Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg Daybreak Aisia podcast. I'm Doug Prisner. You can join Brian Curtis and myself for the stories, making news and moving markets in the APAC region. You can subscribe to the show anywhere you get your podcast and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.

Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg Daybreak Aisia podcast. I'm Doug Prisner. You can join Brian Curtis and myself for the stories, making news and moving markets in the APAC region. You can subscribe to the show anywhere you get your podcast and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.

Jill Diesis who joins us Bloomberg China Eco Gov editor for the big meetings this week, the two sessions. So we've talked a lot about this generally, Jill, let me ask you something a little more specific here.

Jill Diesis who joins us Bloomberg China Eco Gov editor for the big meetings this week, the two sessions. So we've talked a lot about this generally, Jill, let me ask you something a little more specific here.

Can we expect a.

Can we expect a.

Kind of doubling down on the commitment from Chinese policymakers to become self sufficient in some key areas like AI and semiconductors and high tech?

Kind of doubling down on the commitment from Chinese policymakers to become self sufficient in some key areas like AI and semiconductors and high tech?

Well, yes, Brian. I think the one thing to keep in mind with this National People's Congress that we're gearing up for here is that a lot of these policy positions were likely charted out in December when key leaders met and kind of puddled together and laid out what the big priorities would be for twenty twenty four. We know that you know economic sustainability is certainly a major target for this year. We know that they really really want to play some big emphasis on growth, but a lot of those you know, mid to long term goals for China also rely on becoming more self sufficient, as you said, in particular areas like technology. We've seen, you know, over the last couple of years, a bigger push toward investments in electric vehicles, for example, or renewable energies, advanced technologies, those kinds of things. So I imagine that is going to continue to play a role in top policymakers thinking as they sort of you know, announced this big agenda for this year. Of course that the big balance, the tricky balance here for them, is going to be balancing those priorities against this need to also make sure that economic growth is sustainable for the course of the year.

Well, yes, Brian. I think the one thing to keep in mind with this National People's Congress that we're gearing up for here is that a lot of these policy positions were likely charted out in December when key leaders met and kind of puddled together and laid out what the big priorities would be for twenty twenty four. We know that you know economic sustainability is certainly a major target for this year. We know that they really really want to play some big emphasis on growth, but a lot of those you know, mid to long term goals for China also rely on becoming more self sufficient, as you said, in particular areas like technology. We've seen, you know, over the last couple of years, a bigger push toward investments in electric vehicles, for example, or renewable energies, advanced technologies, those kinds of things. So I imagine that is going to continue to play a role in top policymakers thinking as they sort of you know, announced this big agenda for this year. Of course that the big balance, the tricky balance here for them, is going to be balancing those priorities against this need to also make sure that economic growth is sustainable for the course of the year.

So, Jill, aside from espousing a lot of nationalism, which would be expected, I'm wondering whether our leadership is going to make any effort to be empathic, to say to the population overall, hey, we know that it's been challenging. We know that you're having a tough time believing in what we're doing. Maybe maybe that's an extreme example, but at least to kind of mirror the reality a little bit to saying, yeah, things are tough, we're on the case.

So, Jill, aside from espousing a lot of nationalism, which would be expected, I'm wondering whether our leadership is going to make any effort to be empathic, to say to the population overall, hey, we know that it's been challenging. We know that you're having a tough time believing in what we're doing. Maybe maybe that's an extreme example, but at least to kind of mirror the reality a little bit to saying, yeah, things are tough, we're on the case.

Well, Doug, I think that at this point it would actually be a bit of a surprise if they go into a ton of details about economic challenges to say the least. But yeah, look, I think that you know, we've seen some measures. I mean, you know how this goes that Beijing is not necessarily you know, ever been incredibly transparent or candid about a lot of the ways in which they outline policy. A lot of it is more, you know, kind of plays out in actions that they take. For example, when we think back to just you know, this big multi trillion dollars doc route that we've been through within the past, you know, within the past eighteen months or so, and then a lot of the conversations or you know, a lot of the discussion around that within January February, what we saw in China in terms of reaction to that and acknowledgment of how much that was you know, an issue within the economy, within the stock markets, was you know, this big giant change at the top, you know, firing the market regulator or replacing with someone else. We saw a lot of you know, language from Premier Leagu Chong and others saying, you know, talking about the need to help. So I'd imagine that it would come in something in the form of something like that that feels you know, a little bit more, you know, Okay, then, yeah.

Well, Doug, I think that at this point it would actually be a bit of a surprise if they go into a ton of details about economic challenges to say the least. But yeah, look, I think that you know, we've seen some measures. I mean, you know how this goes that Beijing is not necessarily you know, ever been incredibly transparent or candid about a lot of the ways in which they outline policy. A lot of it is more, you know, kind of plays out in actions that they take. For example, when we think back to just you know, this big multi trillion dollars doc route that we've been through within the past, you know, within the past eighteen months or so, and then a lot of the conversations or you know, a lot of the discussion around that within January February, what we saw in China in terms of reaction to that and acknowledgment of how much that was you know, an issue within the economy, within the stock markets, was you know, this big giant change at the top, you know, firing the market regulator or replacing with someone else. We saw a lot of you know, language from Premier Leagu Chong and others saying, you know, talking about the need to help. So I'd imagine that it would come in something in the form of something like that that feels you know, a little bit more, you know, Okay, then, yeah.

I was chuckling as well, because you know, it's hard to think of Hijin Ping as an empathetic leader, you know, walking walking through the neighborhoods. You know, I feel your pain. I'm here to help. And Bill Clinton but but you know, yeah, exactly. But but actually I think Doug was spot on. I think in some way that's what investors are hoping for, that we'll get some sort of maya kulpa in a sense from policymakers that that you know, they want to make some changes, they want to make life a little bit easier for consumers. I'm just wondering. You know, we've seen a bounce in property here in Hong Kong after we removed a lot of these restrictions. Now they've done something of the sort in China, but maybe not quite as much across the board. Can we expect perhaps a few strong moves on property.

I was chuckling as well, because you know, it's hard to think of Hijin Ping as an empathetic leader, you know, walking walking through the neighborhoods. You know, I feel your pain. I'm here to help. And Bill Clinton but but you know, yeah, exactly. But but actually I think Doug was spot on. I think in some way that's what investors are hoping for, that we'll get some sort of maya kulpa in a sense from policymakers that that you know, they want to make some changes, they want to make life a little bit easier for consumers. I'm just wondering. You know, we've seen a bounce in property here in Hong Kong after we removed a lot of these restrictions. Now they've done something of the sort in China, but maybe not quite as much across the board. Can we expect perhaps a few strong moves on property.

I look bright and I think that I think that investors ultimately want a lot of things out of the Chinese government that they're not necessarily going to receive. And you know, I mean, we've seen that optimism play out time and time again over the past couple of years, only to be met with some disappointments. I will say, when it comes to the property sector, I'm not really sure that you would see massive amounts of new you know, you know, massive support for the property sector, a bunch of you know, unconventional measures to sort of help move things along. But we have seen I will I will acknowledge that we have seen Beijing, you know, take some measures already that at least, you know, it implied that they are thinking about new ways in which they need to you know, sort of transform the sector. I mean there's a new housing model that Beijing has been promoting fairly recently, involving building a portable housing, renovating urban villages. That could be something that comes up at this NPC. We've seen them also tap into different forms of funding. We have policy banks to try to facilitate a little bit more investment for the sectors. So through the through the people think of China. So there are some measures there. I'm just not really sure that we're going to see anything sort of radically new announced at this particulars.

I look bright and I think that I think that investors ultimately want a lot of things out of the Chinese government that they're not necessarily going to receive. And you know, I mean, we've seen that optimism play out time and time again over the past couple of years, only to be met with some disappointments. I will say, when it comes to the property sector, I'm not really sure that you would see massive amounts of new you know, you know, massive support for the property sector, a bunch of you know, unconventional measures to sort of help move things along. But we have seen I will I will acknowledge that we have seen Beijing, you know, take some measures already that at least, you know, it implied that they are thinking about new ways in which they need to you know, sort of transform the sector. I mean there's a new housing model that Beijing has been promoting fairly recently, involving building a portable housing, renovating urban villages. That could be something that comes up at this NPC. We've seen them also tap into different forms of funding. We have policy banks to try to facilitate a little bit more investment for the sectors. So through the through the people think of China. So there are some measures there. I'm just not really sure that we're going to see anything sort of radically new announced at this particulars.

Yeah, so chill when it comes to government spending, do we know what we're likely to hear in terms of a deficit, you know, the amount of GDP that would I guess be sacrificed for a deficit.

Yeah, so chill when it comes to government spending, do we know what we're likely to hear in terms of a deficit, you know, the amount of GDP that would I guess be sacrificed for a deficit.

Yes, this is a really interesting one, Doug, and I think that probably one of the things that I'm most keen to look out for at the NPC this time around. So usually the government or historically the government hasn't really liked to see that fiscal deficit ratio so depth the GDP rise above three percent. That's been kind of a fairly fixed line for the government to consider. We did see that change though around the middle of last year, this is around October or so, where they made a very unusual media revision to the budget to essentially raise it to about three point eight percent. As they were you know, looking at you know, issuing a bit more sovereign debt sort of helped with an infrastructure projects. Now, the size of that, the amount actually you know, issued in debt wasn't massive by any stretch, but I think that it did signal something of a sea change in this philosophy about how much the central government actually actually has to help a lot of these debt ridden local governments with with spending and such. A lot of economistsy thinking that at this point, for the NPC, we might actually see them just chart the years start out saying, you know, maybe we'll we'll be willing to bend the rules a bit on that three percent line. Maybe we see something like that three point three percent physcal deficit ratio. So I think that that's that that's a really good one to look out for.

Yes, this is a really interesting one, Doug, and I think that probably one of the things that I'm most keen to look out for at the NPC this time around. So usually the government or historically the government hasn't really liked to see that fiscal deficit ratio so depth the GDP rise above three percent. That's been kind of a fairly fixed line for the government to consider. We did see that change though around the middle of last year, this is around October or so, where they made a very unusual media revision to the budget to essentially raise it to about three point eight percent. As they were you know, looking at you know, issuing a bit more sovereign debt sort of helped with an infrastructure projects. Now, the size of that, the amount actually you know, issued in debt wasn't massive by any stretch, but I think that it did signal something of a sea change in this philosophy about how much the central government actually actually has to help a lot of these debt ridden local governments with with spending and such. A lot of economistsy thinking that at this point, for the NPC, we might actually see them just chart the years start out saying, you know, maybe we'll we'll be willing to bend the rules a bit on that three percent line. Maybe we see something like that three point three percent physcal deficit ratio. So I think that that's that that's a really good one to look out for.

I'll throw you a little bit of a curve ball. Demographics.

I'll throw you a little bit of a curve ball. Demographics.

Uh, is there a chance that we might see something along the lines of incentivizing young couples to have more children?

Uh, is there a chance that we might see something along the lines of incentivizing young couples to have more children?

Oh gosh, that's an interesting one. Yeah, I'm not sure. I think that, you know, certainly, there's been a lot of challenges to uh, you know, population growth within China. We you know, obviously saw indias or past China's the world with populist country. We've seen, you know, a lot of concerns about falling birth rates and the fact that you know, the removal of one child policies several years ago, and some other incentives haven't really done much to move the needle. I'm not I wonder whether that would actually come out of the NCC. It's a good question because what we have seen in the past from China is, you know, some more iterative policies announced on sort of an ad hoc basis. I think last year, maybe the year before, there were some announcements to try to encourage people to have more children, whether in the form of incentives or breaks on taxes and stuff like that. I'm not sure whether that's going to come out of the MPC, but I do think that that is pretty top of mind for policy makers because of a lot of those concerns about long term impacts that declining populations and Moller birth ranks can have on the economy.

Oh gosh, that's an interesting one. Yeah, I'm not sure. I think that, you know, certainly, there's been a lot of challenges to uh, you know, population growth within China. We you know, obviously saw indias or past China's the world with populist country. We've seen, you know, a lot of concerns about falling birth rates and the fact that you know, the removal of one child policies several years ago, and some other incentives haven't really done much to move the needle. I'm not I wonder whether that would actually come out of the NCC. It's a good question because what we have seen in the past from China is, you know, some more iterative policies announced on sort of an ad hoc basis. I think last year, maybe the year before, there were some announcements to try to encourage people to have more children, whether in the form of incentives or breaks on taxes and stuff like that. I'm not sure whether that's going to come out of the MPC, but I do think that that is pretty top of mind for policy makers because of a lot of those concerns about long term impacts that declining populations and Moller birth ranks can have on the economy.

Have family for formation and the rest very quickly. Jill thirty seconds, what about military spending.

Have family for formation and the rest very quickly. Jill thirty seconds, what about military spending.

Yes, I think that that's another one to look back for. I mean, look, national security is top of mind also. I mean there's many things that are top of mind. I feel for the Chinese government, but we've seen under sheet and pain obviously much more interest in building up national security. Will see if that translates into more militarios prodict.

Yes, I think that that's another one to look back for. I mean, look, national security is top of mind also. I mean there's many things that are top of mind. I feel for the Chinese government, but we've seen under sheet and pain obviously much more interest in building up national security. Will see if that translates into more militarios prodict.

Jill, Thank you, Jill.

Jill, Thank you, Jill.

Lisa Sloomberg, China ECOGOV editor, joining us in our studios now, Ben Sharple's.

Lisa Sloomberg, China ECOGOV editor, joining us in our studios now, Ben Sharple's.

Bloomberry Energy and Commodities Editor.

Bloomberry Energy and Commodities Editor.

Ben. So, once again we see a little bit of back and forth between US and China.

Ben. So, once again we see a little bit of back and forth between US and China.

This is yet another one.

This is yet another one.

There's something like three hundred and sixty million barrels of oil in the spr Not sure that the million barrels that China threw through its subsidiary Unipac America that Sinopek bought would make that much of a difference. Is this more symbolic or is this quite serious a development like this?

There's something like three hundred and sixty million barrels of oil in the spr Not sure that the million barrels that China threw through its subsidiary Unipac America that Sinopek bought would make that much of a difference. Is this more symbolic or is this quite serious a development like this?

I think you're right, Brian, it's more symbolic. It's politics at play here, point scoring if you like. You know, the White House pointed out that by law, the Energy Department is required to sell to the highest bidder, even if it's a foreign country, foreign country like China. So you've had during the Trump administration, they sold barrels to Petro China, which one of the biggest producers or consumers in China itself, and at the moment, the Energy Department is actually trying to fill the SPI. There was a huge release in twenty twenty two by the Biden administration to tame prices following the Russia's invasion of Ukraine. So it's not an actual They're not trying to sell barrels at the moment, They're trying to fill it, refill it. It's near a forty year low, So I think you hit the nail on the head early more early on. It is symbolic. It's politics a play in the meantime.

I think you're right, Brian, it's more symbolic. It's politics at play here, point scoring if you like. You know, the White House pointed out that by law, the Energy Department is required to sell to the highest bidder, even if it's a foreign country, foreign country like China. So you've had during the Trump administration, they sold barrels to Petro China, which one of the biggest producers or consumers in China itself, and at the moment, the Energy Department is actually trying to fill the SPI. There was a huge release in twenty twenty two by the Biden administration to tame prices following the Russia's invasion of Ukraine. So it's not an actual They're not trying to sell barrels at the moment, They're trying to fill it, refill it. It's near a forty year low, So I think you hit the nail on the head early more early on. It is symbolic. It's politics a play in the meantime.

When I think of China demand, I think of places like Iran, I think of places like Russia supplying the Chinese system. Are those sources still intact?

When I think of China demand, I think of places like Iran, I think of places like Russia supplying the Chinese system. Are those sources still intact?

Most certainly, China is a very opportunistic buyer, and they look for the cheapest barrels, and for those countries like Russia and Iran that have the barrels that have a range of sanctions on them, China is the logical place. There is a little bit at play at the moment that Russian barrels are getting a little bit cheaper than Ananium barrel, so there's almost a sort of head to heads of scenario going on there. So China is getting barrels even cheaper from both those those out there. So yeah, I know, if you want to sell barrels and you're selling it cheap than China, it's a place to go.

Most certainly, China is a very opportunistic buyer, and they look for the cheapest barrels, and for those countries like Russia and Iran that have the barrels that have a range of sanctions on them, China is the logical place. There is a little bit at play at the moment that Russian barrels are getting a little bit cheaper than Ananium barrel, so there's almost a sort of head to heads of scenario going on there. So China is getting barrels even cheaper from both those those out there. So yeah, I know, if you want to sell barrels and you're selling it cheap than China, it's a place to go.

So I think I mentioned the NPC meetings becaus we'll get the growth target. Somewhere around five percent is what's expected. I think a lot of people would be curious about how strong the demand is for oil in China, whether or not that's a decent barometer of economic growth there. And we know that China produces its own oil through Scenic Offshore and PetroChina Unshore and such, but they still import a lot of oil. How strong is the is the demand in China?

So I think I mentioned the NPC meetings becaus we'll get the growth target. Somewhere around five percent is what's expected. I think a lot of people would be curious about how strong the demand is for oil in China, whether or not that's a decent barometer of economic growth there. And we know that China produces its own oil through Scenic Offshore and PetroChina Unshore and such, but they still import a lot of oil. How strong is the is the demand in China?

China is the barometer in some sense of oil demand. It is the biggest importer in the world of oil. And what's happening in the property sector there the economy is of great concern for producers and people and sellers of oil. You had CNPC, the largest energy is China's largest energy producer, last week giving its lowest forecast in around a decade for all demand this year. Caveat being that it's coming off a high base in twenty twenty three, but a soft economy, the transition to electric vehicles. It's eating in to all demand for China at the moment, So it is course of concern and you can see that being reflected in prices at the moment.

China is the barometer in some sense of oil demand. It is the biggest importer in the world of oil. And what's happening in the property sector there the economy is of great concern for producers and people and sellers of oil. You had CNPC, the largest energy is China's largest energy producer, last week giving its lowest forecast in around a decade for all demand this year. Caveat being that it's coming off a high base in twenty twenty three, but a soft economy, the transition to electric vehicles. It's eating in to all demand for China at the moment, So it is course of concern and you can see that being reflected in prices at the moment.

Yeah, it's interesting that you make that point because obviously this week we're going to learn a lot more on economic policy as the National People's Congress gets underway. But to the point about green technology and sustainable sources of energy, I would imagine as time goes on, China is going to become less and less a big buyer on the global market of crude and distalates. Is that a fair statement.

Yeah, it's interesting that you make that point because obviously this week we're going to learn a lot more on economic policy as the National People's Congress gets underway. But to the point about green technology and sustainable sources of energy, I would imagine as time goes on, China is going to become less and less a big buyer on the global market of crude and distalates. Is that a fair statement.

That's a fair statement. But you also have to remember that China energy security is a big thing for China, so they will still keep buying and still keep buying crude to process into fuels. There will still be an element there. But if you look at it now and the transition, especially to electric vehicles, it's huge in China and it is displacing things like gasoline demand. You've had the CNPC saying that gasoline demand in China make peak this year. There's been a few forecasts over the last couple of years of the peak. They've called it early, but it's certainly looking like that gasoline demand is starting to wane in China.

That's a fair statement. But you also have to remember that China energy security is a big thing for China, so they will still keep buying and still keep buying crude to process into fuels. There will still be an element there. But if you look at it now and the transition, especially to electric vehicles, it's huge in China and it is displacing things like gasoline demand. You've had the CNPC saying that gasoline demand in China make peak this year. There's been a few forecasts over the last couple of years of the peak. They've called it early, but it's certainly looking like that gasoline demand is starting to wane in China.

Then the other big story this morning on the oil front was OPEK Plus extending its oil cuts until the end of June. Speaking of Symbolis, I mean, what is the gap between what they say they're doing and you know how religious are these cuts with the actual output?

Then the other big story this morning on the oil front was OPEK Plus extending its oil cuts until the end of June. Speaking of Symbolis, I mean, what is the gap between what they say they're doing and you know how religious are these cuts with the actual output?

Well, you know, the devil is in the detail there. We have to wait to see the numbers, the monthly numbers that come out from OPEC to see whether they are adhering to it. It was largely expected. The market has some problems with China demand at the moment, it has some problems with non OPEC supply, especially US shelled supply increasing. So there are those elements where it is putting pressure on the price. And you saw the reaction in prices today. It didn't do much right, It hasn't done much at all, and that's largely because the market is expecting it. Oil has traded in a narrow, tight range of about ten dollars.

Well, you know, the devil is in the detail there. We have to wait to see the numbers, the monthly numbers that come out from OPEC to see whether they are adhering to it. It was largely expected. The market has some problems with China demand at the moment, it has some problems with non OPEC supply, especially US shelled supply increasing. So there are those elements where it is putting pressure on the price. And you saw the reaction in prices today. It didn't do much right, It hasn't done much at all, and that's largely because the market is expecting it. Oil has traded in a narrow, tight range of about ten dollars.

A barrel this year. Is the market just saturated now?

A barrel this year. Is the market just saturated now?

The market is? You know what the market is looking out for is probably the question that a lot of people are asking. If you look at prompt time spreads. It is tightening. It is showing a tightening in the market. But usually when OPEK release says something like this, announces something like this, you get a strong reaction. But we're not seeing it this time, so there is some caution in the market at the moment.

The market is? You know what the market is looking out for is probably the question that a lot of people are asking. If you look at prompt time spreads. It is tightening. It is showing a tightening in the market. But usually when OPEK release says something like this, announces something like this, you get a strong reaction. But we're not seeing it this time, so there is some caution in the market at the moment.

Are most of the refiners in China set up to work with sweet crude or sour crude?

Are most of the refiners in China set up to work with sweet crude or sour crude?

Look, you know, the Chinese are very good at adapting to whatever sources that they can get. You know, you've got the teapots, You've got a lot of the big new flash refineries that are huge in terms of global perspective. So you know, whatever crew that they need, they can adjust and they can work to process it because they are opportunistic bars and they use a lot of crew smart money.

Look, you know, the Chinese are very good at adapting to whatever sources that they can get. You know, you've got the teapots, You've got a lot of the big new flash refineries that are huge in terms of global perspective. So you know, whatever crew that they need, they can adjust and they can work to process it because they are opportunistic bars and they use a lot of crew smart money.

Now what's it saying for WTI a barrel. It's at eighty right on the button just about over the course of this year.

Now what's it saying for WTI a barrel. It's at eighty right on the button just about over the course of this year.

I mean it's tough to say. It's tough to say.

I mean it's tough to say. It's tough to say.

Yeah, if you look at the time spreads and you take that as a measure the market, it is showing the market tightening. So I would say prices are going up how far?

Yeah, if you look at the time spreads and you take that as a measure the market, it is showing the market tightening. So I would say prices are going up how far?

How quickly.

How quickly.

Is the big question here because there are competing factors. There's headwindsor's tailwinds. There's China, there's no OPEC supply. There's also the geo politics in the Middle East that are throwing up that element. So if if I had to make a call, I'd say it's going up, but it's going up slowly, maybe.

Is the big question here because there are competing factors. There's headwindsor's tailwinds. There's China, there's no OPEC supply. There's also the geo politics in the Middle East that are throwing up that element. So if if I had to make a call, I'd say it's going up, but it's going up slowly, maybe.

Eighty to eighty five or something like that.

Eighty to eighty five or something like that.

All right, Ben, thanks very much, real pleasure. Ben Sharples, Bloomberry Energy and Commodities Editor. We're joined by I mentioned pay political scientists and fellow at Claremont McKenna College, and the Bloomberg opinion columnists.

All right, Ben, thanks very much, real pleasure. Ben Sharples, Bloomberry Energy and Commodities Editor. We're joined by I mentioned pay political scientists and fellow at Claremont McKenna College, and the Bloomberg opinion columnists.

So mention.

So mention.

It's no small thing really to say that the economy will be the top priority. But I think a lot of investors would like to see, you know, put your money where your mouth is. Do you agree with that notion that we put there at the end of the story about basically economists expecting you know, growth friendly stuff but you know, no real big statement.

It's no small thing really to say that the economy will be the top priority. But I think a lot of investors would like to see, you know, put your money where your mouth is. Do you agree with that notion that we put there at the end of the story about basically economists expecting you know, growth friendly stuff but you know, no real big statement.

Yeah, I think you're basically right, because why people hear a bunch of retic trying to boast of people's confidence in the leadership, but we are doing such empty talk is not going to do any anything to make people confident about the Chinese economic prospects. What we need is really a set of very specific policies. I think this is where the Chinese government will be challenged during the next ten days when the annual session of the parliament is actually going on.

Yeah, I think you're basically right, because why people hear a bunch of retic trying to boast of people's confidence in the leadership, but we are doing such empty talk is not going to do any anything to make people confident about the Chinese economic prospects. What we need is really a set of very specific policies. I think this is where the Chinese government will be challenged during the next ten days when the annual session of the parliament is actually going on.

Minchen, Do you think that there will be an honest assessment of how weak the economy is right now? Will leadership kind of admit the challenges?

Minchen, Do you think that there will be an honest assessment of how weak the economy is right now? Will leadership kind of admit the challenges?

Yeah, it's interesting. I think they will do themselves a favor by being honest, but this is unlikely. They're going to put out a brave phase to put the Spain on the economy, and they've been doing this for the last year, frankly, but the market has not turned. So I think we all hope they will be honest, but it's unlikely to happen.

Yeah, it's interesting. I think they will do themselves a favor by being honest, but this is unlikely. They're going to put out a brave phase to put the Spain on the economy, and they've been doing this for the last year, frankly, but the market has not turned. So I think we all hope they will be honest, but it's unlikely to happen.

Mintion, you said that what we need, you know, what they need is very specific policies. They believe that they have been coming out with very specific policies, and in fact, it seems like investors are saying it's too specific. What we need is more muscle, and I guess you're suggesting it's not likely to happen.

Mintion, you said that what we need, you know, what they need is very specific policies. They believe that they have been coming out with very specific policies, and in fact, it seems like investors are saying it's too specific. What we need is more muscle, and I guess you're suggesting it's not likely to happen.

Yeah, well, my expectations are very low. Of course, I would like to be surprised. On the upside, I think what they'd be doing is some dribble dripping a little bit of stimulus, cutting reserve rates, cutting some interest rates. They're not putting real money, which is fiscal spending on the line. I think what is really needed is fiscal spending. We're not talking about huge package, but say two additional percent going into the pockets of consumers rather than building extra infrastructure, extra real estate.

Yeah, well, my expectations are very low. Of course, I would like to be surprised. On the upside, I think what they'd be doing is some dribble dripping a little bit of stimulus, cutting reserve rates, cutting some interest rates. They're not putting real money, which is fiscal spending on the line. I think what is really needed is fiscal spending. We're not talking about huge package, but say two additional percent going into the pockets of consumers rather than building extra infrastructure, extra real estate.

Does that necessarily mean that the government will allow the budget deficit to increase in a meaningful way.

Does that necessarily mean that the government will allow the budget deficit to increase in a meaningful way.

Yes, I think if they want to stimulate the economy, if they really want to change people's perception of groom and doom, have to incur a much bigger budget deficit. Otherwise, if it go forward with needed gross the budget deficit will continue to grow, because right now they do have a budget deficit of something like a leaf nominally four to five percent real term, probably close to eight percent, which is huge. If the growth goes up, the budget deficit will actually come down.

Yes, I think if they want to stimulate the economy, if they really want to change people's perception of groom and doom, have to incur a much bigger budget deficit. Otherwise, if it go forward with needed gross the budget deficit will continue to grow, because right now they do have a budget deficit of something like a leaf nominally four to five percent real term, probably close to eight percent, which is huge. If the growth goes up, the budget deficit will actually come down.

So we'll probably hear from Lee Cheong, you know, these types of words that the economy is the priority and that you know, they'll be pulling out all the stops to get it moving. But do you think that Hi Jinping himself has the same sort of commitment to the economy And is there any sort of vehicle from which he can, you know, make those comments or statements.

So we'll probably hear from Lee Cheong, you know, these types of words that the economy is the priority and that you know, they'll be pulling out all the stops to get it moving. But do you think that Hi Jinping himself has the same sort of commitment to the economy And is there any sort of vehicle from which he can, you know, make those comments or statements.

Oh yes, I think this is where the next few days will be really interesting time to watch because according to protocol or custom, she is going to visit several regional delegations and he'll give a speech. He's not going to give a long speech at the plenary session, but he's going to give a speech at regional sessions and we'll see how what he says about economy and what he says is really sort of going to be sort of a put on the microscope.

Oh yes, I think this is where the next few days will be really interesting time to watch because according to protocol or custom, she is going to visit several regional delegations and he'll give a speech. He's not going to give a long speech at the plenary session, but he's going to give a speech at regional sessions and we'll see how what he says about economy and what he says is really sort of going to be sort of a put on the microscope.

One of the things that I think leadership has been challenged with is abandoning the old style playbook in favor of something that's a little bit more contemporary. Speaking of President She, one of the mantras that he has been issuing over the last year and a half at least is this notion of high quality economic development. Do you think that's going to remain key? Is that a critical theme?

One of the things that I think leadership has been challenged with is abandoning the old style playbook in favor of something that's a little bit more contemporary. Speaking of President She, one of the mantras that he has been issuing over the last year and a half at least is this notion of high quality economic development. Do you think that's going to remain key? Is that a critical theme?

Oh?

Oh?

Yes, this is the mantra, this is the slogan, but you know, his understanding of high quality differs from a lot of other people's understanding of high quality. What he means by a high quality is ipech manufacturing, but that is a small segment of the Chinese economy. I think real high quality is overall productivity, rising income across the board. That is true high quality. But that is unlikely to be the government's policy mention.

Yes, this is the mantra, this is the slogan, but you know, his understanding of high quality differs from a lot of other people's understanding of high quality. What he means by a high quality is ipech manufacturing, but that is a small segment of the Chinese economy. I think real high quality is overall productivity, rising income across the board. That is true high quality. But that is unlikely to be the government's policy mention.

If that language isn't right, you know, let's pivot to what's the kind of language that global investors would need, because you know, there's really been a sense here of late that investors are kind of detaching from China. They're giving up to a certain degree. You know, you just hear it in comments from strategists, and you know outside the country and the West of people talking about the attraction of the Chinese economy is getting less and less and less. What's the type of language that policymakers would need to use to change that?

If that language isn't right, you know, let's pivot to what's the kind of language that global investors would need, because you know, there's really been a sense here of late that investors are kind of detaching from China. They're giving up to a certain degree. You know, you just hear it in comments from strategists, and you know outside the country and the West of people talking about the attraction of the Chinese economy is getting less and less and less. What's the type of language that policymakers would need to use to change that?

Yeah, I think the three kinds of language will probably be welcomed by investors. First is a much less emphasis on security, because if you talk about security then people get scared. And Second, a much more emphasis on the private sector because so far the government has been pouring money into the state sector, and sud is a much more welcoming attitude to following investors opening up sectors of the economy. I think if they do this, the perception of China's leadership and its economic policy will change.

Yeah, I think the three kinds of language will probably be welcomed by investors. First is a much less emphasis on security, because if you talk about security then people get scared. And Second, a much more emphasis on the private sector because so far the government has been pouring money into the state sector, and sud is a much more welcoming attitude to following investors opening up sectors of the economy. I think if they do this, the perception of China's leadership and its economic policy will change.

What about the government's commitment to increase military spending, what are you expecting to hear on that front.

What about the government's commitment to increase military spending, what are you expecting to hear on that front.

I think probably they're going to announce of a high single digit increase as last years around seven to eight percent. They can no longer the double digit increases, but given the overall security environment, they will have to sort of keep up the pace of military spending.

I think probably they're going to announce of a high single digit increase as last years around seven to eight percent. They can no longer the double digit increases, but given the overall security environment, they will have to sort of keep up the pace of military spending.

You know, here in Hong Kong and Shine we have kind of like a little microcosm of studying the Chinese economy through visitors here. Now, around the time of the Chinese New Year, there were tons and tons of mainland visitors here, but we noticed that, you know, they were not spending here and not staying in hotels for very long. Sometimes they're only coming on day trips. And you know, if you go out on the trails, you'd see a lot of Mainlanders out for hikes, but that means they're not shopping at Gucci and Louis Fitton. So when I asked you that question about you know, what would foreign investors need to hear about the language?

You know, here in Hong Kong and Shine we have kind of like a little microcosm of studying the Chinese economy through visitors here. Now, around the time of the Chinese New Year, there were tons and tons of mainland visitors here, but we noticed that, you know, they were not spending here and not staying in hotels for very long. Sometimes they're only coming on day trips. And you know, if you go out on the trails, you'd see a lot of Mainlanders out for hikes, but that means they're not shopping at Gucci and Louis Fitton. So when I asked you that question about you know, what would foreign investors need to hear about the language?

And I thought you gave an excellent answer.

And I thought you gave an excellent answer.

But it's really domestic investors and domestic consumers that are the most important to Chinese economy.

But it's really domestic investors and domestic consumers that are the most important to Chinese economy.

What do they need to hear?

What do they need to hear?

I think that they just hear from the government something like this, we feel your pain and we're going to do something about it for real. So I think a program, as I have written in Bloomberg that consume a voucher program every person gets a thousand dollars which can be applied to consumption. That kind of program will share people up because this would really put money in people's pocket. Then they will start spending again.

I think that they just hear from the government something like this, we feel your pain and we're going to do something about it for real. So I think a program, as I have written in Bloomberg that consume a voucher program every person gets a thousand dollars which can be applied to consumption. That kind of program will share people up because this would really put money in people's pocket. Then they will start spending again.

What about China's role on the world stage very quickly? Is it going to be the role of the leadership here to acknowledge a more balanced approach with the rest of the world, or is the focus going to be more inward looking.

What about China's role on the world stage very quickly? Is it going to be the role of the leadership here to acknowledge a more balanced approach with the rest of the world, or is the focus going to be more inward looking.

I think they have to be more inward looking because the time when they can actually spend money waste money outside the borders of China is over.

I think they have to be more inward looking because the time when they can actually spend money waste money outside the borders of China is over.

All.

All.

Right, I mean sheane should be a big week.

Right, I mean sheane should be a big week.

We hope to talk to you plenty over the next couple of weeks as we analyze what we get out of the two sessions, the CPPs which gets underway today, the NPC which starts tomorrow, and of course the work report from Lee Chan will be quite interesting. Mentioned Pay's political scientist and a fellow at Claremont mckinna College out in California, and a Bloomberg opinion columnists.

We hope to talk to you plenty over the next couple of weeks as we analyze what we get out of the two sessions, the CPPs which gets underway today, the NPC which starts tomorrow, and of course the work report from Lee Chan will be quite interesting. Mentioned Pay's political scientist and a fellow at Claremont mckinna College out in California, and a Bloomberg opinion columnists.

This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you'll listen and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you'll listen and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.