I'll start industrial production very active four point two percent every
night retail sales five point four percent.
The economists were expecting a print of three point three percent.
So this is definitely better than expected numbers.
Fixed assets. That's where see 5 4 8 percent.
Also better than expected are the property investment side of Hirsch.
That's where we're seeing a bit of more downside there.
Absolutely. I said in the breaks we've become.
That's good. I was right.
For once I think against this background of of course we've got real GDP at the
moment to point 4 percent. We've got at the moment to CPI two and a
half percent or thereabouts. And also those PMI numbers how do they
really stack up next to what we're just getting.
That's going to be the key question I guess.
Yeah. And then you have the likes of property
investment as I mentioned seven point four percent lower.
Year to date residential property sales thirty point three percent to the
downside. So continuing to see a lot of pressure
there. A jobless rate the lower five point
three percent compared to the five point four percent we saw previously did.
Yeah a little bit more context here. So that five point four percent retail
sales number was higher than just about every single forecast in.
Our next guest actually has one that's quite close to that four and a half
percent right point for what it came at a five point for the highest estimate
was five point eight percent. So that goes to our friends at IAG.
You know you ISE pay. There we go straight to a Bank of
America global research a pack economics head and a chief greater China
economist. I mean I feel what I'm going to ask you.
Go. Well I think in terms of the data IP and
retail sales stand out most and retail sales wise as we said and we were
expecting a better number than last month mainly because that auto sales
have been reasonably strong. Right.
Yeah. Year in the first 27 days of the off the
month that it was reported was actually about 19 percent up in volume terms.
So the very fact that retail sales in value terms was up by more than 5
percent I think it has much been must have been contributed by the strong auto
sales. Why do you think it's such a big miss
though or at least better than expected. Well you know I'm one of those people
here this week that economists and your peers are saying maybe 3 percent growth
is not possible this year. Are we likely to see 3 percent.
We still kept our three point five percent growth forecast unchanged which
is currently standing exactly at a Bloomberg consensus at the moment.
And we think that there is still a chance.
And also now if you look at the IP numbers it is much higher than the
consensus numbers. And this is against the heat waves the
power crunch and the Covid control curves back in back in August.
So we think that the numbers are probably not going to be as bad as many
people feared. I think global economics said that power
crunch that we saw in August probably not as bad as what we saw last year or
the third quarter. Yeah the National Bureau Statistics out
would align. Right now China's vowing to stabilize
employment and consumer prices. So Helen if this continues slightly
better than estimates do you think three and a half percent.
That's the bottom. We think we can still probably make it
just by the end of the year. So we have a 4 percent for Q3 four point
six percent for Q4 and the whole year when average out at forty three point
five. Now the problem however is that domestic
demand is still so weak. Look at the CPI inflation headline was
2.5. The core was actually at the zero point
eight percent for two months in a row. So this is telling us that domestic
demand is too weak and we need to see more policy actions to help in our view.
The only policy that will help is to relax the coding controls.
RTS live blog. You have the memo that pointing out that
the big anomaly here isn't showing how bad things are property wise we've got.
This is the big miss. Actually if you like on to the downside
probably investment year today down seven point four percent.
We look at a seven point four seven percent contraction here and also
residential property sales year to date 30 percent down as well.
Now these things are really emblematic of what is actually happening.
That and how that has yet to materialize systemically.
Property sector. You're right Richard has been a drag on
overall growth. So if you look at home sales as you said
as well as construction activities both have been pretty weak.
And unfortunately we're not expecting it to improve dramatically next year.
In fact we're not necessarily saying that this is a high lending scenario
that all these unfinished projects are going to be a major problem for China
that it would you know go off next year. We think that policy easing measures
will step up and probably help deliver most of these sold units to the house a
home buyers. However in terms of the sentiment it is
hard to turn it around. And we think that he would turn and it
would take a definitely take a while before home sales improve more
meaningful. Right.
I mean I guess my question there was if if the issue in the property market is
more structural then it's not Covid per say that triggered the empty apartment
in the mortgage white guys but I guess it exacerbated the problem.
What do you think's driving the other is Covid.
Zero. A bigger problem than a bigger issue
than the property market. Or is it the army or the crackdown
itself. Both are pretty critical problems for
the Chinese economy at the moment. But between the two we think that the
policy makers are going to attack the address to the Colbert control measures
first meaning that by the time of the completion of the 20th Communist Party
Congress we are saying that there is a good chance that they will gradually
taper such controls and open up not only the border controls but also the
domestic zero calorie policy. Is that why you think 6 percent for next
year for growth. That's correct.
Above consensus. We are.
Yes we have been the low consensus for about a year and a half as you know.
But now we're turning above consensus because we think there is a good chance
that we will see some changes in the near future from retail sales.
That's where the money is going to be made for investors.
I know you haven't had to look at the latest numbers but what's been driving
retail sales in terms of just components of retail sales categories.
Yes especially the big categories would be goods versus services.
And what services. There is only one component which is
catering eating out. Right.
And then for the catering services I suspect that August is not necessarily
going to be a very strong number. So it's mainly the goods.
And then within the goods. And actually in the past a few months we
have seen already starting from June because of the tax benefits that holiday
sales have been outperforming and been contributing the most to the strength in
the retail sales. So we think that retail sales growth
probably is still continued continuously being supported by that.
But but if you look at the details other things may still look weak such as
perils you know shoes cosmetics jewelry has been doing very well.
So I'm not so sure you know why that was the case.
But apparently some ladies have been helping
get the party home for us coming up. And this is going to be key said for Xi
Jinping likely to be done. But does the post Congress will look
different. Do you think they going to relax.
Okay. Which strategy.
And if they do so will it make investment the investment climate that
much better. Yes we do think so because we think
after the completion of this most important political event you know the
very reason to hold on to this zero Covid policies would actually gradually
fade out i.e. keeping the stability before the CPC is
no longer going to be the most important reason to keep all this in place.
And therefore we think that you know the political catalyst would be ready for a
potential change to be made and therefore we can turn to the next page.
Not to mention that if you look at president is only temporary.
He is already and was vexed on. He is going to make two more trips to
Indonesia as also and also Thailand in mid-November mid-November.
This is not a sign that China is turning back to autarky.
This is a sign that China is actually trying to reintegrate reengage with the
rest of the world. And therefore we think that opening up
is more likely than many of our peers have claimed.
We forgot to ask him about policy. I just want to give in.
Today was all about the renminbi reaching 7 against the dollar.
Is a weaker renminbi a hindrance to policy easing in any way.
Well in a way probably to monetary easing especially in terms of the
interest rate cuts. We think that's a lower renminbi
probably is not going to be suggesting that there is much room for them to cut
much more aggressively. And however we think at the moment they
may not necessarily be under too much pressure.
Look at the strong set of data right. To to cut more or do much more to show
that they care so they can probably hold on for a little bit longer.
And the more important thing in our view is still the Covid curbs relaxation.
Does that help. Final question.
The youth unemployment problem that they're very concerned about we see the
number. What's the new what.
We don't have a number just yet but I imagine the next few minutes they'll
talk about that. I was thinking those jobless for
nineteen point nine was the last one. Why I said so high though.
Well for. For the youth.
The problem is that for those between 60 and 25 years old.
This is usually the cohort that has more trouble looking for jobs.
And that would take some time because of seasonality.
Most people graduate from college or similar degrees and maybe around July
June July time. So it would take some time before the
for the demand to pick up to absorb all these people in the job market.
But this year you know obviously this is much higher than than what we have seen
historically and close to 20 percent. That suggests that there is a
significant problem still with the supply of new fresh labor out there that
needs to be absorbed by Assamese at the moment when domestic demand is so weak.
I'm afraid that I may see some ease and especially service sector as these are
not necessarily ready to do more CapEx or hire more people.