CGTN Europe spoke to Hong Hao, Chief Economist at GROW Investment Group.
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00:00Hong Hao is the chief economist at the Grow Investment Group.
00:03I asked him for his response to the special action plan to boost consumer spending.
00:09In today's press conference, there's a lot more details that is coming up,
00:16you know, how to use the policies to support consumption going forward.
00:20Specifically, you know, we're seeing, you know, mentioning about increasing people's base salary,
00:27increase unemployment benefit, and also increase social safety net for people who are getting older
00:35and retiring from the workforce. And these are very sort of a comprehensive work plan.
00:40So it's actually showing, you know, where the Chinese economy is heading and where the policy
00:46is going to guide the development of economy going forward. So, you know, I think right now,
00:52we have a top-down mandate. As you know, in China, everything is top-down, right? So once
00:58the central government has made up its mind, then the policy directive will be sent to the
01:04local regional government for them to execute. So having said that, you know, because we've
01:10been talking about this for years, and now we're, you know, making an initial
01:16baby step forward, a lot needs to be done, especially on the provincial, on the city level.
01:21Is boosting domestic consumption in China really enough?
01:26Especially for this year, if you only rely on consumption to drive growth,
01:30it could be a big ask, right? So because we've just started, and also consumption is still
01:36relatively small part, smaller part of the economy. I think right now, consumption takes up,
01:41you know, less than 50%. It's about 45, 46% of GDP. It's substantially less than
01:48countries at the similar development level as China, right? So a lot needs to be done.
01:54And also, you know, in terms of the trade war, you know, because much of the industrial capacity
02:00are now, you know, oversupplied, and therefore, you know, the price pressure
02:06on the domestic economy is going to be huge. So I think it's a monumental task.
02:15And finally, we have had data out today showing growth in retail sales and industrial production.
02:21What is your outlook for China's economic growth in the months to come?
02:26Yeah, I think today's IP industrial production is actually a bit stronger than expected. Reason
02:32being because of the trade war, you know, many people, many businesses are trying to front run
02:38the tariff, trying to stock up on cheaper goods, you know, before the trade war begin. So I think
02:45as a result, you know, if you see the exports numbers, and also the IP numbers are very,
02:51very strong. Also consumption number is higher than expected as well. But having said that,
02:56you know, because of this one-off impact from trade war, I think going into the second quarter
03:01of the year, we will start to see some signs of slowdown, especially in the export sector
03:07and the manufacturing sector. And I bet that it's already happening. You know, for example,
03:12if you look at the leading indicator of export order, it's starting to decelerate. So I think,
03:19you know, it would make it much more difficult to grow towards 5% this year. I think, you know,
03:28besides better consumption, besides, you know, some investments towards higher manufacturing
03:35and high-tech sectors, much still needs to be done, you know, to get to the lowest target of
03:415% this year.