CGTN Europe spoke to Zhang Zhiwei, President & Chief Economist at Pinpoint Asset Management.
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00:00Zhang Zhewei is President and Chief Economist at Pinpoint Asset Management in Hong Kong.
00:05Zhang Zhewei, welcome back. Good to see you.
00:07Foreign direct investment dropped in January, according to China's ministry.
00:13Is this speech going to do the trick and turn things around?
00:19I think that a clear gesture from the government certainly is helpful on the margin.
00:25But I think other signals coming from, for instance, the stock market is also quite encouraging.
00:32I'm based in Hong Kong. This week we have very big conferences in Hong Kong.
00:37And I mentioned many foreign investors coming to Hong Kong after quite many years.
00:42This is the first time they came to Hong Kong because the stock market is doing well,
00:46so that they want to come here to get a sense about what's happening on the ground.
00:50So I think it's not just the government policies, it's also stock market signals, deep-seek,
00:56these kind of real cases that make investors more interested these days.
01:02Given overseas turbulence, domestic confidence is the key, isn't it?
01:08I mean, getting Chinese consumers to spend again is the trick.
01:12But saying it and achieving it is quite another, isn't it?
01:15I mean, any sign that pulling the levers in central government is going to get the punters to spend?
01:23That's right, James. I think that's a very key issue, right?
01:26So the consumption part of the economy so far, I think it's stabilized by the end of last year,
01:33but it hasn't really picked up in a meaningful way to become a pillar for GDP growth.
01:42I think the economy still very much depends on exports so far this year.
01:47So going into the rest of the year with the global international trade environment become less favorable,
01:54I think it's really important to have consumption back on track.
01:58I think that's also the government trying to do, you know, raising fiscal deficit,
02:02likely to boost the consumption going forward.
02:05Well, let's look ahead then into this new world over the next 12 months and the prospects of difficult tariffs.
02:13What will that mean for China and the wider region in terms of exports?
02:21Yeah, so that's a big question on investors' mind.
02:24I think direction-wise, there's no doubt you will have some damage on international trade.
02:31And exactly how big the damage will be, I think we'll probably find out sometime in second quarter,
02:38probably in the coming months.
02:40And I think that the government is also waiting for that, you know, to see how exports will perform in second quarter.
02:50And then they probably will take action on the fiscal side to try to offset the damage to exports.
02:56My sense is it's probably going to happen gradually because there's a lot of front-loading of exports.
03:01And, you know, the big shock also potentially may be put off by, you know, a lot of the firms already getting ready for this.
03:11So they, in the short term, they may have some measures to soften the impact.