WEBVTT - Enda Curran on China Eco Data (Audio)

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<v Speaker 1>Well, as we have been discussing, China's economic activity worsened

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<v Speaker 1>in November with widespread virus outbreaks and restrictions. Joining us

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<v Speaker 1>now to talk about the numbers and the Karen Bloomberg's

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<v Speaker 1>Chief Asia Economics correspondent, and we had a miss on

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<v Speaker 1>industrial production growing just two point two percent we were

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<v Speaker 1>expecting three and a half and retail sales off by

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<v Speaker 1>almost six percent, a much sharper decline than expected and

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<v Speaker 1>probably not going to get much better, is it? Yes,

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<v Speaker 1>I think when you see these numbers this morning, Pool,

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<v Speaker 1>it should come as no surprise really that China is

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<v Speaker 1>having to pivot away from it's very strict COVID zero strategy.

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<v Speaker 1>As you mentioned, weakness across the board here, fixed usset investment,

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<v Speaker 1>industrial output, retail sales all missing analysts estimates. The big

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<v Speaker 1>contraction retail sales is a real standard. I mean when

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<v Speaker 1>you look through the components, it's almost negative right across

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<v Speaker 1>the board in terms of what people are spending are

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<v Speaker 1>not spending their money on. We also had numbers out

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<v Speaker 1>this morning showing that the house house prices continue continue

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<v Speaker 1>to decline, although the pace of that client slowed a

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<v Speaker 1>little bit in November from October. But you have to say,

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<v Speaker 1>when you take it all together, these numbers for November

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<v Speaker 1>are bad. They captured that the economy was in a

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<v Speaker 1>whole and just speak to why the authorities having to

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<v Speaker 1>make the pivot that they are. Yeah, but look at

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<v Speaker 1>what's happening right now. I mean you can see it

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<v Speaker 1>very clearly from where you are in Hong Kong on

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<v Speaker 1>the mainland. You've got these COVID cases spiking in Beijing.

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<v Speaker 1>There's the risk it's going to spread in in into

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<v Speaker 1>some industrial centers, which would even dampen industrial output. I

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<v Speaker 1>can only imagine the negative impact on consumer sentiment. And

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<v Speaker 1>we're five weeks out from the Lunar New Year holiday.

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<v Speaker 1>I mean, this could get a lot worse before it

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<v Speaker 1>gets better. Well, this seems to be the initially reaction

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<v Speaker 1>from analysts. Also, they are making the point that those numbers,

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<v Speaker 1>in those numbers from November are almost ancient history. And

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<v Speaker 1>I were talking about a holy part tim for the economy,

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<v Speaker 1>and that is how does it manage the exit waves?

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<v Speaker 1>The number one is the public health issue. How how

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<v Speaker 1>you know, how will we cope, how the hospital's cope,

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<v Speaker 1>what kind of fatality rate will there be? And in

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<v Speaker 1>that environment. To your point, people are saying, that's hardly

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<v Speaker 1>going to be sort of unleashing fertile ground for unleashing

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<v Speaker 1>animal spirits among consumers. There's a chance of ongoing destructions,

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<v Speaker 1>say to a factory production, because just like every other economy,

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<v Speaker 1>workers gets sick, they can't turn up. Throw in that

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<v Speaker 1>disruptions to your services sector as well, university, school, shopping

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<v Speaker 1>shops and everything else. So the point is the coming

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<v Speaker 1>months are going to be choppy until we see how

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<v Speaker 1>China can navigate this. We do. There's an unusual factor

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<v Speaker 1>with channing that we're going to this massive annual holiday

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<v Speaker 1>Lunar New yor holiday coming up in the middle of January.

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<v Speaker 1>That's obviously going to be huge test for the authorities

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<v Speaker 1>in terms of are they really now going to live

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<v Speaker 1>with this disease, have they adjusted or will they roll

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<v Speaker 1>back and try and put on some restrictions on travel

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<v Speaker 1>and the like. So I think the near term picture

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<v Speaker 1>looking pretty choppy. Most people saying hang on until maybe

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<v Speaker 1>second quarter to get a clearer handle on where the

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<v Speaker 1>economy is going. Yeah, this whole environment, it seems right

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<v Speaker 1>for policy support, what are we anticipating him? Well, we

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<v Speaker 1>did have the cential Bank in the market this morning.

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<v Speaker 1>They actually put extra money into the system. That's being

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<v Speaker 1>interpreted really as just trying to calm down a nervous

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<v Speaker 1>credit market, and you know's ongoing turmoil and challenge credit

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<v Speaker 1>markets linked to the property sector. So they've tipped in

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<v Speaker 1>some extra money there to calm down those borrowing costso spreads.

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<v Speaker 1>But they did not lower their interest rate this morning,

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<v Speaker 1>the Central Bank. And that's because there's a view interest

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<v Speaker 1>rates are already low enough. It's not it's not lower

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<v Speaker 1>interest rates that China needs right now. It's probably you know,

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<v Speaker 1>a much more a much more far reaching vaccination campaign.

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<v Speaker 1>I think that the authorities are preaching every day about

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<v Speaker 1>the pressures on the economy, so we will see ongoing

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<v Speaker 1>public support. There will be more public money coming. The

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<v Speaker 1>survey jobless rate this morning isn't the perfect read of

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<v Speaker 1>China's labor market, but it ticked up, and you have

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<v Speaker 1>to look at the direction, so you can be sure

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<v Speaker 1>the authorities will respond to that. So I would say

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<v Speaker 1>keep it on the physical side of it. We do.

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<v Speaker 1>We do have a very important meeting of economic confessions

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<v Speaker 1>in Beijing this week, and they're expected to set out

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<v Speaker 1>the economic program for the year ahead. We won't get

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<v Speaker 1>a read out this week, but you can be sure

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<v Speaker 1>supporting the economy would be a big part of that.

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<v Speaker 1>And thank you so much. It's always a pleasure. Uh.

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<v Speaker 1>And occurring there is Bloomberg's chief Asia economics correspondent joining

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<v Speaker 1>us from Hong Kong, unpacking the weak economic data that

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<v Speaker 1>we had both for industrial production and retail sales. This

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<v Speaker 1>is Bloomberg