The way ahead. What does that mean in terms of
economics context? I think this year is going to the year
of rebound and recovery after all that. You know, Covid and property downturn
and regulatory tightening and so on. So this year is really from a policy
point of view, but also from the economic development point of view.
It's, you know, recovery of growth, four point nine percent was when we last
spoke with your forecast. Is that still the forecast?
Yes, we are at four point nine. Basically, we're saying around 5
percent, but above 5, I think takes quite a bit of effort, may be quite
challenging given that property is still at the bottom.
And we haven't seen a lot to me yet. And also that global economy is slowing
down. So exports is going to be a drag rather
than a contribution compared to 2021. So there's some challenge there.
Then that leaves consumption as the only card they can play.
What do you think consumption is going to look like this year?
Yeah. Consumption is going to be the leading
driving force of that recovery. And so the main thing is that during
Covid. Right.
So there has been a lot of pent up saving because people were locked down
at home. And also there is a confidence issue.
So access saving went up. Even some consumer activities cannot
take place because of offline closures. I think this year with the with the exit
from the 0 Covid policy, a lot of that is going to resume.
So we see real consumption growth at more than six and a half percent this
year. And retail sales probably are going to
be close to 10 percent. A lot of that also comes down to
confidence and that comes down in part to property.
Mm hmm. Well, what do you make so far of this
whole list of measures that down so far? And do you think we'll get more?
Do we need to get more on the property side?
I think in mid-November, when the government announced the 16 measures of
support, financing, support for developers, I think that marks a turning
point in the attitudes towards the sector.
And right now, I think the risk for the sector, instead of being deleveraging
right now is how do we stabilize? How do we support the sector so they can
grow, they can develop more healthily? Right.
So since then, there has been one after another in a more detailed measure
following in. So if it's not enough, I'm sure there
would be more. I think there will be more.
So one area we think that could come is more funding support for the stalled
projects from policy banks and commercial banks, but also for the home
buyers. The recent announcement about the
so-called mortgage rate adjustment mechanism, I think it's going to end up
lowering mortgage rate and we expect more cities probably ease the purchase
restrictions. And then combined with the exit from 0
Covid. I think that's going to stabilize the
property sector. We see sequential growth from March,
April onwards. So the loan prime rate.
You think that's going to go down this year further?
Yes. Within the loan, prime rate has some
room to go down. Will inflation be a problem?
That's inflation. We don't think it's going to be a
problem, but we do see CPI inflation going up because, you know, prices of
airline tickets and transport, hotels, food and beverage, you know, were weak
and they need to recover and they are recovering.
They're going to recover more. So that's going to push up prices.
But on the other hand, we know property is still relatively weak even after the
the rebound. So the upstream materials input costs
are going to be low and global energy prices are also relatively subdued.
So PPA is not going to push put too much cost pressure.
So we are looking at inflation at around 3 percent.
And for investors looking to places, for example, or just top of my head in
Australia, for example, to play to reopen.
But in terms of imports of raw materials and commodities, what do you think China
is going to need this type of recovery specifically?
Well, this type of recovery, I think the big thing is domestic driven.
But a lot of transport and resumption of tourism driven.
So I think demand for liquid fuel for oil is going to go up.
That's that's quite obvious. And then the stabilization of the
property sector probably will put a floor on some of these
commodity prices and the iron ore price have already rebounded.
And then you also have, you know, the government's focus on new energy,
renewable energy, new energy vehicles. So things like copper would benefit from
both that structural demand and also the rebound in property.
Now, the looking at the reopening story in China, the last one really in the
world to to to open up. Right.
I look at the US, for example, and we've had issues of inflation and labour
market tightness there. Do you think we'll get some sort of
unexpected phenomenon in China's labour market, similar to what we saw in.
Other places, I think it's going to be much better because I think in China,
unlike in the US and many European countries, there is no direct income
subsidy. There's no check in the mail.
So people have to work. They cannot afford to say I'm too
worried about, you know, Covid situation.
Also, to a great extent, Covid happened, you know, sort of swept through China
very quickly. So a lot of people already got it and
recovered. So I think both of these issues
combined, plus the economy is very weak. There's a lot of slack in the market.
So we don't think there is going to be a big issue on the labor market.
Of course, there could be around Chinese New Year.
There could be some disruptions. People decide to take longer holidays
and stay at home, should take care of themselves or their family.
So there could be a bit, but I think in general, it's not going to be a major
issue. And the biggest risk.
Very quickly to China's internal or external.
This year, I would say it's it's a bit both, but maybe still internal because
the uncertainty about the coal situation is is high.
We know nobody can really predict and also confidence about the property
market. Right.
So we have certain baseline. But will people be really optimistic or
pessimistic? It's unclear globally.
I think, of course, we worry about, you know, excessive rate hikes by the Fed
that could lead to a deeper recession. That means very weak export.