WEBVTT - Wang Dan on China Economy (Radio)

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<v Speaker 1>Now keeping us on top of the latest in China's

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<v Speaker 1>economy is Dan Jog She's chief economist at hang Sing

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<v Speaker 1>Bank China. Great time to have you on the show.

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<v Speaker 1>You say that easing COVID restrictions is going to make

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<v Speaker 1>things worse before they get better. I think is that

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<v Speaker 1>because COVID cases are going to rise and that's gonna

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<v Speaker 1>be a problem, or do you think they're not doing

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<v Speaker 1>this right or that it's not gonna last well. As

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<v Speaker 1>the winter is approaching, um COVID cases will rise quite significantly,

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<v Speaker 1>and there is a concern that there might be a

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<v Speaker 1>hospital run in major cities in China. Uh and right

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<v Speaker 1>now there are also a lot of confusions on what

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<v Speaker 1>the real relaxations are because in places like Beijing and Shanghai,

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<v Speaker 1>supposedly we don't need a health code or COVID task

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<v Speaker 1>to get into public transportation, but if you want to

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<v Speaker 1>get into office buildings, it really usual they would require

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<v Speaker 1>twenty four hour our PCR test. So there's a lot

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<v Speaker 1>of inconsistency there. Yeah, and that's one of the questions

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<v Speaker 1>that I've been asking. It really is the degree to

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<v Speaker 1>which we could see the health care system in China

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<v Speaker 1>stress to a point that it nearly breaks. And what

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<v Speaker 1>you're saying is that that that that is a huge

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<v Speaker 1>risk right now. But for the government's credibility, which is

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<v Speaker 1>very much on the line. When you think about not

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<v Speaker 1>only what's happening domestically, the stress that people must be

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<v Speaker 1>under in these large cities, what they've endured for the

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<v Speaker 1>last three years, but the companies who are outside of

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<v Speaker 1>China trying to get a sense of how they can

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<v Speaker 1>conduct business within the mainland. I mean, this is going

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<v Speaker 1>to be confusing, not just domestically, but on the global

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<v Speaker 1>stage as well. Oh. Absolutely, when we talked to for investors,

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<v Speaker 1>be its in financial market or in the real economy,

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<v Speaker 1>especially in UH supply chains like new Enity vehicle all

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<v Speaker 1>it just seems that China's demand has been fundamentally weakened

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<v Speaker 1>and there are no aggressive rescue package similar to the

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<v Speaker 1>size of the two financial crisis um. And then for

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<v Speaker 1>the central government, now this is a transition period before

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<v Speaker 1>the new leaders are in place in the coming March.

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<v Speaker 1>During the two sessions, there wouldn't be any drastic policy

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<v Speaker 1>reversal um and we wouldn't get very clear policy signals either.

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<v Speaker 1>And for domestic investors, they are anxious to see when,

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<v Speaker 1>for example, the interest rate can be lowered, because for

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<v Speaker 1>many of them the liquidity is drying up with the

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<v Speaker 1>prolonged COVID lockdown. And for foreign investors there's also a

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<v Speaker 1>question on whether China is still welcome for investments in general.

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<v Speaker 1>You think that the property market is going to be

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<v Speaker 1>a source of growth this year, what do you see

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<v Speaker 1>happening there. The property market has been the pillar industry

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<v Speaker 1>for China in the past twenty years, and this year

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<v Speaker 1>it has been quite depressed. The housing sales has been

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<v Speaker 1>contracting for about thirty depending on the cities you're in,

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<v Speaker 1>and next year it just seems that the government is

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<v Speaker 1>eager to UM assemble this rescue package amounting to about

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<v Speaker 1>one to two trillion R and B, and those money

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<v Speaker 1>will not be, of course, all spent within one year.

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<v Speaker 1>It probably will be spreading over the three year period UM.

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<v Speaker 1>But it seems that most of those money will be

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<v Speaker 1>as a liquidity provision for the realistic developers UM. For

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<v Speaker 1>the demand side, there are a lot of pessimism about

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<v Speaker 1>when the housing market can really turn up. The consumers

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<v Speaker 1>and home bias really need some clear signal on whether

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<v Speaker 1>UM the COVID control will come to an end in

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<v Speaker 1>and right now that signal is not entirely clear um,

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<v Speaker 1>But for infrastructure spending in China it is coming to

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<v Speaker 1>an end. And for the only thing that still get

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<v Speaker 1>a momentum is probably housing. Yeah, I'm wondering Dan, very quickly,

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<v Speaker 1>in about forty seconds or so, do you think it's

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<v Speaker 1>possible that Beijing reverses itself on some of the measures

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<v Speaker 1>that we saw as it relates to consumer facing tech

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<v Speaker 1>companies that crackdown, could they relax restrictions a bit to

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<v Speaker 1>allow the industry to resuscitate or to be resuscitated as

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<v Speaker 1>a way of driving growth very quickly. Oh, the signal

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<v Speaker 1>is not entirely clear yet. But for the gaming companies

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<v Speaker 1>there are some welcoming signs. For example, some of the

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<v Speaker 1>games by Tensent got improved. Um. But I don't think

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<v Speaker 1>it's the end of the regulation yet. For internet companies,

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<v Speaker 1>they still need to wait before the two sessions we

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<v Speaker 1>can really be sure. All right. Well, Dan Wong, chief

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<v Speaker 1>economist at Hangsang Bang China, thank you so very much

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<v Speaker 1>for your insights, particular review of how slow the turn

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<v Speaker 1>away from COVID zero. Maybe as cases spike of covid

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<v Speaker 1>this winter