be quite helpful. Of course, that means banks

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Speaker 1: are doing national service to some extent, but I think

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Speaker 1: if they didn't, the negative impact of a deeper property

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Speaker 1: downturn on their longe sheet would be even worse. Ta Wang,

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Speaker 1: thank you so much for being with us. Tao Wang

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Speaker 1: is ahead of Asia Economics also chief China economist at

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Speaker 1: UBS Investment Bank, joining us from right outside Princeton, New Jersey.

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Speaker 1: Here on daybreak, Asia