Speaker 1: Well, as we have been discussing, China's economic activity worsened
Speaker 1: in November with widespread virus outbreaks and restrictions. Joining us
Speaker 1: now to talk about the numbers and the Karen Bloomberg's
Speaker 1: Chief Asia Economics correspondent, and we had a miss on
Speaker 1: industrial production growing just two point two percent we were
Speaker 1: expecting three and a half and retail sales off by
Speaker 1: almost six percent, a much sharper decline than expected and
Speaker 1: probably not going to get much better, is it? Yes,
Speaker 1: I think when you see these numbers this morning, Pool,
Speaker 1: it should come as no surprise really that China is
Speaker 1: having to pivot away from it's very strict COVID zero strategy.
Speaker 1: As you mentioned, weakness across the board here, fixed usset investment,
Speaker 1: industrial output, retail sales all missing analysts estimates. The big
Speaker 1: contraction retail sales is a real standard. I mean when
Speaker 1: you look through the components, it's almost negative right across
Speaker 1: the board in terms of what people are spending are
Speaker 1: not spending their money on. We also had numbers out
Speaker 1: this morning showing that the house house prices continue continue
Speaker 1: to decline, although the pace of that client slowed a
Speaker 1: little bit in November from October. But you have to say,
Speaker 1: when you take it all together, these numbers for November
Speaker 1: are bad. They captured that the economy was in a
Speaker 1: whole and just speak to why the authorities having to
Speaker 1: make the pivot that they are. Yeah, but look at
Speaker 1: what's happening right now. I mean you can see it
Speaker 1: very clearly from where you are in Hong Kong on
Speaker 1: the mainland. You've got these COVID cases spiking in Beijing.
Speaker 1: There's the risk it's going to spread in in into
Speaker 1: some industrial centers, which would even dampen industrial output. I
Speaker 1: can only imagine the negative impact on consumer sentiment. And
Speaker 1: we're five weeks out from the Lunar New Year holiday.
Speaker 1: I mean, this could get a lot worse before it
Speaker 1: gets better. Well, this seems to be the initially reaction
Speaker 1: from analysts. Also, they are making the point that those numbers,
Speaker 1: in those numbers from November are almost ancient history. And
Speaker 1: I were talking about a holy part tim for the economy,
Speaker 1: and that is how does it manage the exit waves?
Speaker 1: The number one is the public health issue. How how
Speaker 1: you know, how will we cope, how the hospital's cope,
Speaker 1: what kind of fatality rate will there be? And in
Speaker 1: that environment. To your point, people are saying, that's hardly
Speaker 1: going to be sort of unleashing fertile ground for unleashing
Speaker 1: animal spirits among consumers. There's a chance of ongoing destructions,
Speaker 1: say to a factory production, because just like every other economy,
Speaker 1: workers gets sick, they can't turn up. Throw in that
Speaker 1: disruptions to your services sector as well, university, school, shopping
Speaker 1: shops and everything else. So the point is the coming
Speaker 1: months are going to be choppy until we see how
Speaker 1: China can navigate this. We do. There's an unusual factor
Speaker 1: with channing that we're going to this massive annual holiday
Speaker 1: Lunar New yor holiday coming up in the middle of January.
Speaker 1: That's obviously going to be huge test for the authorities
Speaker 1: in terms of are they really now going to live
Speaker 1: with this disease, have they adjusted or will they roll
Speaker 1: back and try and put on some restrictions on travel
Speaker 1: and the like. So I think the near term picture
Speaker 1: looking pretty choppy. Most people saying hang on until maybe
Speaker 1: second quarter to get a clearer handle on where the
Speaker 1: economy is going. Yeah, this whole environment, it seems right
Speaker 1: for policy support, what are we anticipating him? Well, we
Speaker 1: did have the cential Bank in the market this morning.
Speaker 1: They actually put extra money into the system. That's being
Speaker 1: interpreted really as just trying to calm down a nervous
Speaker 1: credit market, and you know's ongoing turmoil and challenge credit
Speaker 1: markets linked to the property sector. So they've tipped in
Speaker 1: some extra money there to calm down those borrowing costso spreads.
Speaker 1: But they did not lower their interest rate this morning,
Speaker 1: the Central Bank. And that's because there's a view interest
Speaker 1: rates are already low enough. It's not it's not lower
Speaker 1: interest rates that China needs right now. It's probably you know,
Speaker 1: a much more a much more far reaching vaccination campaign.
Speaker 1: I think that the authorities are preaching every day about
Speaker 1: the pressures on the economy, so we will see ongoing
Speaker 1: public support. There will be more public money coming. The
Speaker 1: survey jobless rate this morning isn't the perfect read of
Speaker 1: China's labor market, but it ticked up, and you have
Speaker 1: to look at the direction, so you can be sure
Speaker 1: the authorities will respond to that. So I would say
Speaker 1: keep it on the physical side of it. We do.
Speaker 1: We do have a very important meeting of economic confessions
Speaker 1: in Beijing this week, and they're expected to set out
Speaker 1: the economic program for the year ahead. We won't get
Speaker 1: a read out this week, but you can be sure
Speaker 1: supporting the economy would be a big part of that.
Speaker 1: And thank you so much. It's always a pleasure. Uh.
Speaker 1: And occurring there is Bloomberg's chief Asia economics correspondent joining
Speaker 1: us from Hong Kong, unpacking the weak economic data that
Speaker 1: we had both for industrial production and retail sales. This
Speaker 1: is Bloomberg