Anthony Chan, former global chief economist at JPMorgan Chase, expresses confidence in China's multi-pronged approach to meet economic growth targets, including fiscal policies to stimulate consumption and diversify trading partners.
00:00Well, let's talk now to Anthony Shan who's a former global chief economist at JPMorgan Chase. Welcome to the program. Thank you for joining us
00:07So do you think these measures being announced are the right ones? Will they do the job of helping China's economy meet its targets?
00:15Yeah, I'm actually pretty confident because it's a multi-pronged approach
00:20in which the China is going to really use its policies tools and certainly has some
00:25Plans for longer term to keep growth on a sustainable basis
00:29So I do think they have the the right tools. The question is when and how and when they will execute them
00:37Well, let's dig into that. We have heard a lot about consumption in these meetings
00:41How is China going to kick start that consumption it's after and convince people to start spending?
00:47Well, I think they already are in fact making those plans
00:51They're certainly going to enhance the public safety net to basically
00:56Make people feel very comfortable that somehow if they spend they're gonna be fine
01:00I think that's stimulating with targeted fiscal policy programs is the right way to go
01:07The trade-in for appliances for electric vehicles all that is going to boost consumption
01:12remember that boosting consumption is the right way to go because there is some uncertainty with regard to the
01:18The outside or the trade sector so to boost consumption would be the right way to go to ensure that you get that 5%
01:27economic growth, so
01:29Boosting consumption and stimulating consumption is certainly a viable option for China. We mentioned uncertainty particularly in the trade sector
01:37What about those external challenges that tariffs throw up? What can China put in place to deal with these?
01:44Well, I think that in the short term it is it is unfortunate it raises uncertainty
01:50But I think China longer term is already taking steps to diversify its trading partners
01:55That means that it's not just going to rely on one country say the United States. It's certainly going to look at some of the
02:03The global South a lot of countries in Asia. It's going to look at Latin America
02:07It's going to also look at Europe
02:08So it is going to move and there's a diversification and also willing to talk to make sure that these trade uncertainties
02:17Sort of dissipate with more engagement on both sides
02:21We did have some news on interest rates people's Bank of China saying it wants to cut them as well as the reserve ratio
02:26For banks, how much do you think it will cut and when might it do it? I?
02:33Think it's waiting to see the resolution of this trade uncertainty and to see whether or not
02:38It's going to intensify whether it's short term, but I think they're going to be
02:43The interest rate the policy rate the one low the one-year rate can easily be cut anywhere from 20 to 30 basis points
02:51I certainly think that China will in fact
02:54Engage and lower the reserve requirement ratio because that again frees up money
02:59for banks
03:02to
03:03companies in China to spend more money and by the way, they could also make
03:07Provide more liquidity or more loans to the commercial bank so they can lend so that there are many policy tools that the central bank
03:14Has to ensure that economic growth moves to towards 5% not to mention the other
03:21Factors that we mentioned like fiscal policy
03:23So there are many many policy levers that the Chinese government can in fact use to ensure you get that 5% growth
03:30That's why I'm so confident that they will get 5% growth this year
03:33Anthony great to talk to you. Thank you for coming on the program. That's Anthony Chan former global chief economist at JP Morgan Chase
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