Speaker 1: Alright, we'll China ordering a seven day lockdown of the
Speaker 1: area around fox Kon's main iPhone plant in Jengaile. This comes.
Speaker 1: It's trying to reiterates its firm adherence to a COVID
Speaker 1: zero policy. Joining us now is John LOEU Bloomberg, Senior
Speaker 1: Executive Editor for Greater China. I mean, there wasn't too
Speaker 1: much of a reaction in terms of what we saw
Speaker 1: from the hon high share price yesterday in Taiwan. But
Speaker 1: but this is just another example of how we're continuing
Speaker 1: to see this COVID zero enforcement. Just tell us the
Speaker 1: latest here, John, So the latest, Julia is that the
Speaker 1: lockdown in Ginger has actually expanded. So we have the
Speaker 1: area around the iPhone plant in lockdown for seven days. Uh.
Speaker 1: More broadly, the city center is being locked down for
Speaker 1: three days. Traffic is being limited, trains are being stopped,
Speaker 1: businesses are being closed. That comes after yesterday there was
Speaker 1: a spike. The number of infections tripled to about three fifty,
Speaker 1: slightly lower today the numbers I think it was about
Speaker 1: a hundred and sixty or so, And so obviously a
Speaker 1: lot of people on edge and the authorities they're trying
Speaker 1: to take measures as they see fit. What did you
Speaker 1: make of the National Health Commission telling official state committed
Speaker 1: to COVID zero. It seems a reaffirmation, perhaps not that new,
Speaker 1: but it is um But it does come after a
Speaker 1: period when the market rallied because of thoughts of something
Speaker 1: different going forward. I think it was, or at the
Speaker 1: very least, the market seems to be taking it as
Speaker 1: a signal of of what policymakers are thinking. That meeting
Speaker 1: at the National Health Commission that happened as sort of
Speaker 1: UH post party congress a couple of weeks ago, the
Speaker 1: the officials they're got together to study sort of the
Speaker 1: outcomes of that congress. But from in the statement post meeting,
Speaker 1: they did reiterate that China is committed to COVID zero,
Speaker 1: the officials around the country should be executing COVID zero.
Speaker 1: And so in the midst of all this UH excitement
Speaker 1: about potentially some rollback or exit from that policy, I
Speaker 1: think that statement is telling markets it calmed down. You know,
Speaker 1: you might be getting ahead of yourselves. Yeah, and and
Speaker 1: tell us what the feeling is like on the ground.
Speaker 1: I mean, there must have been quite a lot of exuberance,
Speaker 1: because we certainly saw that reflected in market activity on
Speaker 1: those reopening hopes or rumors. But it really does seem
Speaker 1: like they're saying, hold on, we're not We're not there yet,
Speaker 1: and we may not even be there yet until March
Speaker 1: or later. I think the pain that COVID zero has
Speaker 1: inflicted economically, socially on businesses, on the citizenship is very pronounced,
Speaker 1: and it is not especially it's not a popular policy,
Speaker 1: and I think a lot of people would like the
Speaker 1: country to exit the policy. And so what you see
Speaker 1: there was an obvious excitement about potentially there being a
Speaker 1: reopening of the economy of the country's borders. Uh, and
Speaker 1: the markets responded in tune. I think that looking forward realistically,
Speaker 1: if there is an exit, it's not going to come soon,
Speaker 1: and it will come gradual, step by step, and way
Speaker 1: off into the future. John, I know you're the perfect
Speaker 1: person to ask this sort of esoteric question too, but
Speaker 1: because I know you'll handle it well. Um, it's a
Speaker 1: it's a line from a piece that Tom Freeman wrote
Speaker 1: in The New York Times two the year China lost America. Uh. Potentially, Um,
Speaker 1: I think you could have that could have happened much earlier.
Speaker 1: I think you know, the relationship has been strained, and
Speaker 1: you know it probably uh that strange sort of came
Speaker 1: to the four with the Trump presidency, But I think
Speaker 1: no matter who was elected president in sixteen, I think
Speaker 1: the relationship would have been very tense and difficult. You
Speaker 1: know what, does it make it a lot tougher question
Speaker 1: if we rephrased it a little and said, is two
Speaker 1: the year China lost the West? I think there's a
Speaker 1: I think it might be, but I think the reason
Speaker 1: there was a real shift in attitudes in the West
Speaker 1: towards China probably extends from Russia's invasion of Ukraine more
Speaker 1: so than anything that China did. I think that that
Speaker 1: war has really focus people's attention on Taiwan on how
Speaker 1: much they can countries in the West should be relying
Speaker 1: on countries with different forms of government, and that that
Speaker 1: debate is more public than it's ever been. Getting back
Speaker 1: to to the lockdown too, And from fox CON's point
Speaker 1: of view, I mean, does this make having factories in
Speaker 1: China seem less desirable when you when you can't really
Speaker 1: control whether or not you can continue to manufacture. Absolutely.
Speaker 1: I think the bigger risk here for the Chinese economy
Speaker 1: is that that these COVID lockdowns are going to push
Speaker 1: companies to diversify, to look for other places where they
Speaker 1: can establish manufacturing. It's not going to happen very quickly
Speaker 1: because China has some very disadvantages. Fox God has huge plants.
Speaker 1: There are lots of workers, but lots of component suppliers
Speaker 1: around them, and so you can easily get the things
Speaker 1: that you need to put together the latest iphon, the
Speaker 1: latest laptop, whatever you're trying to produce. In the longer term, though,
Speaker 1: those things are movable, and you've seen Apple beginning to
Speaker 1: make phones in India for example. Yeah, lots of other
Speaker 1: companies thinking about these types of things. Some on a
Speaker 1: more positive note, the PBOC governor Egan yesterday sounded a
Speaker 1: kind of optimistic outlook, although he did say he hoped
Speaker 1: for a soft landing with the property market, but he
Speaker 1: said that the economy remains broadly on track. Your thoughts
Speaker 1: on that interpretation, I think there are a lot of
Speaker 1: fundamental things that that remain in China's favor, uh. I
Speaker 1: think key among those is the fact that China, relatively speaking,
Speaker 1: is still poor when you compare it to the US.
Speaker 1: Too many countries in Europe on a per capita basis,
Speaker 1: and so that that leaves a lot of room for
Speaker 1: ketchup uh and catch up is obviously easier to do
Speaker 1: to generate growth from than being at the cutting edge
Speaker 1: of technology, for example, a sorry finish your third No.
Speaker 1: That being said that the situation globally is turning against
Speaker 1: China technolog alright. Always great reporting, John Loe, Thank you Blomberg,
Speaker 1: Senior executive editor for Greater China with us in our
Speaker 1: Beijing studio