00:00We can talk about all of this with Wang Dan, who's China Director at the Eurasia Group.
00:05Great to have you with us. Thank you so much for your time today.
00:07So why does this fourth plenum matter so much in the current political and economic context,
00:13and how important an event is it?
00:17It is the most important political event this year, and probably in the next five years,
00:22because it will set the tone on what the Chinese policymakers intend to do.
00:27There are a lot of interests now, actually, from the global investors on China,
00:31but there's a huge uncertainty on the policy choice.
00:35Since the beginning of this year, there was, you can call it a policy complacency from the Chinese government,
00:41because there's very little stimulus, additional stimulus on consumption.
00:45When everybody thought there should be more, the government actually still focused on high tech.
00:50And then we will have more of a clear idea, once the fourth plenum happens, what we'll do next.
00:55Well, let's talk a little bit more about those challenges.
00:57China, of course, continuing to deal with deflationary pressures and a serious property downturn.
01:03What kinds of new measures can we expect from policymakers at the plenum,
01:07and could they help to restore confidence, perhaps?
01:09The core of the fourth plenum is to restore confidence, but not through the housing market.
01:17That part of the market is mostly in the risk prevention realm,
01:22and we can see that the policy focus has been on this long-term growth trajectory.
01:28And for the housing market, we believe it won't reach a bottom before 2027.
01:32The government has done a lot to help the borrowers and real estate developers,
01:38but not really to reverse the downturn of the housing cycle.
01:41And when it comes to deflationary pressure, there is a lot of activities in the anti-corruption campaign,
01:48but this year, very little has materialized.
01:51The market expectation is from the next year on, we'll see some actual capacity cutting,
01:56and from 2027, that's when we'll see probably an uptick of the domestic inflation.
02:01And how do you expect the plenum to balance China's push to increase domestic consumption,
02:06while continuing to rely on exports, of course, especially with the ongoing trade friction with the West?
02:13So, when we look at the priorities listed in today's Politburo meeting,
02:19we can see that the number two priority, right after enhancing the party's leadership, is the social welfare.
02:26So, there is a lot of focus on redistributing of the social resources,
02:31from the state-owned sector to individual families, and that's going to be good for the long-term consumption.
02:37But when it comes to the economic agenda, there's very much a focus still on building up the capacity,
02:44especially in the emerging industries.
02:46So, that is showing that the domestic policy choice is mostly up to the domestic imperatives,
02:55and it's not really caving up to the pressure from either the U.S. or other foreign actors.
03:02And this is quite consistent in the past 10 years,
03:05and we have seen tremendous progress, actually, as reflected in equity market.
03:09And the world believes that China is producing the best companies, and it will continue to do so.
03:15And for the export sector, it has been outperforming since four years ago.
03:20And even this year, we can still see the outperformance of exports.
03:24I believe we're at the start of the Chinese company going global,
03:27and this momentum won't slow down, and it will continue to be the main driver for the Chinese economy.
03:33And do you expect the plenum to send any signals to foreign investors,
03:38who are increasingly cautious about China?
03:42As long as the government is consistent on its policy support,
03:47the global investors will eventually come on board.
03:51I've been traveling around the world, from Japan to the U.S. to Europe, in the past two months.
03:57And everyone is watching China with interest,
04:00and people can see this tremendous potential in the industries,
04:05from consumer goods to new energy supply chains to new materials to aeronautics, astronautics.
04:13And these are the bright side of the economy.
04:15And people have been expecting more policy response from the Chinese government,
04:21but there hasn't been much this year.
04:24It's more about assuring up the baseline of the thinking.
04:29So the government will present more of a clarity in the fourth plenum.
04:34And starting from next year,
04:36I believe the confidence of the global investors will be stronger than what we see now.
04:42Really good to get your insights.
04:44Wang Dan, director.
04:45of China at the Eurasia Group.
04:47Thank you very much.
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