beijing's recent stimulus packages sending stocks surging in mainland China and in Hong Kong for a closer look at the economic picture we want to bring in China beige book CEO Leland Miller his company is out with new third quarter data for this week and it's forecasting the impact of Beijing stimulous policies Leland welcome why why don't you tell us what that forecast is well I think we have to have a very different outlook for short-term asset markets and the macroeconomy I mean these are the stimulus package has basically put us uh headed in two different
directions on on on the stock market of course the things are going well they're going to probably go well uh for a while longer uh it's a short-term uh put by the government so they are encouraging everyone to get in uh try to redeem animal spirits and investor spirits and uh and it's a big cheery uh several months for for stocks on on the macro economy it's a little bit different because I think if you look at what they're talking about doing and again very little of this is actually come to effect yet they're trying
to put a floor on the economy they're trying to stabilize it they're not reaching for a higher ceiling so whether it's property whether it's consumption whether it's credit they're trying to do measures across the board that just improve things just enough so that they can basically shift their focus on things they care about a lot more it's interesting we were speaking with an oil analyst yesterday who who made that same point we were asking why you know since then we've seen oil prices come up but that has more to do with commentary we heard from
President Biden yesterday when addressing the Middle East East but why we hadn't seen oil prices rise just on what China had done and he said the same thing that these are stimulus measures that are really targeting the stock market NE not necessarily the broader economy there well that's true but if you also look at what they're talking about doing the talking points are about consumption uh you know so they they've said okay we're going to issue a couple trillion Juan of of bonds we're going to use some of that for consumption whether it's handouts or
whether it's it's uh you know pulling growth forward through some sort of trade in uh you know uh offers uh and on the other hand we're going to we're going to feed the economy and things we're we're going to back stop property but the idea that that's going to you know send send Commodities to the Moon you know that that's going to to juice the economy in the traditional ways that China sees stimulus reacting uh you know inside its its economy very different type of thing they're talking about now very few details so far and
most of this again is about making sure that the Doom confidence Loop where consumers and investors and households were all seeing sinking sentiment feeding off itself uh I think they're trying to stop that and so it's it's it's not really a Commodities play at this point Leland how much of that is boosting investors within China and how much of that is boosting foreign investors confidence because I think that's been the thing that has been shaken so much these tensions between Beijing and Washington commentary out of Beijing concerns from us businesses that maybe they don't have
a safe way of doing business there what do any of these measures make you feel like okay this is a safer place for either American investors or American businesses these days no not at all I mean they don't have anything to do with rule of law or whether China is going to crack down on certain companies you know western or domestic uh what this is is this is an opportunist opportunistic play uh in the stock market the the government said it's going to back stop you so you jump in and you ride as long as
you can but if you're in China and you're trying to actually determine whether your future looks better now than it did say a month ago and you're a household you know you're trying to figure out you know how does this Advantage me in the long term is this going to be a one-off hand handout or is this going to be something that that that restructures the economy in a way that's beneficial to me if you're a corporate we've seen bottom Barrel borrowing for for three or four years now is this going to Spur borrowing Beyond
you know a month or two or even that or is it going to Simply our firms going to look at lower rates and say no thank you the way they've done it for the last four years so the question is is this a structural pivot in the minds of people in China so that they'll change their behavior going forward and I think we haven't seen enough from the stimulus package to to to convince us that that's going to happen what what would change your mind on that front what would make you think this is more
long lasting on the ground there I think it would have to be a lot more demands side stimulus but but not one-offs it has to be more about restructuring economy so it's no longer disincentivizing Savers and households and private firms in order to Advantage you know State firms you don't want to reduce the savings rate so that you could take that uh take that credit and and plow it into manufacturers for instance so what you want to see is is an economy that that looks like it works for you if you're a Chinese family and
what's happening uh and has always happened as part of the the financial system is suppression of of households in order to boost the state and I think they need to reverse that in order to see a sentiment shift what um what's your expectation for growth there for the rest of this year and for next year well look they've done enough so that they're going to claim to at least be near the 5% uh GDP growth Target um a lot of what's happening right now as it's been suggested on the consumption side will be pulling forward
growth if you're trading in Goods now you're not going to need them in the medium term so that's medium-term negative but it's enough to pull forward growth in the coming months you know retail sales should improve property should stabilize so it will be a boost in the short term to growth the question is you know creating all these swap saying they're going to create all these swap facilities for stocks uh and they're going to be plowing all these money into things that they don't really care about like like like asset markets how long will this
last how much will the Boost be and and once you get to that you you know point in the stock market so you get to you know a certain number what happens then does everyone sell into this that's what's happened every other stock market uh you know stock market rally in the last you know 15 years so it's a it's a real big question beyond the next several months what's going to happen they'll growth will go up a little bit but uh but again we may back be back to the drawing board if they don't
do a lot more Leen do do you ever go to China or is this based on on on things that you're reading just what what sources are you looking at well I we have an active uh survey that uh that uh that that tracks China for thousands of firms every single month so it's firms on the ground reporting their conditions I do go to China um you know it's it's a different environment there now than it was you know 5 10 years ago uh but I think that the the core here is that we're trying
to get responses from around the country the problem for people jumping into China is they go to Beijing they go to Shanghai they go one other choice City and they get they bring back their Impressions and what China base book is trying to do is is is do away with that to survey the entire economy the entire country all the major sectors all the major regions and see what the many China stories are are telling us rather than just you know impressions of a trip or two or three what what how what is different now
versus five or 10 years ago because I haven't been there in a while myself well the biggest thing is about sentiment and I think that's why they did this package right now you know the the idea for a while was that you know China China was changing and and China was growing but that there was still opportunity and I think what happened over the last four or five years is that there's a belief that the government is cracking down that uh that it's that it's it's it's not focused on on on supporting growth it's not
support supporting uh households and consumers and so you look at borrowing you look at investing you look at hiring and all those metrics underneath the hood are looking really bad and have looked really bad particularly borring for years and years now so the idea is how can you kick China sentiment back up a couple notches and make sure that this this Doom confidence Loop doesn't hit people have been depressed about you know consumption pressed about property how do you make sure that these things don't feed off each other to create some sort of broader Contagion
