“China is rebalancing where and what to export.”
Head of International of KraneShares Xiaolin Chen talked to CGTN Europe on China’s economy outlook in 2024.
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MusicTranscript
00:00 - Well, Xiaowen Chen is the head of international
00:02 at Craneshares.
00:04 Thank you very much indeed for joining us
00:06 back on the program.
00:07 So we saw the first annual drop in exports,
00:09 but an acceleration at the end of last year.
00:12 What changed and why the sudden turnaround?
00:15 And is that likely to continue?
00:18 - This is a great question.
00:20 Thank you for having me on your program again.
00:22 I think China is a very interesting point
00:25 at this juncture.
00:26 That is the country is rebalancing.
00:31 Probably two key things is where to export
00:34 and what to export.
00:36 As you mentioned, the new tree of the batteries
00:40 or the smart EVs and renewable energy products
00:44 are the new three products.
00:45 And we do expect more of those products along the line
00:49 with the green will continue to come to light.
00:52 I will continue to add it to the exports list.
00:56 And now is the interesting part is China also rebalancing
01:00 who to export its products or services to.
01:04 In the past is heavily interacted or engaged
01:08 with developed market.
01:09 Now you see the emerging market has exceeded
01:13 or outpaced the developed market to become the new
01:15 closest partner to China in terms of the exports.
01:19 We do expect this trend to continue.
01:22 Its neighbors in Asia and emerging market
01:24 will become a more important economic partners
01:28 going forward for China.
01:30 - Let's talk about consumer prices then.
01:32 They declined for the third consecutive month.
01:35 Maybe welcome for individual household budgets,
01:38 but what kind of risks does deflation pose
01:41 to the wider economy, especially amid the slowdown
01:43 in the property sector?
01:45 - Like you rightly pointed out,
01:49 certain lower inflation print is good for the household,
01:54 but not for prolonged period.
01:56 So obviously this is the third month
01:59 that we see a declining.
02:01 So it did raise a bit of the concerns or questions
02:04 to say what caused this decline in inflation.
02:08 So it is important to understand the non-food CPI
02:11 actually gone up, which is encouraging part
02:14 we'd like to see.
02:15 That is interactions and more of a domestic and external.
02:20 What did come down quite dramatically was park price,
02:23 for instance.
02:24 I do expect these kind of components within CPI
02:27 is seasonal.
02:29 And now as the Chinese holiday or Chinese new year,
02:32 excuse me, Chinese new year is approaching
02:35 and some of the associated holiday will come with it.
02:38 We do expect some of the food price
02:40 will pick up from forward.
02:43 See some of the social media posts in China domestically,
02:48 you see massive millions,
02:50 if we talk about hundreds of millions,
02:52 tourism now is hitting Northern part of China
02:56 to see the snow,
02:57 so see the beautiful isle sculptures happening in China.
03:00 And now also China relaxed is a tourist visa
03:04 for people to come to China.
03:05 We do expect the movement,
03:07 touristing consumer spending to pick up
03:10 during holiday seasons.
03:12 - And let's talk about the government's strategy then.
03:15 The approach to dealing with these economic challenges
03:17 has been to make more credit available to businesses.
03:21 And has there been enough of that
03:22 and are more measures on that front
03:24 likely to be necessary to steer the economy
03:27 back towards a firmer footing?
03:29 - I give the credit to Chinese policymaker in 2023
03:34 in making sufficient liquidity available in the systems.
03:38 That's pure at the end is job done
03:40 and make sure there's sufficient liquidity.
03:42 The next phase, which the policymaker
03:45 together with Chinese corporate phase is taking the credit.
03:49 So we do see a bit of a soft in credit demand
03:52 but understandable.
03:53 This is January.
03:55 It is feels like the December.
03:58 I live in London.
03:59 It's the December months investor world
04:02 at least up to Christmas.
04:03 This is the first of the remaining months
04:06 before Chinese New Year happens.
04:07 So you do expect a bit of a credit slowing down.
04:10 People probably plan a new year
04:12 after Chinese New Year in February
04:14 that you would expect credit to take up more.
04:16 Liquidity is sufficient.
04:18 Demand for credit slightly softer on the softer end.
04:22 I do hope the New Year's meetings,
04:24 particularly the MPC and lease up to MPC happening in March
04:27 will give more guidance on where to invest.
04:30 Namely, is it new energy, new infrastructure?
04:33 I do expect that the Chinese policy makers
04:35 to give more clear directions and guidance for investments
04:40 and also for Chinese key agenda to focus
04:43 in terms of the deploy the liquidity.
04:46 - We'll certainly be looking out for that closely.
04:49 Sharlene Chen from Crane Shares.
04:50 Thanks so much for your insights.