I want to start off not so much in the
macro picture.
I wanna talk about the property market.
That's a very hot topic right now,
and I guess there's the premise here for our viewers
that you know the housing market makes up such a
material.
Part of output that it becomes difficult to discern whether
the problems there are A cause or a symptom.
I'm sure you're following what's happening very closely.
What's the core problem right now in the property market?
Right, thanks for having me David
the core problem that initially it was,
as you said, this time last year was more of
a housing sector problem.
But at this point it's actually pretty remarkable.
We have had this a housing slowdown for a year
now,
and up until now it looks like the you know,
credit spread widening was mainly in the property sector.
We didn't really see stress as they enter in the
interbank market or elsewhere,
so it is a. You know quite a interesting dynamic,
but the latest news. It does suggest that you know
a lot of the problems were not really weren't really
solved yet,
and the recovery still quite fragile,
especially given the other type of headwinds facing the Chinese
economy.
And in in your assessment,
what are the short term solutions?
And can we be confident that those solutions will work?
Yeah, I think right now.
If we look at the headline news about mortgage
or home buyers or some home buyers refusing to pay
mortgages,
the problem there was that these are highly levered and
cash strapped.
Developers may not be able to
continue construction or finish the project on time and that's
the sort of the gist of the
problem at the moment. How to solve that problem?
You solve that over the weekend the regulators came out.
Reassuring the market and also asking banks to lend money
to certain developers to continue construction.
So if that's the problem of continuing construction,
delivering properties on time would be the solution.
Narrowing narrowly defined, but the bigger picture is that we
have these private developers which play a significant role in
the housing market and investors in the market are not
sure what the end game is that.
How exactly we're gonna find a solution to these developers?
You know we can at this moment just continue lending
and making sure they finish their projects,
but you know, down the road.
What's the resolution? How do what's the end game for
housing for living in?
Not for speculation, there's still a lot of questions
in investor's mind.
Right and what? What do you think that will have
any implications on whether that's central or local government?
Budget deficit targets? Do you think that's going to show
up as far as you know,
fiscal support is concerned?
But when you come to sort of
China's financial market and fiscal
spending, it is. It's a sort of that there are
different ways for the government to pull out resources.
Whether it's coming through the banking system or which wouldn't
be showing up as a fiscal number,
or is it coming from some kind of a local
government or even central government resources which would show up
in the fiscal number?
You know that there's a lot of uncertainty.
How exactly they figure out.
A source of funding, or how do they support these
developers?
That said, I think that right now is the financing
problem for these developers to continue construction and they should
be able to find a way to solve that problem
because the alternative is is quite concerning.
If you think about this negative feedback loop that
home buyers are not buying from these private developers,
if worrying that they are not going to be able
to finish the project and therefore these are private.
Bloopers are facing even more cash flow stresses because presales
are a main source of funding for them.
Then you just get into this negative feedback loop.
So I think the core issue here is for the
government to step in quickly to boost confidence to solve
the problem at hand and also providing more clarity to
the market to broader investors.
How this downturn in the property sector is going to
get resolved.
Yeah, and what we'll see,
of course. And wait for more announcements.
As far as this specific issue is concerned,
I want to just change topics and talk about employment
they've talked about that a lot.
That seems to also be a priority.
Youth unemployment is is very,
very high. Could you just explain to our viewers and
us to why is employment such a big issue right
now?
Yeah, I think if you.
Think about the the Chinese
government's objective to support growth and boost consumption.
You gotta ask ourselves where is the consumption going to
come from?
The consumption is going to come from income and confidence
for people to spend their income and employment is right
at the core of income.
If you have a very high unemployment rate or underemployment
problem because anecdotally
some workers, even though they have a job,
their salaries are being cut.
So if you don't have the income that's going to
translate into less consumption,
less growth, less demand, and also that confidence of
businesses and households are going to translate into investment decisions.
So that's why this is so important both to the
economy and to social stability.
Talk about your growth target as a final question and
and and what is going.
Well, let's let's try to end on a fairly pleasant
note here.
Yeah, exports have been going well.
If you look at the Chinese goods exports
versus the Bloomberg consensus expectations for 11 months in a
row exports that.
Have surprised to the upside of consensus expectations.
So when we look at the items,
China has been exporting, it's interesting that the desynchronized nature
of external demand.
For example, before it was a COVID related product.
And now it seems that the reopening.
Related products that are benefiting Chinese exports
so that part of the economy is doing well.
Although uncertainty is also significant as we talk about the
US recession risk Europe recession risk if we do head
into a recession for the US and Europe,
Chinese exports will suffer as well,
so adding everything together.
You were expecting 33 point,
3% growth for this year.