1
00:00:00,160 --> 00:00:03,240
Speaker 1: Let's get to our guest, King lou Is Greater China,

2
00:00:03,400 --> 00:00:07,480
Speaker 1: chief economist at HSBC Global Research, joining us from our

3
00:00:07,520 --> 00:00:10,960
Speaker 1: studios in Hong Kong. King, thanks for being with us.

4
00:00:11,320 --> 00:00:13,640
Speaker 1: Let's talk about the reopening and how you view the

5
00:00:13,720 --> 00:00:16,759
Speaker 1: situation right now. Pretty aggressive steps from the government to

6
00:00:16,880 --> 00:00:19,439
Speaker 1: kind of relax some of the restrictions. We've seen this

7
00:00:19,520 --> 00:00:22,400
Speaker 1: kind of rollout in stages, and this weekend will mark

8
00:00:22,720 --> 00:00:26,439
Speaker 1: a very important inflection point in the process. How do

9
00:00:26,480 --> 00:00:31,480
Speaker 1: you see this impacting the overall economy in China? Happy

10
00:00:31,480 --> 00:00:34,239
Speaker 1: New Year, Thanks for having me. Uh So, Actually, it's

11
00:00:34,280 --> 00:00:38,080
Speaker 1: fair to say the reopening happened um faster than most

12
00:00:38,200 --> 00:00:43,520
Speaker 1: had expected back in November December. And uh, the reopening

13
00:00:43,600 --> 00:00:46,880
Speaker 1: actually will be the big theme uh for this year,

14
00:00:47,159 --> 00:00:51,360
Speaker 1: and the momentum can carry into next year. We think overall,

15
00:00:51,880 --> 00:00:56,960
Speaker 1: after the first quarter of the potentially very challenging transitional period,

16
00:00:57,680 --> 00:01:01,520
Speaker 1: from the second quarter on, China's economy will rebound strongly,

17
00:01:01,640 --> 00:01:07,520
Speaker 1: especially for consumption, which had been subdued all through the pandemic. Uh.

18
00:01:07,560 --> 00:01:11,720
Speaker 1: And the rebound can be supported by both a better

19
00:01:11,840 --> 00:01:16,919
Speaker 1: outlook and uh, you know, economic recovery, as the mobility

20
00:01:16,959 --> 00:01:20,560
Speaker 1: restrictions will be removed and also the excess savings are

21
00:01:20,640 --> 00:01:24,440
Speaker 1: crude over the past three years. Yeah, we've also heard

22
00:01:24,440 --> 00:01:27,600
Speaker 1: from the PBOC recently it's been reiterating its position that

23
00:01:27,640 --> 00:01:32,199
Speaker 1: they will be targeted imprudent monetary policy. In practical terms,

24
00:01:32,720 --> 00:01:34,520
Speaker 1: what does this mean and how do you see its

25
00:01:34,520 --> 00:01:40,160
Speaker 1: supporting equities? In our view, the targeted UH kind of

26
00:01:40,200 --> 00:01:44,520
Speaker 1: easing from PBOC basically means they will likely rely more

27
00:01:44,640 --> 00:01:49,400
Speaker 1: on the quantitative tools, especially the structural tools so to speak.

28
00:01:49,480 --> 00:01:53,400
Speaker 1: They introduced UH you know in recent years, including various

29
00:01:53,400 --> 00:01:56,680
Speaker 1: schemes of the re lending UM. And then the reason

30
00:01:57,120 --> 00:01:59,640
Speaker 1: they want to be targeted is I think, you know,

31
00:02:00,280 --> 00:02:04,200
Speaker 1: basically trying to UM you know, avoid the kind of

32
00:02:04,200 --> 00:02:06,960
Speaker 1: the big flooding of the liquidity UM and at the

33
00:02:07,000 --> 00:02:11,760
Speaker 1: same time the US fat probably the interest rate will

34
00:02:11,800 --> 00:02:15,040
Speaker 1: stay ativated, so they won't also want to minimize the

35
00:02:15,080 --> 00:02:19,360
Speaker 1: potential headline monetary policy divergence from the US. What about

36
00:02:19,360 --> 00:02:22,720
Speaker 1: some of the other policies that Beijing is employed to support,

37
00:02:22,840 --> 00:02:26,079
Speaker 1: Let's say, for example, property developers in the real estate market.

38
00:02:26,320 --> 00:02:29,280
Speaker 1: How far along are we now in that process and

39
00:02:29,320 --> 00:02:33,600
Speaker 1: are you seeing signs of stability or um Is there

40
00:02:33,639 --> 00:02:36,040
Speaker 1: the risk maybe the things wobble a little bit here

41
00:02:36,040 --> 00:02:38,280
Speaker 1: in the new year, given some of the uncertainty that

42
00:02:38,360 --> 00:02:42,280
Speaker 1: we've talked about with respect to the reopening, right. I

43
00:02:42,320 --> 00:02:45,360
Speaker 1: think for the property sector, it's fair to say probably

44
00:02:45,440 --> 00:02:49,720
Speaker 1: the worst has passed. UM. Since November last year, the

45
00:02:49,800 --> 00:02:53,920
Speaker 1: government stunts towards the property sector has changed the dramatically

46
00:02:54,360 --> 00:02:57,840
Speaker 1: we have seen. UH. For example, the focus has shifted

47
00:02:57,880 --> 00:03:03,840
Speaker 1: from let's ensure devaly of the unfinished projects to let's

48
00:03:03,919 --> 00:03:08,400
Speaker 1: ensure the developers would have enough funding. So that change,

49
00:03:09,040 --> 00:03:12,760
Speaker 1: using a metaphor, is kind of like UH, previously they

50
00:03:12,840 --> 00:03:15,839
Speaker 1: focus on watering the leaves of the plant, but now

51
00:03:15,919 --> 00:03:18,519
Speaker 1: they're trying to make sure the water can get to

52
00:03:18,600 --> 00:03:21,799
Speaker 1: the roots, and that's very important. At the same time,

53
00:03:21,880 --> 00:03:24,680
Speaker 1: we see from the local government level, UH, you know,

54
00:03:24,800 --> 00:03:29,000
Speaker 1: lots of cities have eased their home purchase restrictions and

55
00:03:29,200 --> 00:03:32,359
Speaker 1: UH even yesterday, UH the PBOC and c b r

56
00:03:32,400 --> 00:03:35,920
Speaker 1: C are saying there's more flexibility about the mortgage rate cards.

57
00:03:36,480 --> 00:03:38,680
Speaker 1: And so can we say with confidence that the worst

58
00:03:38,880 --> 00:03:41,320
Speaker 1: of the crisis is now over in terms of property

59
00:03:41,320 --> 00:03:45,840
Speaker 1: in China? I think, you know, for the physical market rebound,

60
00:03:46,160 --> 00:03:49,440
Speaker 1: it will need uh for China to emerge from COVID

61
00:03:49,520 --> 00:03:53,040
Speaker 1: because lots of home purchase will require the offline activities.

62
00:03:53,320 --> 00:03:56,280
Speaker 1: But at least from the sentiment perspective from you know,

63
00:03:56,640 --> 00:04:00,480
Speaker 1: how easy the developers can access funding UM now is

64
00:04:00,560 --> 00:04:04,160
Speaker 1: much better. Uh, And we have seen basically the capital

65
00:04:04,200 --> 00:04:08,200
Speaker 1: market respond positively to the changes as well. You were

66
00:04:08,200 --> 00:04:10,640
Speaker 1: talking a moment ago about domestic demand. I'm thinking of

67
00:04:10,640 --> 00:04:14,640
Speaker 1: the Chinese consumer. Certainly. You've got to believe that everything

68
00:04:15,040 --> 00:04:18,279
Speaker 1: the population has been through since the pandemic began nearly

69
00:04:18,320 --> 00:04:21,359
Speaker 1: three years ago has just been excruciating. We've got the

70
00:04:21,440 --> 00:04:24,120
Speaker 1: Lunar New Year holiday a couple of maybe ten days

71
00:04:24,160 --> 00:04:27,279
Speaker 1: from now, and I'm wondering if you have expectations about

72
00:04:27,720 --> 00:04:33,040
Speaker 1: how people will participate normally in the very festive period

73
00:04:33,160 --> 00:04:36,680
Speaker 1: right now, and a lot of spending on the retail side.

74
00:04:36,720 --> 00:04:39,880
Speaker 1: It has driven things from travel to retail sales. Do

75
00:04:39,920 --> 00:04:42,000
Speaker 1: you do you have a sense of how well the

76
00:04:42,080 --> 00:04:47,760
Speaker 1: Chinese consumer will behave during this period? Well, actually we think,

77
00:04:47,800 --> 00:04:50,960
Speaker 1: you know, first saying this might be the busiest travel

78
00:04:51,080 --> 00:04:54,200
Speaker 1: Lunar New Year travel season since to Seldon and I,

79
00:04:54,720 --> 00:04:57,360
Speaker 1: lots of people plan to, uh, you know, go back

80
00:04:57,400 --> 00:05:01,200
Speaker 1: to their home and reunite with their family, especially because

81
00:05:01,240 --> 00:05:04,640
Speaker 1: this year we don't see any more mobility restrictions. That

82
00:05:04,760 --> 00:05:08,080
Speaker 1: being said, you know, the virus is still ripping off

83
00:05:08,160 --> 00:05:11,599
Speaker 1: the whole country, you know, especially the rural areas probably

84
00:05:11,640 --> 00:05:15,200
Speaker 1: will get hit when the migrant workers returned to their home.

85
00:05:15,560 --> 00:05:19,920
Speaker 1: So we don't expect the consumption to rebound very strongly

86
00:05:20,000 --> 00:05:23,280
Speaker 1: during this lower New year period, which is owning less

87
00:05:23,279 --> 00:05:27,400
Speaker 1: than two weeks from now, but probably the recovery will

88
00:05:27,480 --> 00:05:32,039
Speaker 1: come more meaningfully from second quarter of this year, so

89
00:05:32,200 --> 00:05:35,599
Speaker 1: as things improve. Quarta u Quarta, what's a credible growth

90
00:05:35,640 --> 00:05:39,960
Speaker 1: target for twenty three in China? We actually think China

91
00:05:40,040 --> 00:05:43,120
Speaker 1: can grow by five percent this year and then the

92
00:05:43,200 --> 00:05:45,960
Speaker 1: momentum can carry into next year. So next year we

93
00:05:46,000 --> 00:05:49,880
Speaker 1: expect a five point eight percent growth and uh you know,

94
00:05:50,000 --> 00:05:54,760
Speaker 1: basically the as I mentioned consumption will uh drive the growth.

95
00:05:55,360 --> 00:05:58,920
Speaker 1: At the same time, the external demand probably will be

96
00:05:59,240 --> 00:06:03,479
Speaker 1: uh as impressive this year, given the recessionary pressure is

97
00:06:03,520 --> 00:06:06,360
Speaker 1: on the rise in other parts of the world. At

98
00:06:06,400 --> 00:06:10,760
Speaker 1: the same time, the property sector might rebound modestly, which

99
00:06:10,839 --> 00:06:15,600
Speaker 1: basically means overall the investment could have still a decent

100
00:06:15,800 --> 00:06:19,560
Speaker 1: growth of around five percent. We were talking a day

101
00:06:19,760 --> 00:06:24,240
Speaker 1: or two ago about the significance in the and financial story,

102
00:06:24,320 --> 00:06:27,839
Speaker 1: being allowed to access, about wanting to half billion US

103
00:06:27,920 --> 00:06:30,920
Speaker 1: And I'm wondering whether or not it's fair to say that,

104
00:06:30,960 --> 00:06:35,200
Speaker 1: in terms of some of the regulatory clampdowns that we

105
00:06:35,240 --> 00:06:38,320
Speaker 1: have seen come out of Beijing on consumer facing tech,

106
00:06:38,680 --> 00:06:40,480
Speaker 1: that the worst of that is over as well. Is

107
00:06:40,520 --> 00:06:42,800
Speaker 1: that a fair statement or are you a little concerned?

108
00:06:44,080 --> 00:06:47,520
Speaker 1: Actually I think that's a fair statement. Um, we hear

109
00:06:47,600 --> 00:06:53,800
Speaker 1: from last months important meetings basically saying that internet sector

110
00:06:53,880 --> 00:06:57,760
Speaker 1: has made good uh, you know, improvement from their compliance,

111
00:06:57,839 --> 00:07:01,520
Speaker 1: et ceter And also I think if we put the

112
00:07:01,560 --> 00:07:06,240
Speaker 1: regulation of different sectors into perspective, like the antitrust for

113
00:07:06,279 --> 00:07:10,720
Speaker 1: the Internet sector, the big tech in finance or fintech, Um,

114
00:07:11,120 --> 00:07:15,920
Speaker 1: those practices are more or less benchmarking the global best practice.

115
00:07:16,240 --> 00:07:18,360
Speaker 1: But at the same time, you know, we haven't seen

116
00:07:18,560 --> 00:07:22,720
Speaker 1: any other country lots of regulations seem to be all

117
00:07:22,840 --> 00:07:25,920
Speaker 1: delivered in in one year or maybe less than a

118
00:07:26,000 --> 00:07:30,360
Speaker 1: year back in one so we start to see, uh,

119
00:07:30,400 --> 00:07:34,240
Speaker 1: for example, the top leaders from China talking about people,

120
00:07:34,600 --> 00:07:37,000
Speaker 1: I mean they need to worry about or they need

121
00:07:37,040 --> 00:07:41,880
Speaker 1: to manage well. Um, the fallacy of composition, which means, um,

122
00:07:41,920 --> 00:07:46,280
Speaker 1: you know their need. They need more transparency for regulation

123
00:07:46,360 --> 00:07:49,960
Speaker 1: and collaboration. Kinglu thank you so much for being with us.

124
00:07:50,000 --> 00:07:52,560
Speaker 1: Happy New Year to you as well. King Lu is

125
00:07:52,640 --> 00:07:56,679
Speaker 1: a Greater China Chief Economist at HSBC Global Research, joining

126
00:07:56,760 --> 00:07:57,920
Speaker 1: us here on d B A