1
00:00:00,080 --> 00:00:04,680
Speaker 1: Katrina l Senior economists at Moody's Analytics. Katrina, we have

2
00:00:04,800 --> 00:00:07,760
Speaker 1: the PBOC cutting the triple are in China, and also

3
00:00:07,840 --> 00:00:12,000
Speaker 1: we had some word yesterday about movements on the property

4
00:00:12,080 --> 00:00:15,280
Speaker 1: side too, to end one of its UM one of

5
00:00:15,280 --> 00:00:19,120
Speaker 1: its bands on property developers to sell shares and then

6
00:00:19,239 --> 00:00:21,680
Speaker 1: use that money for a couple of things, one to

7
00:00:22,160 --> 00:00:26,640
Speaker 1: pay down debt or secondly to actually purchase real estate.

8
00:00:26,680 --> 00:00:29,360
Speaker 1: With this scene is a little softening on the on

9
00:00:29,440 --> 00:00:32,720
Speaker 1: the property market. UM, we're seeing future straight a little

10
00:00:32,760 --> 00:00:35,960
Speaker 1: higher this morning. On China. Is the mood I guess

11
00:00:35,960 --> 00:00:39,800
Speaker 1: the mood is in flux, isn't it definitely? I mean,

12
00:00:40,000 --> 00:00:44,879
Speaker 1: what's happening in China is that because of the enduring

13
00:00:45,000 --> 00:00:48,680
Speaker 1: zero COVID policy, we're seeing that policy makers a having

14
00:00:48,720 --> 00:00:53,840
Speaker 1: to continue to release monetary and fiscal stimulus measures. But

15
00:00:54,000 --> 00:00:56,720
Speaker 1: at the end of the day, these measures can't completely

16
00:00:56,760 --> 00:01:00,760
Speaker 1: absorb the impact of of the the no make damage

17
00:01:00,800 --> 00:01:04,480
Speaker 1: that these movement controls are inflicting. I mean, the pandemic

18
00:01:04,560 --> 00:01:08,080
Speaker 1: of the past three years has really exemplified the fact

19
00:01:08,160 --> 00:01:10,840
Speaker 1: that it doesn't matter how much stimulus you're going to

20
00:01:10,920 --> 00:01:15,200
Speaker 1: release UM locking down large cities or even the ongoing

21
00:01:15,280 --> 00:01:19,280
Speaker 1: threat of locking down large cities does have um you know,

22
00:01:19,400 --> 00:01:24,920
Speaker 1: unavoidable economic consequences on household consumption and business investment. And

23
00:01:25,240 --> 00:01:27,440
Speaker 1: what we're seeing as well from the Chinese government is

24
00:01:27,480 --> 00:01:30,880
Speaker 1: while they are releasing stimulus, it is it is still

25
00:01:30,880 --> 00:01:34,679
Speaker 1: targeted and it is still um you know, quite limited.

26
00:01:34,720 --> 00:01:36,880
Speaker 1: They're not going gung ho when it comes to try

27
00:01:36,920 --> 00:01:41,360
Speaker 1: and reinvigorating the economy and really trying to stabilize domestic demand.

28
00:01:41,360 --> 00:01:44,559
Speaker 1: They're taking that more piecemeal approach as well, which means

29
00:01:44,640 --> 00:01:48,640
Speaker 1: that um you know, stabilization, it just really remains elusive

30
00:01:48,680 --> 00:01:52,440
Speaker 1: when it comes to a domestic demand perspective in China.

31
00:01:53,040 --> 00:01:55,680
Speaker 1: How much further weakness then do we see in the

32
00:01:55,720 --> 00:01:58,600
Speaker 1: growth story? I mean, those industrial profit figures for October

33
00:01:58,680 --> 00:02:01,320
Speaker 1: we're quite weak, down some in the first ten months,

34
00:02:02,680 --> 00:02:04,880
Speaker 1: so we're looking at the fourth quarter is going to

35
00:02:05,000 --> 00:02:07,920
Speaker 1: be another week one. I mean October and November have

36
00:02:08,040 --> 00:02:11,799
Speaker 1: been particularly challenging in China. Um you know, as you say,

37
00:02:11,840 --> 00:02:14,760
Speaker 1: the industrial profits figures are weak, but we're also seeing

38
00:02:15,280 --> 00:02:19,079
Speaker 1: um you know, the manufacturing pm MY data that's likely

39
00:02:19,120 --> 00:02:21,600
Speaker 1: going to be another weak one for November, and that

40
00:02:21,720 --> 00:02:23,440
Speaker 1: the p m I has actually been a pretty good

41
00:02:23,480 --> 00:02:26,520
Speaker 1: barometer of what's happening on the ground in China, and

42
00:02:26,560 --> 00:02:31,080
Speaker 1: it does show that um the significant challenges that that

43
00:02:31,120 --> 00:02:34,400
Speaker 1: they're they're facing at the moment, not just from a

44
00:02:34,480 --> 00:02:37,640
Speaker 1: domestic point of view, but also we're starting to see

45
00:02:37,680 --> 00:02:41,399
Speaker 1: that the weakness emerged really from the export channel as well,

46
00:02:41,440 --> 00:02:44,960
Speaker 1: and that export channel was an important support earlier this year,

47
00:02:45,120 --> 00:02:48,400
Speaker 1: but that it really is fading with weakness in Europe

48
00:02:48,440 --> 00:02:52,000
Speaker 1: and to a lesser extent, the US materializing. We've been

49
00:02:52,000 --> 00:02:55,720
Speaker 1: talking about the COVID protests in China the impact to

50
00:02:55,760 --> 00:02:58,120
Speaker 1: global growth there, and also just wanted to get your

51
00:02:58,160 --> 00:03:00,680
Speaker 1: thoughts on what we heard from the FED Service chair

52
00:03:00,760 --> 00:03:03,440
Speaker 1: Lele Branard, because she said this string of supply shocks

53
00:03:03,520 --> 00:03:06,919
Speaker 1: is keeping these inflationary risks high too, and certainly what's

54
00:03:06,919 --> 00:03:08,760
Speaker 1: happening in China and we've seen that with the fox

55
00:03:08,800 --> 00:03:11,320
Speaker 1: cone plant is just going to exacerbate a lot of

56
00:03:11,320 --> 00:03:15,519
Speaker 1: these supply chocks globally. That's exactly right, but I think

57
00:03:15,600 --> 00:03:17,399
Speaker 1: at this point it kind of remains to be seen

58
00:03:17,560 --> 00:03:21,880
Speaker 1: how how damaging the protests in China will be um

59
00:03:22,120 --> 00:03:25,960
Speaker 1: for to kind of supply chains continuing to normalize. I mean,

60
00:03:25,960 --> 00:03:29,120
Speaker 1: we have seen supply chains have UM kind of eased

61
00:03:29,200 --> 00:03:32,079
Speaker 1: quite significantly in the past couple of months, so we're

62
00:03:32,080 --> 00:03:34,480
Speaker 1: not seeing those same sort of blockages. So there is

63
00:03:34,520 --> 00:03:37,800
Speaker 1: certainly a threat UM coming from those process in China,

64
00:03:37,840 --> 00:03:40,680
Speaker 1: but it does remain to be seen how damaging, if

65
00:03:40,680 --> 00:03:43,720
Speaker 1: it all, we're going to really see UM an impact

66
00:03:43,720 --> 00:03:47,160
Speaker 1: from those protests. I mentioned that policy was very much

67
00:03:47,240 --> 00:03:50,280
Speaker 1: under the microscope in China. Is there a policy move

68
00:03:50,360 --> 00:03:53,000
Speaker 1: that you'd like to see that hasn't been made yet.

69
00:03:54,320 --> 00:03:56,400
Speaker 1: I mean, I guess what what I would like to

70
00:03:56,400 --> 00:04:00,720
Speaker 1: see from an economic perspective is knowing how damaging the

71
00:04:01,080 --> 00:04:05,720
Speaker 1: zero COVID policy is. UM. You know, continuing with it

72
00:04:06,120 --> 00:04:10,560
Speaker 1: UM is economically damaging in itself, So I guess continuing

73
00:04:10,600 --> 00:04:13,840
Speaker 1: to move away from that I think would would really

74
00:04:13,880 --> 00:04:18,000
Speaker 1: help the domestic demands stabilization in China. I mean, the

75
00:04:18,080 --> 00:04:22,640
Speaker 1: more UM we go into the ongoing movement controls, I mean,

76
00:04:22,680 --> 00:04:25,680
Speaker 1: the more frustration you can see from from households and

77
00:04:25,720 --> 00:04:28,880
Speaker 1: from businesses. So UM, there really is that that strong

78
00:04:28,960 --> 00:04:31,560
Speaker 1: need to move away from that while we continue with

79
00:04:31,640 --> 00:04:35,200
Speaker 1: the ongoing movement controls. I don't think it matters how

80
00:04:35,760 --> 00:04:40,000
Speaker 1: how severe or how Gung Ho policymakers go on the

81
00:04:40,040 --> 00:04:43,520
Speaker 1: on releasing stimulus, it's really not going to overwhelm that

82
00:04:43,640 --> 00:04:47,240
Speaker 1: that zero COVID policy. What did China's woes mean for

83
00:04:47,320 --> 00:04:50,400
Speaker 1: other potential manufacturing hubs in the region and growth there,

84
00:04:50,440 --> 00:04:52,680
Speaker 1: the likes of Vietnam, the likes of seeing more growth

85
00:04:52,720 --> 00:04:56,400
Speaker 1: in India too. So what we're seeing is that, I mean,

86
00:04:56,440 --> 00:05:00,000
Speaker 1: the pandemic has has really taught us that it's import

87
00:05:00,040 --> 00:05:03,680
Speaker 1: and to diversify supply chains. And I think UM, given

88
00:05:03,760 --> 00:05:06,960
Speaker 1: the UH the protests that are happening in China and

89
00:05:07,000 --> 00:05:10,960
Speaker 1: the threat again to UM supply chain management, it's really

90
00:05:10,960 --> 00:05:13,919
Speaker 1: going to further entrench that trends that we need to

91
00:05:13,960 --> 00:05:18,280
Speaker 1: continue to diversify supply chains, not rely on one single market.

92
00:05:18,600 --> 00:05:22,240
Speaker 1: I mean, even though China remains that the dominant manufacturing

93
00:05:22,400 --> 00:05:25,760
Speaker 1: hub in the region, but also it's it still remains

94
00:05:25,880 --> 00:05:28,680
Speaker 1: an important hub globally as well. I think it's really

95
00:05:28,680 --> 00:05:32,560
Speaker 1: going to cement business as plans to continue to to

96
00:05:32,680 --> 00:05:35,840
Speaker 1: make sure that they're not disproportionately exposed as much as

97
00:05:35,880 --> 00:05:39,560
Speaker 1: they previously have been to one particular market. We don't

98
00:05:39,600 --> 00:05:42,120
Speaker 1: often have guests talk about Hong Kong because while it

99
00:05:42,160 --> 00:05:46,080
Speaker 1: has a huge stock market. It doesn't have a huge economy,

100
00:05:46,120 --> 00:05:48,599
Speaker 1: but let's talk a little bit about it. I see

101
00:05:48,640 --> 00:05:50,440
Speaker 1: in your notes that you talked about the PEG and

102
00:05:50,480 --> 00:05:53,119
Speaker 1: the fact that that will remain. One interesting thing about

103
00:05:53,120 --> 00:05:55,320
Speaker 1: Hong Kong is that it is part of China, and

104
00:05:55,400 --> 00:05:58,480
Speaker 1: most of us who live there got m r n

105
00:05:58,560 --> 00:06:02,880
Speaker 1: A vaccines either for Maderna or from Fiser, and yet

106
00:06:03,160 --> 00:06:07,880
Speaker 1: China has not used its contracts with BioNTech, for instance,

107
00:06:07,920 --> 00:06:10,720
Speaker 1: to deploy them. Do you think that that is is

108
00:06:10,839 --> 00:06:13,520
Speaker 1: possible and how does that relate back to whatever model

109
00:06:13,560 --> 00:06:17,200
Speaker 1: Hong Kong offers. Yeah, I think I think it's important

110
00:06:17,200 --> 00:06:21,280
Speaker 1: to UM. I guess if we're looking at at Hong Kong,

111
00:06:21,320 --> 00:06:23,800
Speaker 1: what we have seen is that because Hong Kong has

112
00:06:23,839 --> 00:06:28,160
Speaker 1: been able to significantly ease the movement controls there, I

113
00:06:28,200 --> 00:06:31,640
Speaker 1: mean that we're seeing that kind of sustained recovery and

114
00:06:31,640 --> 00:06:35,080
Speaker 1: domestic demand. But when it comes to China, because they

115
00:06:35,680 --> 00:06:39,360
Speaker 1: um don't have that same sort of vaccination coverage. UM,

116
00:06:39,400 --> 00:06:42,640
Speaker 1: that's that's what's really kind of um, you know, hurting

117
00:06:42,960 --> 00:06:46,400
Speaker 1: hurting the reopening plans, I guess. And so that's what's

118
00:06:46,480 --> 00:06:49,279
Speaker 1: I guess, keeping keeping China behind the curve when it

119
00:06:49,320 --> 00:06:51,760
Speaker 1: comes to moving on from the pandemic, because for them

120
00:06:51,800 --> 00:06:55,440
Speaker 1: it's it's still really the front of mind, top policy concern,

121
00:06:55,520 --> 00:06:58,359
Speaker 1: and it's still the concern for consumers and businesses. But

122
00:06:58,400 --> 00:07:01,919
Speaker 1: if we're looking elsewhere across the lobe, um, you know,

123
00:07:02,320 --> 00:07:04,560
Speaker 1: most places have really moved on from that. So I

124
00:07:04,600 --> 00:07:08,279
Speaker 1: think the vaccine sort of supply issue is something that

125
00:07:08,600 --> 00:07:13,480
Speaker 1: will continue to come up while while China's resisting the endemic.

126
00:07:13,520 --> 00:07:17,520
Speaker 1: Living um starts. Katrina, always a pleasure. Thank you for

127
00:07:17,560 --> 00:07:20,560
Speaker 1: your insights. Katrina l is senior economist at Moody's Analytics,

128
00:07:20,680 --> 00:07:23,320
Speaker 1: joining us from Sydney here on Bloomberg Daybreak Asia