CGTN Europe interviewed Marc Ostwald, Chief Economist & Global Strategist, ADM ISI
Category
🗞
NewsTranscript
00:00Mark Oswald is chief economist and global strategist at the independent brokerage firm
00:05ADM ISI. Mark, good to see you. Welcome back. Let's just start with this phone call between China's President Xi and
00:13US President, incoming President Donald Trump. The two apparently in this phone call talked about many things, but they talked about trade. Given the possibility of
00:22US trade tariffs on Chinese goods imminently, what are you looking out for?
00:30Well, I think the first important thing is actually everyone is much more willing and ready to engage with the new administration in Washington. And that is
00:41actually a positive relative to the start of 2017. I think the most important thing is the communications channels are open, but they were open, you know, for the last Trump
00:52administration during the last Trump administration, and there was a lot of trade tariffs. But I think everyone's actually now realizing that, you know, just
01:03blobby, just having wholesale tariff imposition is actually not going to be good for either China or for the USA. So I think there's a lot more room for
01:16discussion and negotiation than perhaps people give credit for.
01:22We'll have to wait and see over coming days and weeks. Obviously, let's just drill down on the China story today. China's economy growing by 5% in 2024, hitting its
01:31targets, and yet many people in China seemingly complaining about flatlining living standards. What does that disconnect say about the Chinese economy?
01:43Well, it basically says it's still very reliant on investment and industrial production. Industrial production is actually growing at a faster trend rate now than
01:56before the pandemic, which is impressive. But it is coming on the back of a lot of stimulus, i.e. debt, basically. And external demand has been strong. The
02:06consumer side, I think, you know, there are two factors which have contributed to that. One, wage growth has been poor, which doesn't help the feel good
02:17factor. And secondly, there are still numerous concerns about the property sector. And given that Chinese consumers' savings are very much geared to the
02:30property sector, that doesn't help confidence either. So addressing that problem, it won't be done with a flick of a finger or a magic button, is basically still the key
02:43challenge.
02:44Despite those stimulus efforts, domestic consumption still lagging behind industrial output. Why has it been so challenging to shift towards a consumption driven
02:57economy?
02:57I think the biggest problem lies back in the sort of 2019-2020, well, 2018-2019 period, when there was a lot more, a lot of tightening of regulation. And that dented both
03:12consumer and business consumption and confidence. And as much as some of that has been relaxed in the meantime, I think there is a fear that it could be repeated at some point in
03:25the future. And that really, without, you know, rowing back on some of that regulation, and dare I say it, go large or go home in terms of stimulus policy, you're
03:42getting this transition is not going to be that easy.
03:46Mark, good to see you. Have a good weekend. Mark Oswald, Chief Economist and Global Strategist at ADM ISI.