00:00I know the Iran situation has really kind of dominated the headlines, but in terms of MPC, anything that stood
00:06out to you that really is something that was interesting?
00:08Thank you for having me here. I think the most important key was the tech and the physical in MPC.
00:14I think we talked about the claw, and everyone will have its own claw in the future, and everyone will
00:19have its own robot in the future.
00:21So basically, we're in Spanish means that technology will be the key technology, a part of the driver of the
00:26economy for China in the next couple of years.
00:29And in the meantime, we believe that the physical policy will be important.
00:32We know that oil prices are volatile, that will limit the room for monetary policy in China, but the physical
00:38side, definitely, there will be more kind of expansionary in China.
00:42We see that the debt ratio is about 4% of GDP, it's stable, but basically, which also means that
00:49when the government can still pump up the money into the market if needed.
00:55So basically, you know, I think, you know, we have a strong start of the Chinese economy at the beginning
01:00of this year.
01:01We saw the export numbers today was really, really strong, and, you know, PMI okay for now.
01:06I think in this case, you know, basically, which means that, you know, probably China will have, like, about 5
01:12% growth this year.
01:13Maybe the range is about 4.5% to 5%, but basically, I think, you know, they're still kind of
01:18highly likely we see close to 5% growth for this year.
01:24Does having a 5%, let's say they hit the top end of the range, does that address the employment, the
01:34weak employment market?
01:35In other words, has the relationship between GDP growth and employment changed, given the role of technology and everything else?
01:43And I wonder whether or not we should be looking at employment equally as important as growth.
01:47I think, you know, two things here.
01:49Basically, AI will kill some jobs, definitely, not only in China, but globally.
01:54But in the meantime, we know that technology will create some new jobs.
01:57You know, we visit a lot of factories in China.
01:59We see that, you know, the new guys, you know, the young guys, they are graduates, co-graduates from a
02:05good university,
02:05and they are kind of doing a lot of, you know, technology-related jobs in China at this moment.
02:11And we see that, you know, the AI model, all these kind of things, all need a lot of, you
02:15know, kind of high technology, you know, talents in China.
02:18In the meantime, I think the service sector will help absorb a lot of, you know, employment in China laborers
02:25as well.
02:26Okay.
02:26We know that, like, you know, my hometown was in Jiangsu province.
02:30We know there's a very famous kind of...
02:32Tell us.
02:33Yeah, the football league in Jiangsu province, and every city will have its own kind of, you know, team.
02:40And every weekend, you can go to different cities to not watch football, but also do a lot of tourism,
02:46you know, enjoy the food there.
02:47Okay.
02:47So this will happen in, I think, probably in April.
02:50It'll take about, you know, four months.
02:52And basically, in the whole kind of summer, we'll see a lot of, you know, football fans, you know, come
02:58into Jiangsu province and take the high-speed train.
03:01And then we'll spend all weekend in a big city, in a big city there.
03:06It's interesting, right?
03:07Because we did a great piece about, you know, maybe not in Jiangsu, but in, like, parts like Guangdong, which
03:14are, you know, big manufacturing hubs.
03:16People are struggling to find jobs right now.
03:18And this whole sort of AI, you know, wave is really kind of killing a lot of these, you know,
03:23factory workers' jobs.
03:24And, you know, yes, it brings up productivity.
03:26But then again, it's not enough to really boost consumption because consumption and spending is still so low in China.
03:32So how do you see the whole consumption space in any way?
03:37Are you seeing any sort of meaningful sort of signs that maybe consumption is actually coming back?
03:44I think, you know, I'm very positive on that.
03:47Basically, we can see that, you know, ratio of the services consumption as 70% GDP is relatively low in
03:53China.
03:54And in our opinion, it will take some time, maybe 10 years, to reach a relatively, you know, medium level
04:00globally compared to, according to the global standard.
04:04So basically, I think, you know, the service sector will help quite a lot in terms of this.
04:10Of course, you know, the factory job, you know, especially the labor-intensive jobs will be lost due to the
04:15AI, due to technology.
04:17But we know that, you know, a lot of people do the social media.
04:20A lot of people, you know, I went to, like, you know, also some cities in Guangdong province during the
04:26Chinese New Year.
04:28Yeah.
04:28Because, you know, my wife, you know, saw something on TikTok and said, she said, okay, we have to be
04:33there.
04:33And we do see a lot of people, you know, in province, in cities like Shantou, they look at their,
04:39you know, gathering together and try the, you know, the food there.
04:43And, of course, you know, the bad thing is that the restaurant is really, really expensive.
04:47Hotels is crazily expensive there.
04:49But, you know, we can see that this creates some demand.
04:52And the local government already saw this is kind of a problem, but also creates some kind of, you know,
04:58demand for labor and especially for service-related jobs there.
05:01Yeah.
05:02The, just your outlook on inflation.
05:07So we have a couple of two-part questions.
05:09So we now have the spike in oil prices globally.
05:12Is that going to be somewhat welcome news given the efforts to boost inflation in China?
05:17And do you think we might get consumers, can they absorb that?
05:21Whether that's temporary or more prolonged, we don't know it still.
05:24But just what is your, where is your mind on that?
05:26Well, maybe China has a low inflation issue.
05:29They want to, they want to see kind of a relatively high inflation.
05:32But I don't think, you know, oil price is a good kind of driver for that.
05:36But, of course, you know, oil price might be driving inflation a bit higher.
05:40But probably, you know, possibly we are from PPI inflation to CPI inflation.
05:44That's right.
05:45The path through, you know, China will be there.
05:48So in the meantime, I think, you know, if we look at China's history when the oil price is surged,
05:54you know, basically the inflation might, you know, take some also spike in the short term.
05:58But in a relatively long term perspective, it was still in the depend on the fundamentals.
06:03Okay.
06:04For example, you know, in China's history, during the 2008 global financial crisis, you know, there was a spike in
06:11the oil prices at the beginning.
06:12The CPI inflation peaked a little bit, but gradually, you know, calmed down.
06:17So I think, you know, from this kind of perspective, what we have to really have to think about here
06:22is that normally speaking with the oil is an external shock.
06:27But this kind of shock, you know, happened from time to time, whether this will be constantly a problem in
06:34the future.
06:35This also means that China, for example, need a lot of, you know, alternatives for oil.
06:40That's coming to.
06:41Yeah.
06:42For example, new energy.
06:43I was going to get you to react to some of those export numbers that we got yesterday.
06:47I mean, they were double digits and really kind of surpassing expectations.
06:51A lot of it had to do with where these exports were going to non-U.S. destinations now.
06:57Is that going to be a problem at all this year, just given the fact that, you know, it seems
07:00like a lot of these nations have already dealt with the most of it, U.S. tariff policy.
07:04But, you know, China, when it comes to exporting some of their cheap products and the like, I mean, is
07:10that going to be an issue this year?
07:13You know, the most important thing here is that when we look at these numbers, the good thing is that
07:17the volume growth right now has outpaced the value growth in China in the first two months of this year.
07:24Yeah. This is kind of, you know, why is that important?
07:26Yes. Yeah.
07:27They will somehow, you know, basically reduce some kind of concerns for investors because they always think that there will
07:34be kind of a price competition among Chinese corporates.
07:37And the second thing is that, you know, even the exports to U.S. has declined by another kind of
07:43double digit, but actually it's narrowed compared to last year.
07:46And in the meantime, we see that, you know, the good thing is the product mix is good because the
07:50China's export a lot of kind of semiconductor with a cheap ship and auto, you know, these kind of things
07:57in the rest of the world.
07:59This might be, you know, create some issues, you know, for other countries in the world.
08:03But look at this number only, I think still we have to say that the strongest number in almost five
08:09years is actually a very good start of the China's export story.
08:13And also it's good for investors to buy in China's global story.
08:19It's also kind of important because, you know, not only this year, but also in the past two years, two
08:23or three years, when investors talk about China, they're always concerned that, okay, because of tariff, because of the geopolitical
08:28tensions, China's trade numbers won't be good.
08:31But in the past few years, we always see that continue to be an upside surprise to investors.
08:39This, I think, at least will help, you know, people to reframe some of the Chinese gold broad story.
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