China economic outlook: "Solid financial framework is fundamental"
Head of International at KraneShares Xiaolin Chen speaks to CGTN Europe about the latest economic data and the outlook for China's economic recovery.
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00:00 This exports growth clearly reversed back, falling by 7.5%, like you said.
00:06 I think it's also highlighting there's remain uncertainties for global demands rebound on that factor as well.
00:14 I hear you on the supply, oversupply and the pricing pressure.
00:18 The imports also fell somewhere around 1.9%, also missing the targets, missing the expectations,
00:25 also reflecting a bit of a probably the lower energy demand and also a bit of an ongoing concerns or recoveries on China's property sectors.
00:33 But if you look a bit of a next level, studying the details on the exports data,
00:38 it will show such as clothing and toys, literally is the biggest drag of these exports falling.
00:46 Clothing and toys fall almost 23%.
00:50 On contrast to compare to auto automotive, that actually goes up in this month by 28%.
00:57 I believe the trends of China continue to climb up in the value chain in terms of exports will continue.
01:04 The sector, such as you mentioned at the beginning of EV, green and green technology, even if they may face some headwinds,
01:13 they will continue to be the key sectors to drive exports for China going forward.
01:18 Obviously, the key point is China domestic demand recovery is the key for China to deliver the economic growth targets for this year.
01:28 The world needs China running in top gear.
01:31 How much of a setback is this for the country's economic recovery?
01:37 We speak with investors globally.
01:39 Even for today, we got a lot of questions coming in.
01:41 I think for some of the conservative or more skeptical investors, they would feel more comfortable to continue to under allocating to this,
01:50 you know, second largest economy in the world in their portfolios.
01:54 But if you look at the money supply data also released today, Jamie, the total social financing and also the bank lending money supplies,
02:03 all has seen a very big seasonal increase in terms of nominal numbers.
02:09 And also, if you look at household lending, corpus activity, all staying at elevated levels.
02:15 This is more of an important indicator to our view that is showing a leading sense of all the corpus and household are starting to borrowing,
02:24 are starting to looking at, you know, having more credit on their balance sheets, are looking at expansion of their business,
02:30 are looking at more consumer activities related to that.
02:33 In those instances, one month's data obviously shows some concerns of the falling in terms of nominal numbers.
02:39 But I'd like to watch it more closely and also stay slightly on the optimistic side,
02:44 given all this money, the money that has been or credit has been made available in household and corpus in China.
02:51 As you said, it's one month's data. I mean, let's take a look at the long term.
02:55 What is your outlook for China's economy?
03:00 I think solid financial framework is fundamental to make sure we refuel the stabilization in China's capital markets as one.
03:07 I have seen and heard a lot of the recent announcements from CSRC to make sure the regulations for new stocks come to the market, the IPO market.
03:16 All the current stocks are giving clear guidance on dividends, so on and so forth.
03:21 And also having a very solid program of a national team supporting the equity market to provide market stabilization funds as one.
03:30 Second, I think not to overdown that and make sure this is at a very critical moment for China's economy to stay recovery mode,
03:38 which we believe is a sufficient liquidity in the systems with the Chinese governments are leading the way in providing the programs and support such as trade in program.
03:49 Now they let the old TV in China, 320 million cars in China on average at five and a half years old, only two years away before they have to retire.
03:59 They can come forward to trade into new EVs.
04:02 We think there's programs in place, liquidity sufficiently provided by the policymaker to let the consumer start to lead the way of recovery.
04:11 Charlie Chen, lovely to see you. Thanks so much for coming back on the show.
04:14 Charlie Chen, head of international at Craneshares.