CGTN Europe spoke to Xiaolin Chen, Head of International, KraneShares
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00:00Let's get some more analysis on all of this with Shaolin Chen, Head of International at Crane Shares.
00:06Welcome back to the program. Good to have you with us today.
00:08So what do you make of these targeted measures that China is planning to support its companies and its workers announced during this Politburo meeting?
00:18Thank you, Paul, for having me on your show.
00:20These measures have been long planned, shall we say.
00:24That's the least statement we should expect from Chinese policymakers.
00:27Also, they are very carefully deplored and well expected by the market.
00:32The reason I say that is the recent statement also released.
00:35But if you see all the actions go back to even middle of last year, the Chinese government has been planning a long time to say we got to prepare for the uncertainty we may face potentially or the challenge we may face externally.
00:48Therefore, they have had a lot of policy ready to implement when the time is right.
00:55All the policy they announced from September all the way till now is nearly half a year.
01:01All the policy was carefully managed.
01:04When the time was right, they deployed one after another.
01:07Earlier this year, they had the MPC.
01:10Then they promised to support the economy with $2 trillion consumption stimulus package, so on and so forth.
01:16The market is expecting the governments to do more on the supportive policy, but I think they are doing the right way with their own pace of given how the data, how the economy is doing.
01:27It's ready to wait in the right timing to deplore them.
01:30But so far, the policy they announced actually reflect this time round.
01:35China is very prepared with the external uncertainties and implementing the policy accordingly.
01:41And with this goal of achieving around 5% growth this year, how can China balance this target with these increasing trade tensions with the United States?
01:52It's a great question, Paul.
01:54At the end of the day, if you look at the data, U.S. trade with China is 2.3% of China's GDP, only 2.3%.
02:02A lot of people thought that would be a lot higher than that.
02:04If you look at the data in 2024, U.S. trade to China's percentage of GDP, only 2.3%.
02:10Not saying they are not important, because China is U.S. largest trading partner.
02:15But China is the largest trading partner to many nations today.
02:19That is the effort that the Chinese policymaker has been implementing over the last two decades.
02:25If you look at China's exports partners, over the last two decades, China has been actively diversified away from the developed market.
02:34Over the last two decades, exports to the developed market dropped by 17%.
02:40At the same period, to ASEAN, to Frontier, to Emerging Market, to Asia, neighbors, has gone up the same proportion.
02:46So I just say, you know, China has a long goal to rebalance its economy, to consumption-driven.
02:52This time around may just, you know, let them to rebalance faster.
02:57And do you think that the Politburo plan to increase income for middle and lower income groups could boost consumer spending?
03:05I think the goal to make China more urbanized, i.e. has more people living in the cities,
03:11and also increase their middle class number was a long-term goal from this generation or this leadership.
03:18And also the past leadership has always been the case.
03:21Today, China's urbanization rate is around 60%, 65%, depends on which month, years you look at them.
03:28But still at a very decent rate over the last couple of decades, still they have plenty of room to continue to grow.
03:34In that instance, the government has to help, you know, middle income, even the lower income,
03:39because the lower income people or household are the target people that this leadership is aimed to help them to achieve to middle class level.
03:48By 20, you know, in a couple of, like, 10 years' time, China is expecting their middle class to reach nearly 400 million.
03:55So in that instance, China has a lot of, you know, job to do ways of resort trade tension.
04:00Like I said, all these tensions now happening will eventually play out with a constructive deal on both sides.
04:07It has to. It's a matter of time.
04:09But all these uncertainties and challenges the Chinese government face today will only help them to be more determined to accelerate,
04:17to achieve their overall long-term goal faster and quicker.
04:21Always good to get your input.
04:22Thank you so much to Xiaolin Chen, head of international at Crane Chairs.
04:26Thank you so much.