00:00Margaret Molmar is the head of China Desk at the OECD Economics Department.
00:05It seems that probably consumption is not doing as bad as we would have expected,
00:12given the payback effect of the trading program.
00:16And also probably exports are doing much better than people would have expected.
00:23And investment is unfortunately not doing as well as it could be,
00:28but hopefully in the remaining quarter there will be at least some recovery there too.
00:35Chinese shoppers seem to be happier to spend on experience,
00:40spend more on experiences than on things.
00:42Is that a lasting shift, do you think, and who stands to gain from that?
00:49Obviously it's the service sector that is gaining from that,
00:51and that is what I think we've been looking forward to for many years,
00:56the service sector to be the major driver of the economy.
01:00And it seems that slowly that is starting to happen.
01:05And obviously as long as there are new services, new experiences,
01:10then that can be a new driver of consumption.
01:14As you said, exports are doing much of the heavy lifting,
01:18but Europe and others want a more balanced relationship.
01:22Can China have both?
01:25I think yes, to some extent.
01:30Exports are growing just because Chinese goods are extremely competitive.
01:36So China is moving up the value chain very fast,
01:39and it has a very competitive market,
01:42maybe not only in a good sense,
01:44but also it has cutthroat competition in the domestic market,
01:48which drives down prices.
01:51So basically all those companies that can export,
01:54they are escaping the domestic competition.
01:57So export is a way of escaping competition from the domestic market,
02:00where profit margins are much lower.
02:02So in that sense,
02:04as long as this cutthroat competition
02:10is there in the domestic market,
02:12probably exports will be a very attractive
02:16way of surviving for Chinese companies.
02:19So on that front,
02:22I think in the short run at least,
02:24probably we can't expect too big changes.
02:27Beijing has been adding support step by step,
02:30and the annual target is now within reach.
02:33Is the job done,
02:34or are there areas that you think still need support?
02:38Well,
02:39even though we would say that probably growth will be almost sure between 4.5% and 5% this
02:46year,
02:46it's not that difficult any longer to achieve that.
02:50But it still doesn't mean that we can just lay back and do nothing.
02:56And that's why I think all these new measures have been adopted,
03:02including the monetary and fiscal measures.
03:05So we will see probably in the coming months,
03:09an acceleration of infrastructure investment,
03:12which was doing not so good in the first three quarters of the year.
03:17Despite all these initiatives that we already heard during the two sessions,
03:21such as,
03:21for instance,
03:22the six networks.
03:23So that initiative was already there,
03:26but I mean,
03:27not so much happened so far.
03:29So probably there will be a kickoff of those projects in the remaining quarter.
03:36So I think that there will be a bit of a bit of a bit of a bit of a
03:36bit of a bit of a bit of a bit of a bit of a bit of a bit of
03:36a bit of a bit of a bit of a bit of a bit of a bit of a bit
03:36of a bit of a bit of a bit of a bit of a bit of a bit of a
03:36bit of a bit of a bit of a bit of a bit of a bit.
