Alice Han

Again, that's double digit negative territory, which has been in place, I think, over the last six years.

This is something that they haven't really addressed because politically, I think they like the fact that they've succeeded in deflating the real estate asset bubble.

But I remember writing a piece five years ago saying that this is not a financial risk, but it's a macro risk because as soon as the property sector, which is about a quarter of GDP historically, if not more, stays at depressed levels, that's going to have massive knock-on effects for household balance sheets, for spending, for consumer and business confidence.

So I would expect that they going into the March NPC will probably do a bit more to support the real estate sector.

And that will probably look in the form of reducing mortgage rates, which, again, is still historically very low, reducing some of the constraints to first home buyers as well in certain cities as well.

And then more broadly, I think probably reintroducing some of that whitelist financing program to effectively get banks to lend to developers so that they can finish their properties that have been bought but not yet sold.

So when I put it all together, it's important to remember that in spite of China's economic largesse, there's still a lot of structural problems.

And it's hard for me to see

that the government is really adequately dealing with this with a solution in mind.

But I will end with my takeaway from the CWC.

So, you know, I don't think we've talked about this, the Central Economic Work Conference that convened at the end of December, which is oftentimes a very good signal for what is going to happen in the March government work report for the subsequent year.

They were basically pointing towards more support for domestic consumption.

So there was a reintroduction or rather an extension of the subsidy program to some extent for EVs and for other durable goods.

Now there probably will be some subsidy program for services is my expectation in March.

But this is again too little too late because ultimately they will keep having to juice both manufacturing and I think fixed asset investment next year.

Yeah, it's hard to see if real estate sector remains quite depressed because, you know, at its peak, it was about 70% of household wealth.

So if you think about the knock-on effects of that on household balance sheets, it's pretty considerable.

But I have long held the view that until we see meaningful increases in wage growth, which I think is another way to look at your point about per capita growth,

disposable income, it's hard for me to see a meaningful boost in consumption.

And thus far, the Chinese government has what I call a supply side approach to boosting consumption and not a demand side approach, because all they're really trying to do is subsidize the cost of goods and maybe even coming into March services.