China's Annual Investment Drop Among 'Worst' Economic Figures, ANZ's Yeung Says

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00:00Your initial reaction to the numbers and among the many that we mentioned, what do you think is the most important?

00:05I look at the FAI number, the fixed asset investment is perhaps the worst in history since I observed this data back in from 1998.

00:13This is the first negative figures.

00:16So you can see how bad it was.

00:18Outside of COVID?

00:19Outside of COVID.

00:20No, even including COVID for two years, the number was still positive across the whole year.

00:25It was a drop in terms of I don't have the nominal GDP growth number because I'm sitting in the stage studio.

00:33But I expect that this would also be one of the worst in terms of nominal growth.

00:38Maybe since 1976.

00:41Except COVID. This one is except COVID.

00:44Okay. This is the absolute number of output.

00:46Yeah.

00:47Nominal. Okay.

00:48Apparently, if you look at the four quarter number, you know the momentum dropped a lot in the last few months,

00:53except maybe some rebound in December.

00:57Just looking at the PMI number and also today's industrial production, not bad, you know, higher than 5%.

01:04So what does that mean for 2026?

01:06What's going to turn around this investment story that, you know, this negative sort of sentiment that we're seeing when it comes to people?

01:14Well, the low number in the second half of last year provide low base for comparison.

01:19So just in terms of headline figures, we've improved in the second half of the year.

01:22But that tells us still whether the government is willing to relax the anti-infolution and relax some of the pipeline.

01:31That's been a lot of funding sitting in the local government ready to deploy.

01:36But then the sentiment in the second half of last year started to drop a lot because of anti-infolution.

01:43Well, I'm looking at the GDP figures 4.8% this year.

01:46I know that some of the local governments do set a very aggressive target, maybe at 5%.

01:53So this may still be the official target for the Chinese economy as a whole.

01:58But my worry is not about headline numbers, it's about the distribution.

02:01Because now if you look at the unemployment number too, especially youth unemployment, I expect to be a second digit number still.

02:10I don't have the number for December, but the November number is 16.9%.

02:14It's higher than the November number last year or 2024.

02:18Yeah, okay.

02:19We're going to try an effort to get you that number.

02:22You won't get that today.

02:23Okay.

02:24The headline number of jobless rate is 5.1%, which is the same.

02:27Is that informative to you, just the overall number?

02:29It is very informed.

02:31I think this is very indicative about the structural changes.

02:35Okay.

02:36The regime shift of the economy.

02:37GDP is doing quite well.

02:38But what about AI robots replacing, you know, the demand for labour?

02:43And how would that wait on and drag consumption?

02:46So we see that the retail sales numbers very, very weak.

02:50You know, I can't whether to China can count on consumption.

02:54Right.

02:55To boost the domestic demand.

02:57Because, you know, I believe the export and external environment is still pretty vulnerable.

03:02Okay.

03:03Vulnerable.

03:04So maybe the export side of things, how does that look for this year then?

03:08You know, people are pointing to maybe we're finally going to see payback.

03:11Things are going to be slower than what we saw last year.

03:13But even the December numbers for trade were very, very strong.

03:16Very strong.

03:17This is structural.

03:18I think China export is structurally strong because of the super cycle of the technology

03:23and digital economy and the transformation of the world.

03:26This is still, I believe, is a real activity that drive the China export because of the electronic supply chain.

03:33It's difficult to be, you know, replaced in other economy.

03:36They substitute the China supply chain.

03:37It's very difficult.

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