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Speaker 1: Let's get to Tinglu, chief China economist at Nomura International,

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Speaker 1: who joins from Hong Kong. Ting Lou, thanks for being

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Speaker 1: with us. What's your take on the steps that the

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Speaker 1: government in China is taken to relax some of these

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Speaker 1: COVID restrictions coming too late? Now, should this pivot perhaps

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Speaker 1: have come at a much earlier time? Well, it's never

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Speaker 1: too late. I think it's just too very welcome because

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Speaker 1: during COVID is not sustainable and I believe they will

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Speaker 1: have to do this. Yes, maybe it's a little bit

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Speaker 1: too late, um, but I think this is the right step. Yeah,

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Speaker 1: the policy wasn't sustainable, but the half out of it

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Speaker 1: is going to be an interesting one to navigate. Indeed,

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Speaker 1: what sort of bumps and challenges do you anticipate going ahead? Yeah, well,

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Speaker 1: I believe they now ending the zero COVID to ads,

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Speaker 1: but they will have to get into a new stage

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Speaker 1: that's about a flatteny in the curve, I believe. Well,

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Speaker 1: we will have we will see an inevitable search of

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Speaker 1: infections in China in the next couple of months, and

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Speaker 1: they will have to be prepared for this. But first

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Speaker 1: and the foremost, of course, I believe they need to

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Speaker 1: switch narratives. They need to tell people that most of

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Speaker 1: those people, in fact, you won't have serious disease. It's

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Speaker 1: not a pneumonia, so they won't swamp the hospitals there

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Speaker 1: squeeze or the resources. Uh. Then of course they also

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Speaker 1: need to increase vaccination for those elders. That's the two

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Speaker 1: most important steps for the government. Now, I know your

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Speaker 1: expertise is overall the economy, but if you could get

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Speaker 1: in and look a little bit at the level of

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Speaker 1: the health care system, is it sufficient to handle this

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Speaker 1: right now? Have they fortified it in a way where

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Speaker 1: they're better prepared well compared with like city of states

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Speaker 1: are like Singapore or some of the like small economies

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Speaker 1: like the Hong Kong Definitely mainland China is not really

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Speaker 1: so reaching those resources. But compared to Vietna, compared with

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Speaker 1: a bunch of the emerging markets um like India, and actually,

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Speaker 1: as think, China is badly crivoted. So and also we

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Speaker 1: need to recognize that olycron is much less well deadily

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Speaker 1: them before. So I believe that China has one of

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Speaker 1: the resources to handle the infections of omicron uh. And

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Speaker 1: of course we need to be prepared for writing infections

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Speaker 1: and also perhaps me some of the rising um will

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Speaker 1: death numbers. I think we've talked about some of the

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Speaker 1: challenges facing China's economy. I want to talk about policy support.

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Speaker 1: We've already had a triple our cut. What other measures

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Speaker 1: do you anticipate their coming? Well, I expected them just

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Speaker 1: to print more moneys to support Chinese business, especially Chinese developers.

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Speaker 1: Uh and some of the China's local governments or Chinese

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Speaker 1: property marks as being in a big slum since a

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Speaker 1: year ago, and many private developers are in big trouble,

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Speaker 1: so I believe they will continue to support them after

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Speaker 1: the pivots two weeks ago. One of the things that's

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Speaker 1: been curious, though, when the p BOC has done this

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Speaker 1: type of tweaking to the policy in the past, I mean,

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Speaker 1: there's been little demand for money. They can't give it

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Speaker 1: away in some cases. Do you think there's going to

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Speaker 1: be greater appetite if the COVID trajectory or the relaxation

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Speaker 1: of these policies remains kind of on the path that

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Speaker 1: we seem to be witnessing right now, this unfolding of relaxation.

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Speaker 1: Do you think it's going to necessarily mean people are

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Speaker 1: going to demand more credit. Well, eventually, yes, but not

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Speaker 1: necessarily in the next couple of months. I believe that

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Speaker 1: we will have to experience our period of surgery, infections

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Speaker 1: and sound disruptions of the manufacturing and the logistics before

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Speaker 1: everything becoming better. So maybe in the three or four

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Speaker 1: even five months, China will have to experience a very

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Speaker 1: difficult period. So what's your growth outlook over the next

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Speaker 1: few months. Well, um, I have UM two point four

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Speaker 1: percent and year over year um GDP growth forecast for

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Speaker 1: Q four this year. UH is still below the consensus,

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Speaker 1: but many economies are cutting their growth forecasts from about

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Speaker 1: four percent to bellows pent just in the past couple

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Speaker 1: of days. For the first UH two quarters next year,

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Speaker 1: I just expect maybe somewhere around one growth year over year,

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Speaker 1: and the sequential growth is likely to be negtive. Why

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Speaker 1: because well, when China starts lifting those lockdowns and start

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Speaker 1: some of those eaty measures, and then we will experience

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Speaker 1: a real search of infections, maybe two hundreds of thousands,

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Speaker 1: maybe even two half million per day, So this will

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Speaker 1: be a difficult time before uh well uh they well,

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Speaker 1: before the completion of the reopening and after that I

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Speaker 1: expect a true recovery of the Chinese economy maybe in

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Speaker 1: the second half next year, so in the all year

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Speaker 1: next year. Yeah, yeah, Well, I was just wondering thanking

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Speaker 1: in the case where infection spike, if it goes on

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Speaker 1: for a couple of months, I'm thinking about the supply

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Speaker 1: chain problems that could unfold as a result of that.

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Speaker 1: I mean on the production side, the manufacturing side, could

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Speaker 1: things get very messy. And if you're a producer or

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Speaker 1: a consumer, let's say, have manufactured goods that have been

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Speaker 1: produced in China, will you feel a lot of stress

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Speaker 1: in the supply chain? Well, I think the answers yes. Now,

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Speaker 1: hopefully it's not really that serious. I think the most

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Speaker 1: important job for the Chinese government just to switch the

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Speaker 1: narrative to tell Chinese people, especially those young workers that

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Speaker 1: will COVID, the only crime is not really so serious.

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Speaker 1: It's not a pneumonia. Otherwise, perhaps we'll see more disruptions

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Speaker 1: like what we experience in uh Fox councils and do

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Speaker 1: factory a couple of weeks ago, when many workers choose

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Speaker 1: to leave the sectory. We've seen some support come for

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Speaker 1: the beleaguered property sector. Those sixteen support measures, which of

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Speaker 1: course we've discussed previously. But do you think that this

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Speaker 1: is the end of it. Can we now draw a

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Speaker 1: line under the troubles for the property sector or can

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Speaker 1: you anticipate more ahead? Well, I think the worst of

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Speaker 1: time for proper developers regarding funding or financing is over.

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Speaker 1: But it takes more time for developers to recover for

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Speaker 1: China's new home sales to recover. Why because zero COVID

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Speaker 1: because of all this kind of um well lockdowns. As

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Speaker 1: I said before, even though they start while the real opening,

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Speaker 1: but the real opening process could have been quite slow

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Speaker 1: and painful. We still have a lot of these lockdown measures. There,

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Speaker 1: A lot of regency in China still have very restrictive

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Speaker 1: well prevention measures. So we will have to see the

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Speaker 1: end of that before we see a true recovery of

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Speaker 1: the property markets. All right, Ting Lou, We will have

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Speaker 1: to leave it there, but thanks so much for joining

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Speaker 1: us on Bloomberg Daybreak Asia. Tinglu is chief China economist

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Speaker 1: at Namura International,