[CC may contain inaccuracies] I mean the group is going through a synchronous recovery no whereas trying to in that is it anything that other countries
can learn from it. But yeah as a caveat every country is unique in terms of its structure. You're absolutely right. Every
country is unique. And so but China in its recovery has been kind of ahead of the curve. But of course part of that is due to
the fact that China got hit with the pandemic much earlier than the rest of the world as well. So the rest of the world can
actually use China's dynamic. Not every single feature but the overall dynamic. I say rule book. Right now we see that China is
decelerating in growth. We see that China is facing very high pressure on the PPA side. What's unique about China however is
that the PPA inflation hasn't really translated into CPI inflation. So within China not within the program is how does
that play out in the rest of the world. Because we saw how disinflation and deflation was exported from China for years. So
does that BPI translate into more inflationary pressures globally speaking. I think there's a possibility of that but I
don't think it will be the main driver of global. So trying to this time around. I don't think we'll be the main export there
of inflation for global especially for the advanced economies for mostly two reasons. Right. One is that the inflation
pressure the advanced economies are harsh. A lot of it's driven by services which is not tradable. So you don't get your part.
You get your haircuts or your barber or your Salonga treatment or whatever from from exploding Chinese goods. Right. However
there is some upward pressure in the sense that China might be passing along some of their raw material cost and also some of
the higher intermediate goods cost in their exports because these are the tradable goods that they can be passed along to
the rest of the world. For those who are for their major importers. Yeah. And we saw that in those PMI numbers. Right.
Our input and output prices for manufacturers jumped at. Where does that leave the PPO. See there that when it comes to any
kind of form of easing when you have these inflation pressures and you have the Fed the RBA likely are some kind of
announcement today and the B.O. either on this kind of tightening path. So that leaves China with very limited room to
maneuver. Right. So of course the Chinese PBL C will have to first focus on the Chinese domestic economy. I mean if you look
at the CPI which has been in this inflation for the year then they can technically argue that they have some room. However
what's the rest of the globe kind of NIKKEI ignore the rest of the world. So our view of Credit Suisse is that or I guess my
view is that for the rest of the year China's PBL C can do very modest loosening at best. And that translates quantitatively
means that there may be some modest acceleration to money supply growth. Right. In terms of m to growth however we're not
anticipating any more triple cuts for the rest of the year. And then we have to for any additional loosening beyond what what's
our baseline for the rest of the year. We'll have to wait essentially until next year when I think China might indeed
announce a fairly aggressive target in terms of their growth which we think will be around 6 percent. And then to achieve
that target. I do think that's both their monetary policy and their fiscal policy. We'll have to turn a little bit more
accommodative compared to this year to achieve that. And we just saw another net drainage when it comes to liquidity in those
open market operations on the BBC after we saw what a trillion renminbi that was injected just a couple of weeks ago. Are we
likely to see that more drainage now that that kind of seasonal demand is starting to ease and as it grows it's going to be more
drainage until we get some kind of announcement. If we do on a triple ARCA. So once again I don't think we'll have the triple.
OK. So people who are waiting for that might be slightly disappointed. That being said I think the some of these
liquidity adjustments are as you pointed out. Exactly. They're seasonal. So they don't truly reflect any meaningful change in
the overall policy stance or the policy attitude. What they do represent is that the authorities or our interpretation of it is
that the authorities will try to maintain sufficient liquidity especially with the property market situation now that they will
maintain sufficient liquidity for the banks and for the financial system. But they will of course use that these
operations to adjust that liquidity as needed. David we're seeing a slowdown in China which is largely supply side driven.
But the thing is we've got other aspects of the economy which must stem from the property developers. It's not what's
happening with them. It's probably more also what happens to local governments who rely on land sales in many ways and other
aspects which may have well unthought of consequences of what's going on with those developers and that may increase that huge
debt load to the local governments already have even further. And that's going to be something which.
Authorities in China have to be worried about in the medium to long term. You're absolutely right. I think this is something
that especially the property market or the kind of the vulnerability of the property market is a trigger for the. All
that that issue is that the Chinese economy has been facing. That is a that is an area that requires constant and dedicated
policy attention. They cannot afford any misstep on kind of managing. So I think that the property market or the real estate
sector is a decelerating and eventually contracting sector in China in the medium term. Do we think that they will blow up in
the next six months. The answer is no. Right. However that means we have to you know the policymakers have to pay very close
attention to it to make sure that they address this situation and make sure that they don't have a disorderly default on
their.