00:00Shaolin Chen is Head of International at Crane Shares.
00:03Great to see you again.
00:04So, exports were strong, imports even stronger.
00:08Is that the real story?
00:1127% jump in exports and even larger, 36% rise in imports in June.
00:17Really a great number for China to deliver in June.
00:21This tells us China's external sectors remain very healthy.
00:27The exports, obviously, side is being driven, like you mentioned earlier on,
00:31by a surge in high-tech products, AI-related hardware, robotics, autos, and other advanced manufacturing.
00:38This is really showing China has been successfully plugged into the global investments in the new technology
00:45to expect the tariff discussion and geopolitical issues.
00:49I think the important surge is, excuse me, the import surge is equally important
00:56because it suggests, you know, a stronger demand for imports and also components rather than just commodities.
01:04That typically indicates factories are ramping up the productions and supply chains,
01:10and these are, you know, disrespect.
01:13All these shocks from Middle East and high shipping costs, insurance costs,
01:17that has occurred early in this year.
01:19So I think, you know, these are good, strong trade data, shows resiliency,
01:24shows China is gathering a successful momentum on the next trade of AI and technology.
01:30So consumers are spending, factories are producing, and as you mentioned, you mentioned high-tech there.
01:35AI is driving demand for everything, from chips to rare earth.
01:40How is that changing the shape of China's exports?
01:44China's exports has become a very much of, if you look at just China's traditional exports,
01:51it will be ordinary, it will be good, it will be on track.
01:54But with AI embedded, literally make China become a next level of having an upside surprise.
02:01Literally AI effectively make China, or become China's next new engine for its exporting sectors.
02:09Chips, high-end electronics, servers, networking equipment, hardwares,
02:15all these used in AI training, deployments, all seen strong growth.
02:20I think now analysts are repetitively flagging these categories as major contributors
02:25to the upside surprise in exports in China, and the recent data shows that.
02:30I hope that given the strong government policy support,
02:35even available fundings and subsidies for these companies to continue to develop,
02:43the trends continue to evolve,
02:44I would expect more and more of the dominant shipments in exports orders in the coming months.
02:53Of course, we're all looking with interest at what those GDP numbers will hold.
02:59What will they need to show to back up this export and import data we're seeing?
03:06It's a great question.
03:08First quarter, the data are around 5%.
03:10I think in second quarter, given all the data released so far,
03:14you would expect the China GDP number would be on target to deliver around 5% GDP.
03:21Overall, this year, even with all these tensions, geopolitical issues, and so on and so forth,
03:26that China has faced externally, that I think, given the support,
03:31given the announcements from the governments in how they would determine to support this domestic economy
03:37or supporting this economy to continue to grow on,
03:40you would expect 4.5% to 5% GDP growth this year with that target on track.
03:46You talked about analysts.
03:49So what are the markets looking for?
03:51What number do you think they're going to fixate on the most?
03:55I think a lot of numbers are important.
03:58One is the monetary policy.
04:00Market expects more of interest rate support and even tax,
04:05even some of the corporate tax support for certain industries in the new technology area
04:11continue to support fundamentally bottom-up, top-down.
04:16We don't expect a bazooka moment of here you go, this is helicopter money to happen in China,
04:21but rather than more managed, more gradual, more targeted monetary policy
04:27to certain industries and sectors, even help them consumption.
04:30So that's top-down, bottom-up.
04:31In terms of data, import-export are a very good indicator.
04:35Hopefully, China can get out of this decrease in CPI inflation number
04:40to become inflation again in the near term.
04:43That can boost a lot of analysts' confidence to say,
04:47you know what, the domestic market is back on consuming again.
04:51That's also quite a key part of the puzzle for China to deliver the GDP growth.
04:57Xiaolin Shen, always a pleasure talking to you.
04:59Thank you so much.
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