Houze Song

Thank you for inviting me, Alice.

I would say in terms of what they have been saying, the message has been pretty consistent.

For example, if you compare Vice Premier Hu's speech with the speech President Xi gave before the pandemic in 2018, the message, especially the part on the global order and the global trade systems, are basically essentially the same.

So the signaling from Beijing has been pretty consistent.

On the other hand, in terms of what they have been approaching and also China's trade policy, it has been quite different compared to, say, eight years ago when President Xi made his speech during the Davos.

But one thing, China was essentially running a balanced trade back in 2018.

China's trade surplus was less than 1% of GDP.

In contrast, last year, China made a record $1.2 trillion trade surplus.

And that part of it reflects Beijing's basic manufacturing-first economic policy, but also a greater part probably has to do with the fact of China's weak domestic demand.

I would say, especially in terms of weakness, Chinese consumption weakness, there's both a cyclical component, there's also a secular component.

The secular component being that historically the share of income in China that goes to the household sector

is much lower compared to other major economies.

And also on top of that, there's the ongoing cyclical adjustment basically triggered and amplified by the ongoing real estate hard lending.

So as to why the Chinese central government not providing more help to the household sector and the economy broadly,

I would say there are a couple of reasons.

The first is that basically that the China's central government's priority in terms of their priorities growth is no longer the top priority.

Growth is probably at best secondary.

So for example,

China's long-term growth target through the year 2035, basically implies that Beijing is aiming for an average growth rate of 4% point for the next 10 years.

On top of that, the basically ongoing U.S.-China tension means that Beijing needs to double down on its strategy, manufacturing a technology-first strategy to pursue tech independence.