You know, on the heels of this very important speech.
Now, if if it weren't for President Biden's the US curve on China when it
comes to chips so important to developing key things that they need to
develop. Maybe this wouldn't be resonating so
much. But against that backdrop, how strident,
how aggressive, what is what is Xi Jinping trying to tell not just the
world, but in particular the US? Yeah, I think you're absolutely right.
Thanks for having me back. I should say.
But look, this this speech is taking place in context.
And the context is a deterioration in U.S.
China relations, especially trade relations.
And President Biden has imposed export bans on technology and chip technology
to China. So this is a reassuring message from XI
or an attempt to be reassuring to his constituents is to say we're going to
plow ahead on our own. We're going to devote the resources and
effort on our own to close that gap and to make up for whatever shortfall there
might be in this band from the United States.
You know, another key issue here is the ties to his Taiwan reunification.
Shirley Wrenn, who is a Mandarin speaker, made the point that in this
part of the speech he really picked up, that his voice even shook at one time,
that he is angry about this. What did you pick up?
Look, Taiwan is the most important domestic political issue in China.
It is obligatory for anybody who aspires to senior leadership in the Chinese
Communist Party to be forceful, if not strident on Taiwan.
So part of what she is doing is passing a test.
But I wouldn't I wouldn't allocate all of the interpretation of this to simply
domestic Chinese politics. I think they are also serious about
this, that they don't want to see any change in the status of Taiwan.
They don't want to see a move toward independence.
They want to caution the United States about tormenting or incentivizing
independent streak in Taiwan. So they're serious about trying to
manage it on their terms in the near future.
Frank, at the same time, we're seeing their mode of domestic governance Covid
zero. The other aspects of how this is playing
out for the economy, the property sector, consumer demand being depressed.
All of this is starting to constrain growth.
You see this in the trade numbers. I mean, we just had the Singapore export
numbers when it comes to demand from China shrinking over 30 percent for
September. What does it mean for businesses in your
area and how I guess China is reshaped in terms of whether or not it can
continue being the economic powerhouse for both demand and supply.
I think the zero tolerance policy in China.
The lockdown policies, China have caused considerable disruption to the Chinese
economy. Now, Beijing will say the the benefit is
worth it. There's there's health benefits to it.
But to my mind, they could have, I think, accomplished a lot of the
benefits of that without these sort of massive and pervasive dislocating
lockdowns like the ripple effect is going to go on for some time.
So I think they really went for a very rigid or very orthodox approach on
Covid. They're paying a huge economic price for
it and they're not going to be able to easily turn the light switch back on
next year, having turned it off this year.
So it's a longer term problem for the Chinese economy.
What are we seeing from a business perspective for your business?
Well, I can tell you specifically on an activity here, RTS, specifically in
e-commerce. You have a collapse in demand in certain
segments like apparel and beauty. Beauty and apparel are typically the two
largest segments of consumer goods in China and e-commerce.
And of course, when you have locked down, you don't need a new shirt or you
don't need a new increase. So demand just collapses in those areas.
It also disrupts work habits and office activity and experimentation.
So it's a it has a depressive effect on the whole economy.
So in terms of the next steps for China, what is at the top of the list?
Many people are saying, for example, that Covid 0 may not be going away for a
long, long time, although some thought that maybe after
the party Congress. That's when she would be able to say,
OK, we're doing better. When we can we can start softening this,
start winding it down. What do you think is the next big step
from having that second group? I think the part of the party Congress
is this is consistent with Chinese political culture.
He's not there to be defensive or to apologize.
His message at the party Congress is. We did the right things for the right
reasons. We took the right steps to safeguard
China's health. So it is almost a defiant or resolute
posture that he's taking. And it's accepted and amplified by the
party structure. That's for today.
But my guess is when we get through the holidays, we start looking at January.
We will see some lightning or some experimentation.
We'll see. I think a reduction in quarantine for
international visits. And I think we'll see a lighter touch
when it comes to lockdowns and a slight move away from that zero tolerance.
But Chinese government tends to move incrementally, and I don't think they
move until next year.