1 00:00:00,360 --> 00:00:05,160 Speaker 1: He sings a love song as we go along Wagon 2 00:00:05,320 --> 00:00:11,400 Speaker 1: in Winter Wonderland, the medal we can build the slowm 3 00:00:14,800 --> 00:00:18,320 Speaker 1: Hello Stephanomics. Here the podcast that brings you the global economy. 4 00:00:18,360 --> 00:00:21,360 Speaker 1: And yes it does feel a little too soon for 5 00:00:21,440 --> 00:00:25,640 Speaker 1: Winter Wonderlands, but it is December, the month when shopkeepers 6 00:00:25,680 --> 00:00:28,720 Speaker 1: around Europe usually make most of their profit for the year. 7 00:00:29,120 --> 00:00:32,800 Speaker 1: And thanks to President putting the Christmas lights that typically 8 00:00:32,880 --> 00:00:36,120 Speaker 1: lure people into the central shopping districts aren't going to 9 00:00:36,200 --> 00:00:40,360 Speaker 1: be burning so brightly or as long. We're transporting you 10 00:00:40,440 --> 00:00:43,199 Speaker 1: to Zurich for that story. In a moment with a 11 00:00:43,320 --> 00:00:46,960 Speaker 1: cold front about to hit Europe, I also are star 12 00:00:47,080 --> 00:00:51,800 Speaker 1: columnist Xavier Blast an economist May Vakuza whether European governments 13 00:00:51,800 --> 00:00:56,240 Speaker 1: have done enough to put improve European energy supplies. If 14 00:00:56,280 --> 00:01:00,480 Speaker 1: European homes do stay warm through this winter, it turns 15 00:01:00,480 --> 00:01:03,960 Speaker 1: out they'll partly have China's COVID zero policies to thank. 16 00:01:04,680 --> 00:01:07,399 Speaker 1: So to round off this week's show, we have a 17 00:01:07,440 --> 00:01:10,640 Speaker 1: quick update from China government reporter Calum Murphy on the 18 00:01:10,680 --> 00:01:13,319 Speaker 1: protests that broke out earlier this week in more than 19 00:01:13,360 --> 00:01:18,240 Speaker 1: twenty Chinese cities. But first that story from Bloomberg Economy 20 00:01:18,280 --> 00:01:25,640 Speaker 1: reporter Bastition Ben Wrath in Zurich snowboard and we're selling 21 00:01:25,680 --> 00:01:28,360 Speaker 1: snowboarn in ski apparel. If people don't want to come 22 00:01:28,360 --> 00:01:31,000 Speaker 1: into town anymore to buy something like this and instead 23 00:01:31,000 --> 00:01:34,840 Speaker 1: only shop online, that hurts us very very much. That 24 00:01:34,959 --> 00:01:38,520 Speaker 1: was Tim Stickle. For thirty years now, his store called 25 00:01:38,600 --> 00:01:41,520 Speaker 1: rail Slide, has been the go to place for everything 26 00:01:41,560 --> 00:01:46,040 Speaker 1: related to skating and snowboarding in Frankfort, Central Germany. It's 27 00:01:46,040 --> 00:01:50,400 Speaker 1: located very conveniently. Shoppers can find it downtown, right between 28 00:01:50,440 --> 00:01:53,960 Speaker 1: Frankfort's style main Sharping Street and the rum Or Square 29 00:01:54,000 --> 00:01:56,640 Speaker 1: with its famed Christmas market. In the run up to 30 00:01:56,680 --> 00:01:59,440 Speaker 1: the holidays, that usually brings a lot of foot traffic 31 00:01:59,480 --> 00:02:02,120 Speaker 1: into a store war which shop is looking for snowboards, 32 00:02:02,200 --> 00:02:05,760 Speaker 1: jackets and gloves to put under the tree. But this 33 00:02:05,840 --> 00:02:10,680 Speaker 1: year things are different. Russia invaded Ukraine, which plans Europe's 34 00:02:10,680 --> 00:02:14,120 Speaker 1: relations with its main fuel provider into an ice age. 35 00:02:14,720 --> 00:02:17,600 Speaker 1: Energy prices on the continent are starring and governments are 36 00:02:17,639 --> 00:02:22,400 Speaker 1: looking for ways to save natural gas and electricity. In 37 00:02:22,440 --> 00:02:27,040 Speaker 1: this situation, Christmas lights have become a comparatively easy sacrifice 38 00:02:27,120 --> 00:02:30,919 Speaker 1: to cut down on energy use. European streets are traditionally 39 00:02:30,919 --> 00:02:34,800 Speaker 1: decorated with sometimes thousands of twinkling stars and fairy lights 40 00:02:34,840 --> 00:02:37,880 Speaker 1: for the season, but now more than a dozen cities 41 00:02:38,000 --> 00:02:42,520 Speaker 1: like Paris, London, Copenhagen, Zurich and Berlin have cut their lights, short, 42 00:02:42,760 --> 00:02:47,639 Speaker 1: reduced the area, or even outright band them. Frankfort is 43 00:02:47,680 --> 00:02:50,359 Speaker 1: among them, cutting large light displays and a number of 44 00:02:50,440 --> 00:02:54,040 Speaker 1: Christmas trees. For retailers like Tim, this is a cause 45 00:02:54,080 --> 00:02:56,960 Speaker 1: for concern. He doesn't have an online shop, so he's 46 00:02:57,000 --> 00:03:00,160 Speaker 1: dependent on people coming into town. Since the city year, 47 00:03:00,200 --> 00:03:03,560 Speaker 1: Frankfurt has also decided not to heat the toilets on 48 00:03:03,600 --> 00:03:07,240 Speaker 1: the Christmas market this year, another energy saving measure. He 49 00:03:07,360 --> 00:03:10,040 Speaker 1: worries that many people are going to stay home and 50 00:03:10,120 --> 00:03:15,160 Speaker 1: just shop online. This is the most important time of 51 00:03:15,200 --> 00:03:18,040 Speaker 1: the year. I'll say that around Easter we sell a lot, 52 00:03:18,080 --> 00:03:21,040 Speaker 1: and then at Christmas. I don't want to name precise proportions, 53 00:03:21,080 --> 00:03:23,560 Speaker 1: but Christmas does stand for a very, very large part 54 00:03:23,639 --> 00:03:29,120 Speaker 1: of our revenue. Worries about the holiday sales are echoed 55 00:03:29,120 --> 00:03:33,520 Speaker 1: throughout Europe, especially as other indicators have already suggested consumers 56 00:03:33,600 --> 00:03:36,840 Speaker 1: might spend a lot less on Christmas this year. Disposable 57 00:03:36,880 --> 00:03:41,080 Speaker 1: incomes shrun almost five percent globally between this summer and last. 58 00:03:41,200 --> 00:03:45,200 Speaker 1: According to recent figures from the Organization for Economic Cooperation 59 00:03:45,240 --> 00:03:49,200 Speaker 1: and Development, high energy prices and rising inflation rates are 60 00:03:49,240 --> 00:03:53,000 Speaker 1: eating away on the money people can spend. For retail experts, 61 00:03:53,040 --> 00:03:55,720 Speaker 1: this puts a big question mark over the likely success 62 00:03:55,720 --> 00:03:58,720 Speaker 1: of this year's holiday season. He is Marcel Staffel, who 63 00:03:58,760 --> 00:04:04,840 Speaker 1: leads the Council of Shopping Places in Switzerland. As it's 64 00:04:04,880 --> 00:04:07,760 Speaker 1: hard to make any forecasts because you always forecast based 65 00:04:07,800 --> 00:04:10,360 Speaker 1: on past data, but this year we had so many 66 00:04:10,400 --> 00:04:13,560 Speaker 1: out of the ordinary variables that you basically can't do that. 67 00:04:14,360 --> 00:04:17,520 Speaker 1: Going by consumer sentiment, it's certainly at an all time low. 68 00:04:18,040 --> 00:04:21,640 Speaker 1: You would expect catastrophic holiday sales. Judging from that, I 69 00:04:21,640 --> 00:04:24,760 Speaker 1: hope it won't be quite as severe as that absolute 70 00:04:24,880 --> 00:04:30,560 Speaker 1: tief stunt that Mustafa skin. But does cutting back on 71 00:04:30,720 --> 00:04:34,200 Speaker 1: nighttime lighting even makes sense? A closer look at the 72 00:04:34,240 --> 00:04:37,919 Speaker 1: power consumption of lights suggests that might actually not be 73 00:04:38,040 --> 00:04:42,200 Speaker 1: the case. An example from Paris, nighttime lighting of the 74 00:04:42,240 --> 00:04:45,839 Speaker 1: Eiffel Tower only accounts for four percent of the landmarks 75 00:04:45,880 --> 00:04:49,279 Speaker 1: electricity use, with heating and powering the commercial areas on 76 00:04:49,279 --> 00:04:52,800 Speaker 1: the tower's first floor using much more, But that didn't 77 00:04:52,800 --> 00:04:56,400 Speaker 1: stop Paris Mayor and Hidalgo from announcing that the towel 78 00:04:56,440 --> 00:04:59,159 Speaker 1: will switch off its lights an hour early age evening 79 00:04:59,400 --> 00:05:11,960 Speaker 1: to save energy. Luvantois kahnt sunk Ala Fern Christmas lights. 80 00:05:12,160 --> 00:05:15,400 Speaker 1: The magic word seems to be led. The company behind 81 00:05:15,440 --> 00:05:18,159 Speaker 1: the light ensemble on the Zurich's pricey band of strauss 82 00:05:18,200 --> 00:05:21,480 Speaker 1: A shopping street maintains that the entire installation of more 83 00:05:21,480 --> 00:05:25,560 Speaker 1: than twenty three thousand snowflake themed theodes doesn't use more 84 00:05:25,560 --> 00:05:28,520 Speaker 1: than three kilo one hours per hour. Let that's about 85 00:05:28,520 --> 00:05:31,240 Speaker 1: the same a household of and uses per hour if 86 00:05:31,240 --> 00:05:34,840 Speaker 1: you run it on maximum temperature. Still, the City Commission 87 00:05:34,839 --> 00:05:37,560 Speaker 1: of Zurich decided to half the time the lights are 88 00:05:37,600 --> 00:05:40,320 Speaker 1: on from about ten to five hours every day this 89 00:05:40,440 --> 00:05:43,880 Speaker 1: year for the sake of saving energy. So it seems 90 00:05:43,920 --> 00:05:47,040 Speaker 1: that in many places, cutting the Christmas lights might actually 91 00:05:47,080 --> 00:05:50,600 Speaker 1: be more about saving face than actually about saving energy. 92 00:05:50,880 --> 00:05:54,640 Speaker 1: And that also doesn't stop at retailers. Here is massive stuffle. Again. 93 00:05:58,240 --> 00:06:01,760 Speaker 1: If somebody now doesn't abstain all and says, hey, I'm 94 00:06:01,760 --> 00:06:05,159 Speaker 1: just doing my decorations like every year, and his lights 95 00:06:05,240 --> 00:06:09,160 Speaker 1: in are big and noticeable, then it may happen. Did 96 00:06:09,160 --> 00:06:12,880 Speaker 1: he get some critical comments like it, doesn't he get it? 97 00:06:13,440 --> 00:06:16,200 Speaker 1: You should really show some effort this year and save 98 00:06:16,279 --> 00:06:20,359 Speaker 1: energy wherever it's possible. So retailers are indeed torn on 99 00:06:20,360 --> 00:06:23,160 Speaker 1: whether they should put up Christmas lights. On the one hand, 100 00:06:23,200 --> 00:06:26,480 Speaker 1: they fear less festive atmosphere might hurt their sales. On 101 00:06:26,520 --> 00:06:29,839 Speaker 1: the other, however, they dragged being chastised by shoppers for 102 00:06:29,920 --> 00:06:33,360 Speaker 1: not making enough of an effort on saving energy. That 103 00:06:33,400 --> 00:06:36,480 Speaker 1: means that in Europe's major and minor shopping streets, he'll 104 00:06:36,520 --> 00:06:40,240 Speaker 1: be seeing shopkeepers who, in addition to the reduced lights outside, 105 00:06:40,600 --> 00:06:43,880 Speaker 1: also have decided to take down the lights inside their shops. 106 00:06:44,240 --> 00:06:47,080 Speaker 1: They are hoping that customers give them credit for that. 107 00:06:47,080 --> 00:06:50,520 Speaker 1: That is, if one inflation left some interest in shopping 108 00:06:50,640 --> 00:06:53,040 Speaker 1: and they didn't decide to stay home in the first place. 109 00:06:53,600 --> 00:06:58,800 Speaker 1: Staffel is going the other way. We're currently going through 110 00:06:58,839 --> 00:07:01,360 Speaker 1: such dark times. I wouldn't heard if we had some 111 00:07:01,440 --> 00:07:09,960 Speaker 1: Christmas lights. For Bloomberg News, I'm bath Jan Bnrad. So 112 00:07:10,040 --> 00:07:13,440 Speaker 1: while shopkeepers in Europe grapple with the morality of their 113 00:07:13,520 --> 00:07:17,600 Speaker 1: Christmas decorations, governments have for months now been trying to 114 00:07:17,720 --> 00:07:20,480 Speaker 1: ensure the lights and the heating stays on through the 115 00:07:20,480 --> 00:07:23,520 Speaker 1: winter in homes across the continent. But here we are 116 00:07:23,520 --> 00:07:26,280 Speaker 1: in December and it seems to have gone fairly well. 117 00:07:26,840 --> 00:07:31,000 Speaker 1: Today Bloomberg's in house energy consultants BENF predicted that a 118 00:07:31,080 --> 00:07:33,440 Speaker 1: large part of Europe might end the winter with their 119 00:07:33,480 --> 00:07:36,640 Speaker 1: gas storage still more than half full and with a 120 00:07:36,640 --> 00:07:41,000 Speaker 1: good shot of completely refilling again before Christmas three. That's 121 00:07:41,040 --> 00:07:44,520 Speaker 1: despite being largely cut off from Russian gas, which we 122 00:07:44,600 --> 00:07:48,000 Speaker 1: previously had thought would be completely devastating. So so what 123 00:07:48,120 --> 00:07:51,160 Speaker 1: went right and what's the long term impact of this 124 00:07:51,280 --> 00:07:54,880 Speaker 1: energy crisis going to be in Europe? Well, Bloomberg senior 125 00:07:54,920 --> 00:07:58,680 Speaker 1: Europe economist may have a Kuza and Bloomberg columnist and 126 00:07:59,040 --> 00:08:02,040 Speaker 1: best selling author, have you a blast? Two people with 127 00:08:02,080 --> 00:08:05,200 Speaker 1: a pretty shrewd take on those questions. Thanks both of 128 00:08:05,200 --> 00:08:09,120 Speaker 1: you for coming back on on Stephanomics. Maybe let me 129 00:08:09,200 --> 00:08:11,160 Speaker 1: let me start with you. I think remember, I mean 130 00:08:11,200 --> 00:08:14,600 Speaker 1: six months ago, maybe even less, there were some pretty 131 00:08:14,680 --> 00:08:18,800 Speaker 1: dark forecasts for what would happen to Europe without Russian gas. 132 00:08:19,320 --> 00:08:22,920 Speaker 1: Now it's December. President Putin has done his worst, but 133 00:08:23,000 --> 00:08:26,320 Speaker 1: we haven't seen lights going out across Europe. So so 134 00:08:26,400 --> 00:08:29,360 Speaker 1: what's happened? So just to start, I think some of 135 00:08:29,400 --> 00:08:32,640 Speaker 1: those forecasts where maybe a bit busimistic. Since July we 136 00:08:32,679 --> 00:08:36,720 Speaker 1: have followed our colleagues at BENEV thinking that actually the 137 00:08:36,760 --> 00:08:40,120 Speaker 1: winter could be rough, but energy systems would not collapse 138 00:08:40,320 --> 00:08:43,120 Speaker 1: for the winter. But still you're right that things have 139 00:08:43,200 --> 00:08:46,400 Speaker 1: gone better than could have been probably much better than 140 00:08:46,440 --> 00:08:51,120 Speaker 1: could have been expected. For one thing, first, energy supply 141 00:08:51,280 --> 00:08:55,160 Speaker 1: has been abandoned. High prices in Europe and lower demand 142 00:08:55,160 --> 00:08:57,960 Speaker 1: in Asia have already helped keep the supply coming, and 143 00:08:58,000 --> 00:09:00,840 Speaker 1: that has helped a lot. In addition, we've had some 144 00:09:00,920 --> 00:09:03,320 Speaker 1: mild weather at the start of the at the start 145 00:09:03,360 --> 00:09:05,640 Speaker 1: of the autumn, which has delayed the start of the 146 00:09:05,720 --> 00:09:09,319 Speaker 1: hitting season, which has helped. But the way beyond this 147 00:09:09,640 --> 00:09:13,320 Speaker 1: mild weather, we have seen very substantial reductions in the 148 00:09:13,360 --> 00:09:16,520 Speaker 1: mound where in excess of what people were expecting. I 149 00:09:16,520 --> 00:09:19,120 Speaker 1: think in the latest out look ben if he's looking 150 00:09:19,160 --> 00:09:21,720 Speaker 1: for some twenty percent reduction in the amount relative to 151 00:09:21,760 --> 00:09:24,760 Speaker 1: normal something like that. And finally, one last thing is 152 00:09:24,800 --> 00:09:28,440 Speaker 1: that I think, um, your open systems have also worked well. 153 00:09:28,640 --> 00:09:32,720 Speaker 1: I think your open energy networks and European solidarity has 154 00:09:32,800 --> 00:09:35,360 Speaker 1: held out so that we have sund Europe has kept 155 00:09:35,400 --> 00:09:38,360 Speaker 1: sending gas where it was most needed, and that has 156 00:09:38,400 --> 00:09:40,880 Speaker 1: been that has been It madeview quite quite a big 157 00:09:40,880 --> 00:09:43,960 Speaker 1: success as well. That's interesting you say about the solidarity, 158 00:09:44,040 --> 00:09:47,120 Speaker 1: because that had been a question mark about whether, you know, 159 00:09:47,160 --> 00:09:48,839 Speaker 1: if it came to it and the gas was kind 160 00:09:48,840 --> 00:09:50,679 Speaker 1: of in the wrong place, Like we know, German has 161 00:09:50,679 --> 00:09:54,120 Speaker 1: been quite good at building up supplies, would countries be 162 00:09:54,200 --> 00:09:58,079 Speaker 1: willing to send gas to those countries that were more 163 00:09:58,160 --> 00:10:00,680 Speaker 1: vulnerable And the idea that they been doing that, I 164 00:10:00,720 --> 00:10:03,120 Speaker 1: think is is interesting and again not something we would 165 00:10:03,120 --> 00:10:05,720 Speaker 1: necessarily expected. And I'm interested in what you say about 166 00:10:05,760 --> 00:10:09,600 Speaker 1: demand moever, because we tend to think that, you know, 167 00:10:09,679 --> 00:10:14,120 Speaker 1: people respond to incentives, and a lot of the extremely 168 00:10:14,160 --> 00:10:18,800 Speaker 1: expensive support for households that governments have given across the 169 00:10:18,840 --> 00:10:23,600 Speaker 1: continent has effectively cushioned them from the massive increase in 170 00:10:23,880 --> 00:10:26,520 Speaker 1: energy prices. And there's been criticism that that sort of 171 00:10:26,600 --> 00:10:30,760 Speaker 1: was reducing the incentive for households to reduce their demand 172 00:10:30,960 --> 00:10:34,800 Speaker 1: because they weren't seeing the full price increase. We've seen 173 00:10:34,920 --> 00:10:38,440 Speaker 1: bigger falls in places where households have seen a sticker 174 00:10:38,480 --> 00:10:40,920 Speaker 1: price of energy go up. So the first thing is 175 00:10:40,960 --> 00:10:44,600 Speaker 1: that electricity and gas prices, energy bills are still up 176 00:10:44,640 --> 00:10:47,840 Speaker 1: sixty percent Angelia in the euro area, so even if 177 00:10:47,880 --> 00:10:49,920 Speaker 1: maybe not as high as in the UK, it's still 178 00:10:50,040 --> 00:10:53,120 Speaker 1: a very large increasing gas bills and energy bias. And 179 00:10:53,160 --> 00:10:55,320 Speaker 1: in addition, I think the message that we needed to 180 00:10:55,360 --> 00:10:59,280 Speaker 1: save energy for geopolitical reasons has been quite strong everywhere. 181 00:10:59,360 --> 00:11:04,319 Speaker 1: So compling shion of geopolitical message and substantial increasing prices 182 00:11:04,480 --> 00:11:07,480 Speaker 1: has probably been enough to give the right incentives. We've 183 00:11:07,520 --> 00:11:12,079 Speaker 1: sort of focused on keeping the lights on. But obviously 184 00:11:12,120 --> 00:11:13,760 Speaker 1: the other side of this is the impact on the 185 00:11:13,760 --> 00:11:16,160 Speaker 1: economy and what are you looking at in terms of 186 00:11:16,200 --> 00:11:19,199 Speaker 1: the hit to the economy and the depth of the recession. 187 00:11:19,440 --> 00:11:22,560 Speaker 1: Is there any good news there? So we had some 188 00:11:22,640 --> 00:11:25,760 Speaker 1: good news from them from the energy side, mostly because 189 00:11:25,840 --> 00:11:27,520 Speaker 1: if you have at the same time quite a lot 190 00:11:27,559 --> 00:11:31,280 Speaker 1: of the main reduction and we've seen quite a substantial 191 00:11:31,320 --> 00:11:34,560 Speaker 1: decline in their spaces, sell a lot higher, but that 192 00:11:34,640 --> 00:11:38,319 Speaker 1: will help overall. We think that European countries will spand 193 00:11:38,360 --> 00:11:41,720 Speaker 1: about two point eight percent of their GDP on important 194 00:11:41,720 --> 00:11:44,640 Speaker 1: gas in twenty twenty three. That's up from one point 195 00:11:44,640 --> 00:11:47,840 Speaker 1: three percent, but at some point when prices were above 196 00:11:47,840 --> 00:11:51,200 Speaker 1: two euro without they would be spending more than nearly 197 00:11:51,280 --> 00:11:55,160 Speaker 1: five percent of their GDP. At the same time, if anything, 198 00:11:55,280 --> 00:11:58,840 Speaker 1: financing conditions have tightened much more than we could have 199 00:11:58,880 --> 00:12:01,840 Speaker 1: anticipated before the start of the e c B hiking sake, 200 00:12:02,600 --> 00:12:05,160 Speaker 1: and as a result, we still expect your area will 201 00:12:05,240 --> 00:12:07,840 Speaker 1: fall into a recision. It would be a major psisition. 202 00:12:08,200 --> 00:12:11,120 Speaker 1: But we still forecast your area to contract by not 203 00:12:11,240 --> 00:12:14,719 Speaker 1: point five percent in this quarter and a point four 204 00:12:14,760 --> 00:12:20,000 Speaker 1: percent next quarter and twenty three Party Technician of the Economy. 205 00:12:20,080 --> 00:12:24,120 Speaker 1: So we've got some of the really sort of downside 206 00:12:24,160 --> 00:12:26,640 Speaker 1: scenarios that we had for the economy that we're driven 207 00:12:26,679 --> 00:12:30,040 Speaker 1: by those really big increases in energy prices that we 208 00:12:30,080 --> 00:12:33,920 Speaker 1: had at the start of the autumn and early winter. UM, 209 00:12:33,960 --> 00:12:37,080 Speaker 1: those those sort of disaster scenarios have not come through. 210 00:12:37,120 --> 00:12:39,760 Speaker 1: But at the same time, globally, the cost of borrowing 211 00:12:39,760 --> 00:12:42,480 Speaker 1: has gone up for governments even as the before the 212 00:12:42,520 --> 00:12:46,080 Speaker 1: central banks really got started on raising official rates UM, 213 00:12:46,280 --> 00:12:49,000 Speaker 1: and that in itself is going to slow the economy. 214 00:12:49,040 --> 00:12:51,400 Speaker 1: So I guess it's it's it's a it's a mixed picture. 215 00:12:51,760 --> 00:12:53,440 Speaker 1: Have you a blast I should? I should bring you 216 00:12:53,520 --> 00:12:58,120 Speaker 1: in given your experience of global energy markets, but also 217 00:12:58,280 --> 00:13:02,520 Speaker 1: how European governments can often mess these things up. Have 218 00:13:02,679 --> 00:13:06,400 Speaker 1: they done better at the supply side of this crisis, 219 00:13:06,480 --> 00:13:11,560 Speaker 1: securing supplies of gas than you might have expected. I 220 00:13:11,600 --> 00:13:14,800 Speaker 1: think that they have done very well all considered, but 221 00:13:14,960 --> 00:13:18,640 Speaker 1: they have got very lucky with China. You could look 222 00:13:18,679 --> 00:13:21,959 Speaker 1: at the chart of global energy supplies and look at 223 00:13:22,040 --> 00:13:28,400 Speaker 1: how much China decrease his buying of lergy over the 224 00:13:28,480 --> 00:13:32,120 Speaker 1: last twelve months, and then compared to how much the 225 00:13:32,120 --> 00:13:36,839 Speaker 1: European Union or Europe including the UK have increased llergy purchases, 226 00:13:37,120 --> 00:13:40,120 Speaker 1: and it's almost one by one, it's all what China 227 00:13:40,160 --> 00:13:43,719 Speaker 1: has not boat has gone back to Europe. What will 228 00:13:43,800 --> 00:13:47,520 Speaker 1: have been the situation eve China have not been in 229 00:13:47,559 --> 00:13:51,559 Speaker 1: lockdown and with different COVID zero policy, I think it 230 00:13:51,600 --> 00:13:54,320 Speaker 1: will have been a lot more complicated for European countries 231 00:13:54,360 --> 00:13:59,720 Speaker 1: to operate. And then I'm very hesitant to say that 232 00:14:00,040 --> 00:14:03,040 Speaker 1: have done well or that the worst is over. At 233 00:14:03,040 --> 00:14:07,000 Speaker 1: the beginning of December, we have, depending on the weather, 234 00:14:07,760 --> 00:14:10,600 Speaker 1: ninety to a hundred and twenty days of cold weather 235 00:14:10,679 --> 00:14:13,400 Speaker 1: in front of us. It could be mile as it 236 00:14:13,440 --> 00:14:16,160 Speaker 1: has been the case of most of November and most 237 00:14:16,200 --> 00:14:19,880 Speaker 1: of October. Actually, we have had one of the milder's 238 00:14:20,440 --> 00:14:26,480 Speaker 1: um pre winter periods in recent history in Western Europe. 239 00:14:26,960 --> 00:14:28,840 Speaker 1: Or it could be extremely cold and then we will 240 00:14:28,880 --> 00:14:32,280 Speaker 1: be in deep trouble. I mean to to to think 241 00:14:32,280 --> 00:14:36,360 Speaker 1: that everything is fine in December, when we have three 242 00:14:36,440 --> 00:14:41,200 Speaker 1: what I will call very miserable um um months in 243 00:14:41,240 --> 00:14:43,320 Speaker 1: front of us, I think it will be it will 244 00:14:43,440 --> 00:14:46,320 Speaker 1: not be the right thing to do. We spected like 245 00:14:46,360 --> 00:14:49,240 Speaker 1: a Spaniard who lives in London. I may have thought 246 00:14:49,280 --> 00:14:52,680 Speaker 1: that when I was walking out of my house this 247 00:14:52,840 --> 00:14:55,840 Speaker 1: afternoon for a sanguige, and I did thought why I'm 248 00:14:55,880 --> 00:15:01,000 Speaker 1: living here in the UK. So okay, So that's one 249 00:15:01,000 --> 00:15:04,080 Speaker 1: thing that could go wrong. We could get some pretty 250 00:15:04,160 --> 00:15:07,840 Speaker 1: grim winter. I guess Another side of this is just 251 00:15:07,920 --> 00:15:11,360 Speaker 1: how much it's cost governments to secure this supply. I mean, 252 00:15:11,360 --> 00:15:15,080 Speaker 1: you make a fascinating point about China um and them 253 00:15:15,160 --> 00:15:17,840 Speaker 1: having been lucky with that, but there have also been 254 00:15:17,880 --> 00:15:21,480 Speaker 1: these deals with Qatar and with other places. I mean, 255 00:15:21,520 --> 00:15:23,680 Speaker 1: have it has it? Has this been done in any 256 00:15:23,720 --> 00:15:27,160 Speaker 1: way efficiently or has it just been done in a 257 00:15:27,200 --> 00:15:31,600 Speaker 1: mad scramble. It has been done in a bit of 258 00:15:31,600 --> 00:15:35,520 Speaker 1: a mother scramble. But I think that considering the time constraints, 259 00:15:35,640 --> 00:15:41,400 Speaker 1: considering the difficulties, it has actually gone relatively well in Europe. 260 00:15:41,480 --> 00:15:44,200 Speaker 1: I think that it has worked well. I think that 261 00:15:44,200 --> 00:15:47,680 Speaker 1: the European solidarity has ward to a point although Germany 262 00:15:47,800 --> 00:15:52,000 Speaker 1: has both um ellen gy and GUS supplies or whatever, 263 00:15:52,040 --> 00:15:54,480 Speaker 1: the price was needed to make sure that they had 264 00:15:54,840 --> 00:15:58,360 Speaker 1: enough inventories and pushing up prices for the rights of 265 00:15:58,400 --> 00:16:02,600 Speaker 1: Europe quite considerably. But just considering how countries have to 266 00:16:02,640 --> 00:16:08,520 Speaker 1: do these uh with just basically a Russian gun pointing 267 00:16:08,560 --> 00:16:11,120 Speaker 1: at at their heads of the policy makers, I think 268 00:16:11,120 --> 00:16:15,960 Speaker 1: that it has done quite efficiently. Has it been very expensive, Yes, 269 00:16:16,360 --> 00:16:21,600 Speaker 1: has been massively expensive. Even at current prices um which 270 00:16:21,600 --> 00:16:25,720 Speaker 1: are much lower than that we saw in July Augos. 271 00:16:26,240 --> 00:16:29,840 Speaker 1: We are talking about a hundred and thirty euros per 272 00:16:29,880 --> 00:16:34,720 Speaker 1: megaat our. That compares to what you used to consider 273 00:16:34,800 --> 00:16:38,280 Speaker 1: a normal price of about twenty euros per mega at hour. 274 00:16:38,760 --> 00:16:41,240 Speaker 1: So I think that yes, we managed to buy in 275 00:16:41,320 --> 00:16:46,040 Speaker 1: off gas. We got very lucky with China been in 276 00:16:46,040 --> 00:16:49,120 Speaker 1: in the status of permanent lockdown, and then we got 277 00:16:49,200 --> 00:16:52,520 Speaker 1: very lucky with a very mild start of the of 278 00:16:52,600 --> 00:16:57,080 Speaker 1: the winter, who has led Europe to start December in 279 00:16:57,120 --> 00:17:02,440 Speaker 1: a very comfortable position. But let's not forget that now 280 00:17:02,920 --> 00:17:05,840 Speaker 1: every day we're going to be consuming guys from inventories, 281 00:17:05,960 --> 00:17:09,359 Speaker 1: and there is not Russian guys be a pipeline to 282 00:17:09,520 --> 00:17:14,480 Speaker 1: help us rebuild the inventories necess spring and China maybe 283 00:17:14,640 --> 00:17:18,400 Speaker 1: or may not be back and open and consuming lerg 284 00:17:19,240 --> 00:17:23,680 Speaker 1: and so all of those factors made me a bit 285 00:17:23,680 --> 00:17:27,600 Speaker 1: and comfortable. And we have seen a couple of days 286 00:17:27,640 --> 00:17:30,879 Speaker 1: of a bit of windless weather and a bit of 287 00:17:31,000 --> 00:17:35,080 Speaker 1: colder temperatures, um like the day that we are recording 288 00:17:35,119 --> 00:17:39,080 Speaker 1: this podcast, which made me prone. They thought about going 289 00:17:39,119 --> 00:17:44,399 Speaker 1: back to Spain for sunshine. And the electricity system in 290 00:17:44,400 --> 00:17:49,080 Speaker 1: the UK and France have really been tested and it 291 00:17:49,119 --> 00:17:53,520 Speaker 1: has been pretty tied. So you wouldn't rule out the 292 00:17:53,600 --> 00:17:59,800 Speaker 1: chance having still having blackouts or para outages at some point. No, 293 00:18:00,040 --> 00:18:02,040 Speaker 1: not at all. I think I think that that is 294 00:18:02,160 --> 00:18:04,960 Speaker 1: still a very reasonable case. I think that that's the 295 00:18:04,960 --> 00:18:09,760 Speaker 1: reason why government remain fully prepared for that. UM. France 296 00:18:09,840 --> 00:18:13,200 Speaker 1: is a country that could suffer trouble in early January, 297 00:18:13,240 --> 00:18:16,639 Speaker 1: particularly if it gets very cold and more nuclear reactors 298 00:18:16,760 --> 00:18:19,040 Speaker 1: are repairs are delay, as it has been the case 299 00:18:19,359 --> 00:18:22,320 Speaker 1: in the last few weeks. So I would not say 300 00:18:22,920 --> 00:18:25,199 Speaker 1: do I think that we are better than where I 301 00:18:25,320 --> 00:18:27,880 Speaker 1: thought that we will be a couple of months ago. Yes, 302 00:18:27,960 --> 00:18:30,520 Speaker 1: we are do I think that we are out of 303 00:18:30,560 --> 00:18:33,080 Speaker 1: the boots. I think that it is too early to 304 00:18:33,080 --> 00:18:36,639 Speaker 1: to say. And I think that more things could happen. 305 00:18:36,960 --> 00:18:41,120 Speaker 1: To think that bloody mill putting will not try something else, um, 306 00:18:41,320 --> 00:18:45,240 Speaker 1: it will be a naive. He may have some other 307 00:18:45,359 --> 00:18:50,359 Speaker 1: measures to try to put more pressure on Europe this winter. 308 00:18:50,720 --> 00:18:54,320 Speaker 1: Every time that we thought about pluting, will not there 309 00:18:54,320 --> 00:18:57,240 Speaker 1: to do something else. He will not cut these supplies. 310 00:18:57,240 --> 00:18:59,399 Speaker 1: He will not cut these other supplies. He will not 311 00:18:59,560 --> 00:19:03,600 Speaker 1: threaten the pipelines. And he did it. So to think that, 312 00:19:03,720 --> 00:19:06,280 Speaker 1: you know, he would not try to do something pre Christmas, 313 00:19:06,320 --> 00:19:09,760 Speaker 1: I think it would be very naive. What kind of 314 00:19:09,800 --> 00:19:12,400 Speaker 1: thing has he got up in sleeves still? What? What? 315 00:19:12,400 --> 00:19:16,120 Speaker 1: What kind of scenarios? Well, he can still cut more, 316 00:19:16,560 --> 00:19:22,399 Speaker 1: He can cut the few molecules b bcms, billion, quvick 317 00:19:22,480 --> 00:19:28,120 Speaker 1: meters that he's still chipping into Europe ironically via Ukraine. Um, 318 00:19:28,160 --> 00:19:31,760 Speaker 1: and he can threaten the physical integrity of pipelines. And 319 00:19:31,840 --> 00:19:34,520 Speaker 1: I think that to me, the most concerning thing for 320 00:19:34,600 --> 00:19:36,879 Speaker 1: this winter is the threat of cyber attacks on the 321 00:19:36,920 --> 00:19:41,840 Speaker 1: electric degreed. Then that that is what every you told 322 00:19:41,840 --> 00:19:46,800 Speaker 1: to them privately, that every senior executive of the electricity 323 00:19:47,119 --> 00:19:50,960 Speaker 1: UM industry is worried is cyber attacks this winter. Let's 324 00:19:50,960 --> 00:19:54,520 Speaker 1: not forget there was a cyber attack UM not that 325 00:19:54,640 --> 00:19:57,560 Speaker 1: long ago, the last couple of years against the biggest 326 00:19:58,440 --> 00:20:01,320 Speaker 1: refined products pipeline and in the United States, which is 327 00:20:01,359 --> 00:20:06,720 Speaker 1: called colonial that pipeline was stop working. It triggers shortages 328 00:20:06,760 --> 00:20:09,399 Speaker 1: of gasoline in the eastern course of the United States. 329 00:20:09,960 --> 00:20:13,879 Speaker 1: And the cyber attack was a commercial hack. It was 330 00:20:13,960 --> 00:20:17,119 Speaker 1: done by demanding a Ramson. They wanted money, but he 331 00:20:17,280 --> 00:20:21,639 Speaker 1: originated from Russia. Mhm. And if the goal was to 332 00:20:21,800 --> 00:20:25,359 Speaker 1: deprive Russia of the benefits of high energy prices, you know, 333 00:20:25,400 --> 00:20:27,600 Speaker 1: there's been lots of governments who've talked about this, and 334 00:20:27,640 --> 00:20:31,000 Speaker 1: we've talked about price caps at various points. President Biden 335 00:20:31,080 --> 00:20:33,919 Speaker 1: is still looking for an oil price cap. Is that 336 00:20:33,960 --> 00:20:36,280 Speaker 1: going to happen? I mean, we have we found a 337 00:20:36,320 --> 00:20:41,240 Speaker 1: way to punish Russia via that via from that direction, 338 00:20:42,080 --> 00:20:44,960 Speaker 1: we haven't. And the main problem is that the price 339 00:20:45,040 --> 00:20:49,199 Speaker 1: caps are trying to square a circle. I mean, you 340 00:20:49,280 --> 00:20:52,720 Speaker 1: cannot reduce the price and artificially dictate what the price 341 00:20:52,800 --> 00:20:55,960 Speaker 1: is going to be unless European government are willing to 342 00:20:56,480 --> 00:20:59,840 Speaker 1: UM for in the case of natural gas, are willing 343 00:20:59,840 --> 00:21:03,800 Speaker 1: to put some compulsory demand response to to make that happen. 344 00:21:04,040 --> 00:21:06,679 Speaker 1: You cannot say the price cannot go above that particular 345 00:21:06,720 --> 00:21:09,840 Speaker 1: price level unless you are willing also to say, well, 346 00:21:09,880 --> 00:21:13,480 Speaker 1: demand cannot go above a particular level. And that's the 347 00:21:13,520 --> 00:21:17,040 Speaker 1: reason why the European Commission has proposed this price cap 348 00:21:17,119 --> 00:21:20,080 Speaker 1: that doesn't cap anything at a very high level, with 349 00:21:20,119 --> 00:21:26,359 Speaker 1: a lot of additional UM requirements. In particular the requirement 350 00:21:26,440 --> 00:21:28,520 Speaker 1: that prices need to be at a very high level 351 00:21:28,600 --> 00:21:31,720 Speaker 1: for ten consecutive trade in there is something that it 352 00:21:31,800 --> 00:21:35,520 Speaker 1: didn't happen even when prices went through the roof in July, 353 00:21:35,640 --> 00:21:38,320 Speaker 1: and augoes uh and I think that the main reason 354 00:21:38,400 --> 00:21:41,159 Speaker 1: that they designed that way is because they knew that 355 00:21:41,200 --> 00:21:44,159 Speaker 1: they needed to create a cap that will not work. 356 00:21:44,480 --> 00:21:47,240 Speaker 1: So everyone who wanted a cap could say, oh, we 357 00:21:47,320 --> 00:21:50,760 Speaker 1: what we got the cap. That's our political win. And 358 00:21:50,800 --> 00:21:53,720 Speaker 1: everyone who thinks a cap is a bad idea said, well, 359 00:21:54,000 --> 00:21:55,800 Speaker 1: they have a cap, but it doesn't work. So that's 360 00:21:55,840 --> 00:21:58,639 Speaker 1: also a political win for us UM. And that's the 361 00:21:58,720 --> 00:22:01,600 Speaker 1: gas cap that the the European Union is debating at 362 00:22:01,600 --> 00:22:04,159 Speaker 1: the moment. Finally, if we're sort of stepping back. I 363 00:22:04,280 --> 00:22:07,120 Speaker 1: noticed that the Economists had on its cover it had 364 00:22:07,119 --> 00:22:09,919 Speaker 1: a sort of picture of the of a frozen European 365 00:22:09,960 --> 00:22:13,000 Speaker 1: continent saying how the world is leaving Europe behind. It 366 00:22:13,080 --> 00:22:15,840 Speaker 1: was suggesting that although there's been some sort of short 367 00:22:15,960 --> 00:22:21,119 Speaker 1: term good news that we've discussed, the crisis has cost 368 00:22:21,160 --> 00:22:25,199 Speaker 1: Europe deer and highlighted how the continent is failing to 369 00:22:25,359 --> 00:22:27,880 Speaker 1: keep up with the rest of the world and certainly 370 00:22:27,920 --> 00:22:30,280 Speaker 1: the US and China. Do you think that's right? That 371 00:22:30,840 --> 00:22:33,800 Speaker 1: this is a further nail in the coffin for for 372 00:22:33,840 --> 00:22:36,879 Speaker 1: Europe's economic model. I mean, eurobe is going to have 373 00:22:36,920 --> 00:22:39,359 Speaker 1: a problem because he's going to face much higher energy 374 00:22:39,359 --> 00:22:43,000 Speaker 1: prices that other rediunts of the wall for for for 375 00:22:43,000 --> 00:22:45,600 Speaker 1: for longer. I mean, you look at where natural guys 376 00:22:45,640 --> 00:22:48,840 Speaker 1: is training right now in the United States is something 377 00:22:48,880 --> 00:22:54,800 Speaker 1: around um uh seven dollars per m b tu Europe 378 00:22:54,840 --> 00:22:58,600 Speaker 1: and an equivalent basis is being something like forty. So 379 00:22:58,920 --> 00:23:02,840 Speaker 1: you are there, CEO of a big chemical plan, and 380 00:23:02,880 --> 00:23:07,520 Speaker 1: you have the choice where you said home in Germany 381 00:23:07,680 --> 00:23:11,119 Speaker 1: or in Texas. I think that the answer is is 382 00:23:11,200 --> 00:23:13,159 Speaker 1: very simple. You got to Texas. I mean, there is 383 00:23:13,160 --> 00:23:15,919 Speaker 1: not even a question about it. I think that some 384 00:23:16,600 --> 00:23:22,600 Speaker 1: European policymakers are beginning to shave away from the initial thought, um, 385 00:23:23,080 --> 00:23:26,720 Speaker 1: initial worried of high gas prices, that was mostly on 386 00:23:27,280 --> 00:23:29,840 Speaker 1: course of living an inflation. And now they're beginning to 387 00:23:29,880 --> 00:23:33,760 Speaker 1: think more about the industrialization of Europe. And that is 388 00:23:33,800 --> 00:23:37,960 Speaker 1: something that I have been hearing quite lot from central bankers, 389 00:23:38,000 --> 00:23:41,159 Speaker 1: in particular, that there is the second impact of the 390 00:23:41,560 --> 00:23:44,920 Speaker 1: gas crisis, that the industrialization of Europe. What they are 391 00:23:44,960 --> 00:23:49,960 Speaker 1: worried now. UM. You know, the way I put it 392 00:23:50,000 --> 00:23:53,760 Speaker 1: is uh six six six, and that's not any any 393 00:23:53,880 --> 00:23:56,680 Speaker 1: don't don't look at it in any particular devilish way. 394 00:23:57,080 --> 00:24:01,600 Speaker 1: But when the invasion of Ukraine has start back in February, 395 00:24:01,840 --> 00:24:06,320 Speaker 1: when I was talking to executives of big European energy consumers, 396 00:24:06,720 --> 00:24:11,800 Speaker 1: they were prepared for a six week crisis. UM. At 397 00:24:11,840 --> 00:24:15,359 Speaker 1: the end of March the beginning of April, UH and 398 00:24:15,480 --> 00:24:19,000 Speaker 1: when it was very clear that Ukraine was able to 399 00:24:19,080 --> 00:24:23,399 Speaker 1: defend itself much better than many thought, they they're thinking 400 00:24:23,400 --> 00:24:26,040 Speaker 1: a month, executives shifted and I said, okay, well, this 401 00:24:26,119 --> 00:24:29,119 Speaker 1: is not gonna be a six week crisis. This is 402 00:24:29,119 --> 00:24:32,920 Speaker 1: gonna be a six months crisis. And six months later, 403 00:24:33,440 --> 00:24:37,000 Speaker 1: the thinking is now, well, this may be a six 404 00:24:37,080 --> 00:24:41,399 Speaker 1: year crisis because the global elegy market is gonna remain 405 00:24:41,440 --> 00:24:46,200 Speaker 1: tied somewhere until twenty six PERHP seven. And that's why, 406 00:24:46,480 --> 00:24:49,199 Speaker 1: you know, that's what the six weeks six months, and 407 00:24:49,280 --> 00:24:52,040 Speaker 1: now they're thinking about six years, perhaps a bit less 408 00:24:52,080 --> 00:24:54,159 Speaker 1: than than six years. But allow me to do the 409 00:24:54,200 --> 00:24:57,480 Speaker 1: six six six, And I think that that is it's 410 00:24:57,600 --> 00:25:02,719 Speaker 1: very problematic because you do not changed your business plans 411 00:25:02,760 --> 00:25:06,520 Speaker 1: for six weeks. I don't think that any executives really 412 00:25:06,600 --> 00:25:11,560 Speaker 1: make any fundamental business plan change for six months either 413 00:25:12,000 --> 00:25:15,800 Speaker 1: other than some adjustments and let's reduce some production here, 414 00:25:16,119 --> 00:25:18,760 Speaker 1: let's try to save some money there, you know, delays 415 00:25:18,800 --> 00:25:21,199 Speaker 1: on investments. But if you think that this is a 416 00:25:21,240 --> 00:25:25,440 Speaker 1: six year problem, for six years, executives do really start 417 00:25:25,480 --> 00:25:31,000 Speaker 1: to think harder about what they need to do different. Well, great, 418 00:25:31,080 --> 00:25:33,240 Speaker 1: leave us on and up. Why don't you have ya? 419 00:25:33,359 --> 00:25:38,680 Speaker 1: Thank you so much, Maybe have your blass Thank you 420 00:25:38,760 --> 00:25:41,840 Speaker 1: Mava and Zurich, and have you in London. I promise 421 00:25:41,880 --> 00:25:45,240 Speaker 1: you by your sweat of Christmas. But I appreciate both 422 00:25:45,240 --> 00:26:12,880 Speaker 1: of you coming on. Why, well, we just learned that 423 00:26:13,160 --> 00:26:18,760 Speaker 1: China's troubles exiting COVID had produced unexpected benefits for Europe 424 00:26:18,800 --> 00:26:22,680 Speaker 1: in its search for extra gas supplies, but we can 425 00:26:22,720 --> 00:26:27,679 Speaker 1: see it is causing continued confusion and continued challenges for China. 426 00:26:27,760 --> 00:26:32,160 Speaker 1: And this week anyone listening will have seen you had 427 00:26:32,160 --> 00:26:40,520 Speaker 1: those very unusual street protests in China. So I just 428 00:26:40,560 --> 00:26:43,760 Speaker 1: wanted to check back in with Carlin Murphy, who we 429 00:26:43,800 --> 00:26:49,240 Speaker 1: talked to a few months ago, our government reporter in Beijing, 430 00:26:49,280 --> 00:26:52,240 Speaker 1: although currently in Hong Kong column. Thank you very much 431 00:26:52,680 --> 00:26:55,240 Speaker 1: for coming on. I mean, briefly, where do things stand 432 00:26:55,400 --> 00:26:58,720 Speaker 1: the nationwide sort of protests that we saw over the weekend, 433 00:26:59,400 --> 00:27:02,440 Speaker 1: one source putting it at forty three protests in twenty 434 00:27:02,480 --> 00:27:05,480 Speaker 1: two cities. They have definitely quietened down. On a Monday 435 00:27:05,560 --> 00:27:08,000 Speaker 1: night and Tuesday night in places like Beijing and Shanghai, 436 00:27:08,040 --> 00:27:10,080 Speaker 1: there were very few people out right now. It's a 437 00:27:10,080 --> 00:27:12,320 Speaker 1: bit quiet, and of course the main factor of that 438 00:27:12,440 --> 00:27:15,399 Speaker 1: is the sheer number of police that have been on 439 00:27:15,440 --> 00:27:18,560 Speaker 1: the street, and and the stick element of this is 440 00:27:18,880 --> 00:27:21,119 Speaker 1: a very very strong, and I think it is putting 441 00:27:21,200 --> 00:27:24,560 Speaker 1: people off. And on Wednesday, we heard, of course about 442 00:27:24,600 --> 00:27:28,399 Speaker 1: the passing of the former president Jang Zimen. That brings 443 00:27:28,480 --> 00:27:32,600 Speaker 1: up immediately the question how this might impact the protest. 444 00:27:32,760 --> 00:27:36,600 Speaker 1: Will we see more people taking to the streets, whether 445 00:27:36,680 --> 00:27:41,000 Speaker 1: it be to memorialize the president or to express further 446 00:27:41,160 --> 00:27:44,840 Speaker 1: their discontent with the current situation. So of course, everyone 447 00:27:44,960 --> 00:27:47,320 Speaker 1: in Britain anyway likes to see everything through the lens 448 00:27:47,320 --> 00:27:49,480 Speaker 1: of football, and there was has been a lot of 449 00:27:49,480 --> 00:27:52,080 Speaker 1: debate about how much the pictures from the World Cup 450 00:27:52,160 --> 00:27:56,479 Speaker 1: of fans mingling had helped to trigger this, But one 451 00:27:56,520 --> 00:27:58,560 Speaker 1: of our colleagues was pointing out that they were also 452 00:27:58,680 --> 00:28:02,040 Speaker 1: all these pictures of the president sieging ping with other 453 00:28:02,119 --> 00:28:06,159 Speaker 1: leaders at the G twenty summit recently, also unmasked and 454 00:28:06,160 --> 00:28:08,600 Speaker 1: and in confined spaces. So do you think that was 455 00:28:08,640 --> 00:28:11,320 Speaker 1: a that was a factor as well? I believe so. 456 00:28:11,400 --> 00:28:13,760 Speaker 1: I mean, the original spark of this was a fire 457 00:28:13,840 --> 00:28:16,600 Speaker 1: that took place in the city of Urumchi, which is 458 00:28:16,680 --> 00:28:20,200 Speaker 1: the capital of the Shinjiang region in the far western 459 00:28:20,240 --> 00:28:23,960 Speaker 1: part of China. They're in a high rise building. About 460 00:28:24,000 --> 00:28:27,760 Speaker 1: ten people, according to official statistics, were burned to death 461 00:28:28,080 --> 00:28:32,760 Speaker 1: in a fire that many people said was preventable. There 462 00:28:32,800 --> 00:28:35,040 Speaker 1: was rumors going around that people had been locked in 463 00:28:35,359 --> 00:28:37,719 Speaker 1: that fire trucks could not have access to the building. 464 00:28:38,240 --> 00:28:41,560 Speaker 1: Um circulation online of videos showing that people were crying 465 00:28:41,560 --> 00:28:50,880 Speaker 1: inside the building as the flames engulfed that. But of 466 00:28:50,920 --> 00:28:53,600 Speaker 1: course all of this was denied by the local governments, 467 00:28:53,600 --> 00:28:56,560 Speaker 1: who said, almost in an arrogant way, that the doors 468 00:28:56,560 --> 00:28:58,640 Speaker 1: were clear and open, but that it was the people 469 00:28:58,960 --> 00:29:02,080 Speaker 1: who decided not to run and leave the building. And 470 00:29:02,120 --> 00:29:05,160 Speaker 1: in contrast to that, then you have this celebration going 471 00:29:05,200 --> 00:29:08,880 Speaker 1: on at the World Cup and of course the visiting leaders, 472 00:29:09,120 --> 00:29:13,760 Speaker 1: So people are watching these images of celebrations taking place 473 00:29:13,800 --> 00:29:17,480 Speaker 1: at the World Cup. Meanwhile at home in China, the 474 00:29:17,600 --> 00:29:20,800 Speaker 1: people are living under very strict conditions and the hardship 475 00:29:20,880 --> 00:29:25,120 Speaker 1: is quite pronounced. So it really underscores the fact that 476 00:29:25,160 --> 00:29:29,960 Speaker 1: the world has moved on, but China hasn't. And if 477 00:29:29,960 --> 00:29:32,080 Speaker 1: we're just looking at it through a sort of economic lens, 478 00:29:32,120 --> 00:29:35,600 Speaker 1: it's was striking. I mean, it was interesting and very 479 00:29:35,680 --> 00:29:39,120 Speaker 1: unusual to have so many cities involved in this, but 480 00:29:39,160 --> 00:29:41,280 Speaker 1: as we as we know, the numbers were quite small. 481 00:29:41,360 --> 00:29:44,120 Speaker 1: I wonder, I mean, in economic terms, the significance of 482 00:29:44,200 --> 00:29:48,520 Speaker 1: that of the walkouts and the riots at the in 483 00:29:48,560 --> 00:29:50,640 Speaker 1: the big in the sort of iPhone city, in that 484 00:29:50,760 --> 00:29:55,920 Speaker 1: massive fox com um complex, is that potentially more significant 485 00:29:56,040 --> 00:29:59,160 Speaker 1: for for the Chinese economy, I think it's back to 486 00:29:59,240 --> 00:30:02,800 Speaker 1: the COVID issue and how how quickly they will um 487 00:30:02,960 --> 00:30:07,160 Speaker 1: address that, or whether they will take the protesters concerns 488 00:30:07,240 --> 00:30:10,120 Speaker 1: and try to allay those fears and then sort of 489 00:30:10,280 --> 00:30:13,040 Speaker 1: relax the COVID regulations. That would be the biggest way 490 00:30:13,080 --> 00:30:15,640 Speaker 1: to have an impact on the economy. But if they 491 00:30:15,640 --> 00:30:19,600 Speaker 1: continue to pursue, uh, you know, the policies as they are, 492 00:30:20,360 --> 00:30:24,360 Speaker 1: then we will continue to see this economic downturn. And 493 00:30:24,880 --> 00:30:28,920 Speaker 1: this is particularly a problem for the younger people. So 494 00:30:29,040 --> 00:30:31,760 Speaker 1: we have a lot of young people making up the 495 00:30:31,760 --> 00:30:37,280 Speaker 1: protesters and they're having difficulty finding jobs, and youth unemployment 496 00:30:38,040 --> 00:30:40,880 Speaker 1: is almost record high. So I think, you know, this 497 00:30:40,960 --> 00:30:45,560 Speaker 1: is economic issues are definitely underpinning this, But in terms 498 00:30:45,560 --> 00:30:47,680 Speaker 1: of the numbers and having an impact on the economy 499 00:30:47,720 --> 00:30:49,600 Speaker 1: per se, I think it's still, as you say, quite small. 500 00:30:50,400 --> 00:30:53,880 Speaker 1: The bigger impact will come from whether or not they 501 00:30:53,920 --> 00:30:57,640 Speaker 1: decide to relax the COVID regulations or not. I mean, 502 00:30:57,640 --> 00:30:59,680 Speaker 1: there is quite a lot of confusion over where things 503 00:30:59,680 --> 00:31:01,560 Speaker 1: stand on the on the COVID, on the on the 504 00:31:01,600 --> 00:31:05,040 Speaker 1: exit out of COVID, because although we had, as you say, 505 00:31:05,080 --> 00:31:08,080 Speaker 1: there's big show of force in response to these these protests, 506 00:31:08,080 --> 00:31:11,640 Speaker 1: a lot of police out on the street. We also 507 00:31:11,800 --> 00:31:14,680 Speaker 1: had messages out of the government that seemed to be 508 00:31:14,720 --> 00:31:20,120 Speaker 1: adjusting the course and even responding to some of the 509 00:31:20,160 --> 00:31:23,960 Speaker 1: opposition to COVID policy. So has there been a softening. 510 00:31:24,760 --> 00:31:28,960 Speaker 1: So our reporting is pointing to a softening, and there 511 00:31:28,960 --> 00:31:32,480 Speaker 1: have been some isolated reports here and they're suggesting that 512 00:31:32,560 --> 00:31:35,360 Speaker 1: perhaps maybe COVID is not so bad after all. But 513 00:31:35,440 --> 00:31:39,240 Speaker 1: you know, these are really very sort of preliminary and 514 00:31:39,800 --> 00:31:42,520 Speaker 1: not sort of orchestrated in a in a centralized way. 515 00:31:42,640 --> 00:31:46,320 Speaker 1: Yet I think the important thing to remember at all 516 00:31:46,480 --> 00:31:50,840 Speaker 1: times is that COVID zero basically is cheeting pings policy, 517 00:31:52,360 --> 00:31:55,000 Speaker 1: and anything that sort of moves the dial on that 518 00:31:55,200 --> 00:31:59,200 Speaker 1: is really going to reflect directly on him. And even 519 00:31:59,240 --> 00:32:02,120 Speaker 1: the protests of are are a huge embarrassment for him 520 00:32:02,440 --> 00:32:06,200 Speaker 1: just after receiving, you know, the backing of the whole 521 00:32:06,240 --> 00:32:10,600 Speaker 1: party at his coronation during the Congress. So basically it's 522 00:32:10,680 --> 00:32:13,960 Speaker 1: like this is going to be really difficult to shift. 523 00:32:14,040 --> 00:32:17,959 Speaker 1: Even though we might be seeing some early sort of 524 00:32:18,000 --> 00:32:20,880 Speaker 1: indications of softening, I think it's going to take time. 525 00:32:21,720 --> 00:32:32,240 Speaker 1: Colin Murphy, thank you. Well, that's it for Stephanomics. We'll 526 00:32:32,280 --> 00:32:34,760 Speaker 1: be back next week. In the meantime, please rate us 527 00:32:34,880 --> 00:32:37,760 Speaker 1: wherever you get this podcast, and check out the Bloomberg 528 00:32:37,760 --> 00:32:40,400 Speaker 1: News website for more economic news and views on the 529 00:32:40,440 --> 00:32:44,160 Speaker 1: global economy. You should also follow at economics on Twitter. 530 00:32:44,760 --> 00:32:47,640 Speaker 1: This episode was produced by Yang Yang, Summer Sadi, and 531 00:32:47,720 --> 00:32:51,960 Speaker 1: Mangnus Hendrickson, with special thanks to Colin Murphy, Bastian ben Wrath, 532 00:32:52,280 --> 00:32:56,840 Speaker 1: Mava Kusin, Xavier Blasts, and of course Tony Bennett. Mike 533 00:32:56,960 --> 00:32:59,360 Speaker 1: Sasso is the executive producer of Stephanomics.