Daybreak Weekend: Netflix Earnings, Davos Preview, China Data

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This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight Ahead on the program, we'll
look to earnings from streaming and chip giants Netflix and Intel.
I'm Nathan Hager in Washington.
I'm Caroline hepkehim in London, where we're looking at the
annual gathering of the Powerful, the rich, and the famous.
In Davos, Switzerland, I'm Doug Prisner, looking at how Beijing
will report the performance of the Chinese economy.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven three year, New York, Bloomberg ninety nine to one, Washington, DC,
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Good day to you. I'm Nathan Hager. Investors will be
watching earnings from Intel and Netflix this week for signals
on two very different corners of the tech landscape. Well
here from Netflix first on Tuesday, man for more and
what to expect from the streaming giant. I'm joined now
by Bloomberg Intelligence Senior media analyst Githa Ranganathan and Geitha.
I feel like there's been so much talk about Netflix's
bidding war for Warner Brothers Discovery that it's been kind
of easy to lose sight of the fundamental. So this
will be kind of refreshing. What are you expecting.
Yeah, I'm really hoping we get a rispite from this
three ring circus, Nathan. I mean, it's been going on
for quite a while now. I hope the focus really
turns and this is a distraction, you know, from this
whole drama that we've seen. But fundamentals wise, you're absolutely right.
The company has never been in a stronger situation. We
think they will absolutely deliver on their revenue growth expectations
of about seventeen percent, strong operating margin, strong free cash flow.
They're expecting about nine billion dollars for the full year.
And really, I mean many many times, Nathan, the company
has said that, you know, twenty twenty five as well
as the fourth quarter. The slate really is absolutely a
blockbuster slate. I mean, you think about it, stranger things,
you know, the finale, you had so many other titles.
I mean, whether you're thinking about Knives Out or Emily
in Paris or you know, My Secret Santa or Frankenstein,
nobody wants this. I mean, the list just goes on
and on. But I think more importantly, Nathan, I mean,
it was really their sports strategy. So if you look
at the Lions Vikings game on Christmas date, that was
the most streamed NFL game in US history, So really
a huge achievement and kind of really speaks to you know,
what Netflix has been able to achieve. So I think
there's obviously going to be a lot of attention on
all of those metrics, how that kind of plays out
into advertising, which is a big focus for them. But
I think still, you know, this overhang from the Warner
drama is not going away anytime soon.
In full disclosure, I too watch Stranger Things five and
the Knives Out sequel. But when you think about that
content slate and what I would have to think is
a strategy for even more content to come into this year,
doesn't it raise the question about what the strategy is
for Netflix to buy Warner Brothers Discovery. Does it need
that Warner Brothers ip.
So that has really been the head scratcher, right, People
really kind of wondering is Netflix just playing the long
game here? Do they just want to beef up their
content portfolio, make more of an defensive play for Warner,
keep it out of everybody else's hands, or are they
really seeing some kind of slow down in their own
core engagement? And I mean, this is what has kind
of fueled so much of concern here, because you know,
people really wondering why they're going after the Warner portfolio.
Is it because we're seeing, you know, some kind of
a slow down and engagement metrics. I don't necessarily think
that will be the case. But regardless of how this
whole drama plays out, we know that fundamentals will continue
to be very strong. They have, you know, their own
original titles, even without Warner, have really performed very very well.
We've seen over the past, you know, so many years.
But I do think that Netflix is prepping for the future, Nathan,
as we kind of look at AI and how AI
can democratize content, I think it really becomes key for
many of these big streamers to have access to more
top tier franchises and properties, and really Warner brings them
a huge treasure trobe of titles that they can mine
very nicely into the future.
We'll talk a little bit more about what's driving your
view that Netflix still has that engagement compared to some
of its competitors as well. What are some of the
metrics you're looking at now that they don't break out,
you know, subscriber accounts anymore.
Yeah, absolutely, so. You know, they do disclose a periodically,
you know, a report called what we watched, and they
released this every six months, and we do get some
insight into really one of the biggest titles on Netflix,
how many minutes are spent watching those titles, And on
average you'll see that a Netflix member spends about two
to two and a half hours per day engaging with
their content, which is really a staggering number. And then
if you just kind of put that in the context
of all of the streaming players, they're way ahead of
most of their rivals, but they constantly bring up this
comparison with YouTube, whom they actually trail, and so their
whole argument has been, you know, we really need to
catch up to YouTube, and that threat only gets bigger,
I think with you know, the advent of AI and
people like wanting to create more content, more user generated
content with all of these AI tools like Sora, and
so while Netflix really is in a strong and you know,
an enviable position, they always kind of have to watch
over their shoulder.
I would say, so given that position, should subscribers be
on the lookout for things like higher rates? We keep
seeing those creep up here and there as well.
Yes, they definitely have pricing power. We've kind of seen
a steady cadence of price increases every twelve to eighteen months.
So I absolutely think that a price increase is you know,
on the books sometime in twenty twenty six, and that's
just kind of become the name of the game here
in streaming. We've seen all of these streaming services, I mean,
whether it's Netflix, Disney Plus, HBO Max, all of them,
you know, really kind of using that pricing lever as
you know, the subscriber number does it become is not
important anymore and it's really more our pooh and pricing
power and revenue growth. So all of the streamers are
kind of flexing their muscle when it comes to pricing.
All right, Well, we're going to be focused on the
fundamentals in just the next few days when Netflix opens
those fourth quarter books. Thank you for this, Keith the
Great having you on with us. That's Keith the wrong nothing,
senior US media analysts for Bloomberg Intelligence. Now let's turn
to Intel, the biggest maker of personal computer processors, opens
its fourth quarterbooks on Thursday. Is the turnaround intact? Let's
bring in Bloomberg Technology reporter Ian King for insights on that.
Ian.
We know the US government is working on building a
ten percent stake in Intel, so it's sure to be
watching these earnings. What should we expect from the chip maker?
Yeah, I mean this company has very much had a
transitional point last year. You mentioned obviously the government investment
was also an investment by Nvidia and also an investment
by SoftBank. What those did was really shore up the
balance sheet. So on that side of the house, kind
of task completed. Things are better than they were. There's
no kind of existential risk, at least in people's minds
for the time being. But what we're really looking at
now is the operational side. You're a chip company. You
have to sell more chips. You have to sell more chips,
cost more money and get more profit.
Now to that point. Where do things stand for Intel
right now? Getting that operational side in a turnaround in
the short term, Yeah, I mean we're.
In the very early stages of that. At the beginning
of this year, Intel was at the CES conference in
Las Vegas and they unveiled a new range of chips
based on a new production technology, and what they said was, look,
this gets us back in the game. This makes us
competitive again, and this is very much, you know, the
proof point that our technology is irrelevant in this industry. Again,
obviously we're only a couple of weeks away from that,
so you know, too early to see whether they're selling
like hotcakes or whether you know, that's hype from the company.
But obviously the company's forecast this quarter will be really
important as a guide to their confidence in that.
Talk a little bit more about what the CEO had
to say about those new chips and how they stack
up to some of the competition around, you know, names
that we're familiar with, like Nvidia, like AMD.
Yeah, I mean we're talking about PC processes at this point.
So that's a high volume market for Intel. So that's
important in terms of cash flows, that's important in terms
of filling those factories, but it's not the sort of
down of profitability, you know that the core profitability that'll
come later when we see what it's doing in serverships.
What the company has said is, look, hey, this new
range really kind of repairs the issues of the last
couple of ranges of chips that we've had out there.
You know, it's the most power efficient and they're good
at performance as well, so that that really helps position
as well against our competitors. And you know, they're talking
about their confidence again, and that's really been the first
time in a long time that we've seen Intel really
kind of beat their fist against their chest and say, hey,
look at our chips.
Do those chips the cost of putting them together? Does
that pose a potential risk for Intel go going forward?
Well, the risk is how many they can sell. They've
already built, you know, a brand new factory Fab fifty
two in Arizona. They're trying to convert some of their
other production lines over to this new production technique. That
shift and that cost makes sense if you sell a
lot of these things. If you don't, then that's where
the problem is.
There's got to be a lot of focus as well,
like you mentioned about the foundry plans for Intel. Given
the US governments focus on boosting that business with its stake,
what kind of color could we expect around you know,
Intel's factory plans, you know, boosting manufacturing in the United States.
If you if you own Intel stock, and as taxpayers
in the US we do. All you care about is
Intel going out on stage somewhere or in some forum
and saying, hey, this is a big customer we have
other than ourselves. You know, in video is going to
use our plans. Amb is going to use our plans.
That has not happened yet, and you know, the prospects
for that at the moment are kind of murky. We
don't know. It's difficult for Intel to sort of do
that because you don't want to be talking about what
your customers are up to. But frankly, the eighteen A node,
the one that these new chips are built on, that
node has not delivered on the promises of external customers
that we got from previous management. And it might be
that the next node is so called fourteen A, which
is going to come in the next couple of years,
that might be the one where we start to see
external customers, so probably a longer term story.
There are you seeing just reading the tea leaves of
much interest at least in the short term from potential
customers for Intel in some of these chips and the
foundery business.
If you're one of those companies I just mentioned, you're
going to look at Intel. Of course you are. We're
in a world where we should have capacity, where TSMC
is basically filling all of the others it possibly can,
and is likely getting more than it can fill. So
of course you're going to look at Intel, but you're
also going to look at Samsung. Samsung is arguably a
more established kind of second source to TSMC in the
so called boundary world. So yeah, everybody's gonna look. But
Intel has to prove that this technology it has is
a good enough to compete with TSMC and be offers
an advantage because it costs money to switch over as well.
Appreciate this. Ian, thanks for coming on with us ahead
of Intel's earnings. That's Ian King, technology reporter for Bloomberg News,
and coming up on Bloomberg Daybreak weekend, we'll look ahead
to the annual gathering of the rich, famous and powerful
in Davos I'm Nathan Hager, and this is Bloomberg. This
is Bloomberg Daybreak, Weekend, our global book ahead, the top
stories for investors in the coming week. I'm Nathan Hager
in Washington. Up Later in the program will turn to
China and look at whether economic expansion there met the
government's target. But first, the international business'll eite to send
on Switzerland next week for the World Economic Forum in Davos.
The annual gathering is traditionally about multilateral goals promoting peace, prosperity,
and social progress, but this year has begun with fundamental
questions about international law, America's role in the global order,
and if global business is on the same page on
issues like diversity, climate change, and politics. For more, let's
head to London and check in with Bloomberg Daybreak. You're
a banker, Caroline Hepger Nathan.
The organization that Ron's Davos has set its theme for
this year as a spirit of dialogue, with world leaders
including US President Donald Trump set to attend. Who're quite
curious to know what conversations they will be having. It's
Trump's first in person appearance at Davos in six years.
Last year in a virtual address, the US president criticized
the Paris Climate Accord and promised to unlock the liquid
gold of fossil fuels. As well as his geopolitical interventions
in the Middle East, Venezuela, and Greenland, Trump has also
shown his administration is prompt to impose its demands on
global businesses, from reassuring to pricing executive pay and shareholder
dividends across a wide array of sectors. What message will
he world leaders and the leading light of global business
be bringing to this international forum. Joining me now is
our editor at large, Francine Laqua, who will be leading
Bloomberg's coverage at Davos as every year. Francine, of course,
what do you think are the big questions that you're
going to be asking this year at Davos? Not asking
you to reveal your trade secrets, but give us an insight.
I mean, there's this idea girling that twenty twenty five
was really the year where Prisoner Trump shaped his agenda
about how he sees the world economic times trade, and
I think we're trying to find out whether twenty twenty
six is maybe the year where countries or companies push back. Now,
we definitely started you know, the first couple of weeks
of this year with a terrific news flow, much much
newsflow that we weren't expecting. And look, it's going to be,
you know, part of the Donald Trump Show. He shows
up in Davols. It's the third time that he arrives.
We believe that he'll be there towards the middle of
the week. In his first appearance in twenty eighteen, I
remember it like it was yesterday. He delivered a surprisingly
opened armed message declaring that America First does not mean
America alone. Then he was pretty defiant in twenty twenty
as his impeachment trial was getting underway in Washington. And
then last year, this was like two days after he
got inaugurated. After shortly after being reelected, he delivered a
speech at the Annual Meeting via video, and there he
focused on oil prices, interest rates, in European regulations. So
a lot of the questions will really be trying to
figure out how to deal with the President of the US,
how to deal with the administray if there's tariffs and trade.
And then there's more like the softball questions, you know
about the spurt of dialogue, how can we invest in people.
Some of the conferences were probably or some of the
panels were probably distilled just to make sure that they
would appeal to the Trump administration. But you have great speakers,
you have Jamie Diamond, you have all of Wall Street
showing up. But it's a little bit of a mix
and match. I mean, you want to know what you
know President Trump does and what AI becomes in terms
of valuation and impact on the economy.
Interesting. So then who are you hoping most to speak to,
to hear from, because it really is is everyone. It's
those global world leaders, business leaders who are going to
be there.
So I think this year is a little bit different
again because it'll be really interesting to hear a reaction,
right to see if there's anyone that speaks up against
some of the things that the Trump administration are putting
in place. We'll have good conversations on inflation. And I
keep on getting reminded that why inflation hasn't really taken
off is because when President Trump, on Liberation Day last
year put these tariffs, the rest of the world stayed quiet.
This year could be different. I don't know whether Davos
is the right time. We also really want to know
what is and will be in President Trump's speech. Does
he go after Europe? We know that he's been talking
about financials and the fact that, for example, he wants
to go after some of the private equity because domestically
has this huge, huge concern about affordability. So does that
spill over into the messaging for the rest of the world.
I mean, I can rememberly maybe two three big policy
speeches this year when you know, it wasn't even the president,
it was the Vice president's and people around him came
to Europe. Frankly, it was shocking, right we had JD.
Vans and the people in the room were wondering whether
it was still an ally or not, whether the US
was And so I'm looking for tone. And then on
the back of that, you know what some of the
big Titans think that means for their business and world economy.
WEF which is the organization obviously behind Devils in their
mission statement, had to thumb through the book to find it.
Improving the state of the world that is part of
their mission statement, the emphasis being on dialogue, on collaboration,
on cooperation, and as you've very much alluded to, President
Trump being there in many ways the kind of aggressive
expansionist America first policies of really a kind of direct
in direct conflict with that aim, So it could get uncomfortable.
It probably will get uncomfortable at times unless everybody plays
ball and you know, tries to say that they get along.
The WEFT mission statement is always a little bit complicated
because they try and invite bigs head of state that
can be controversial. You know, there was a Chinese president
a couple of years ago. We've had other presidents that
were they had to make sure that they felt welcome
most the same time not being seen as a pushover.
But I think what the World Economic Forum is is
a great platform right for again companies or heads of
state to try and push their message. So we're expecting,
for example, the UK Prime Minister with the Chancellor to
try and push the UK in saying look, you know
this is what we're planning on growth, maybe to put
the direction in a better footing for the UK after
some of the mishaps that we saw in the budget
and non doms. So it is a platform where you
speak to worldwide investors where it gets picked up. But
a lot of the business goes outside of the World
Economics Forum. Remit right, it's not in the Congress Center.
So I guess what we'll see in the Congress Center
apart from these big policies, speatures maybe a little bit softer,
and then we're also expecting deals outside. It's quite a circus, yes,
with a lot of snow this.
Year, and of course with bag Devil's House, you know,
with lots of lots of speakers who actually come and
talk to you and all of our other reporters there.
Stock markets also are at a high, so I mean
it comes at a very interesting moment. Are your pit
stalks of ton incredibly well? Lots of focus on defense
stocks as well. Geopolitical risks are very high, stock markets
are very high. So it's kind of quite an interesting moment,
isn't it.
Yeah, I'm excited about Bloomberg House because we have a
lot of the AI tech giants, and so if you
look at AI, I think there are three main questions
which we'll try to address. Is first, you know, if
you look at AGI artificial general intelligence, how far away
are we from it? How do you actually define it?
Because it changes depending on who you are. There's of
course the question about valuations. So if you're a Google
or an open AI will speak to actually a Daria
Muday of open AI. I mean, the valuations of these
companies that the IPO are, They're just massive, and so
there's a real question on this is all expectations, but
when do they actually start making money? When do they
start showing in revenue? And then the other question, which
I think really filters through the economy, which we haven't
spent that much time on, is we're hearing the labor
markets are fine, but I hear more and more chief
executives saying, look, I'm going to hire a little bit
less because I have to spend on AI, and AI
gives me the promise of productivity. So actually trying to
understand what this means, you know, in six months, ten months,
but even then two three years for our economies and
job displacements is something that we would like to put
the focus on.
Yeah, interesting, isn't it is that big debate about globalization
is this and change the end of globalizations as trade
to trade flows continue versus as you say that maybe
domestic productivity push and gain from AI. I mean in
the past, again you slightly alluded to it, but climate
change and green finance have featured very heavily at divos.
Do you think that still holds.
I can't see anything green on their green financing. There's
a little bit on renewable energy, which is under the
umbrella of the energy complex. I think there are still
quite a lot of panels outside to the World Economic Forum.
Now.
There are, of course rumors that this is because the
Trump administration said, look, we don't want anything really woke
on the agenda if we show up again. If you
look at an energy panel, it's difficult to do an
energy panel without touching on renewables and green and how
you finance that. But it's really not as prominent as
it used to be. I think a lot of those
conversations will still be happening, but maybe outside again, there
are a lot of houses. There's also a USA House.
There's a lot of houses just outside the Congress Center
which people are taking over, and that comes up more
outside the Congress Center than inside where it's managed by
the World Economic Forum.
N I'm not going to ask you how many years
you've covered devils. I know it's a long time, but
it's very important because it anchors a lot of our thinking,
doesn't it Because it comes right at the start of
the year. But I do want to ask you what
I think listeners will be interested in, which is, how
do you have the stamina to go from conversations to
conversations conversation with all of these people on very different topics.
How do you think and plan about your engagement when
you're there? What do you think about getting out of
Stavos as if event as a journalist.
First of all, that the networking is actually tiring, but
I think you have to enjoy it otherwise you don't
show up at a night cab at eleven pm, especially
if you're on air at five am, but it's worth it.
There are a lot of people that are going to
Davis for the first time, and so some of them
are reached out. And I always said, look, just prepared
to leave early in the morning. So for us it's
five am, but it could be six or seven if
you're a chief executive, and just plan your day like
you're not going back to the hotel. So I actually
have a little bag and I have like various slate
layers if I'm outside for three hours, or a different
pair of shoes if I'm moderating. And it's so you know,
prepare logistically and then just read read reads that you're
prepared for anything and listen out because sometimes there'll be big,
big people that we're not expecting that show up.
Okay, Fan, we'll watch you with the Wheely back around Davos.
I'm preparing for those big conversations. Thank you for talking
to us about it. We really appreciate it. Well. You've
been hearing from Bloomberg's fancce Ine Laqua. Of course, ahead
of the World Economic Forums annual meeting in Davos, we
will have full coverage as that takes place on the
nineteenth to the twenty sixth of January. I'm Caroline Hebge
here in London. You can catch us every weekday morning
for Blueberg Daybreak you at beginning at six am in London.
That's one am on Wall Street.
Nathan, Thanks Caroline, and coming up on Bloomberg Daybreak weekend,
we'll look at how Beijing will report the performance of
the Chinese economy. I'm Nathan Hager, and this is Bloomberg.
This is Bloomberg Daybreak Weekend, our global look ahead, the
top stories for investors in the coming week. I'm Nathan
Hager and Washington. Let's turn to the growth story in
China and whether economic expansion met the government's target. Bloomberg's
Doug Krisnerius, host of the Daybreak Asia podcast Nathan.
In the coming week, we'll get readings on Chinese economic
growth for both the fourth quarter and the full year. Now,
we already know the government has set a growth target
for twenty twenty five of five percent, and there are
few reasons to suspect this will not be met, especially
when you look at the collapse of fixed asset investment
over the second half of twenty twenty five. Now, the
growth target will be a main focal point in March,
when top Chinese leaders gather for their annual parliamentary session
and unveil the next five year plan and set a
new growth target. They will likely emphasize the durability of
China's export economy in the face of a teraro for
with the United States. For a closer look, I'm joined
by Bloomberg's Alan Wong. Alan is Bloomberg ecogov editor for China.
Alan joins from our studios in Hong Kong. Thank you
so much for being here. I have to begin by
asking for your take on what we will learn from
these GDP figures in the coming week.
China set out to achieve around five percent growth target
for twenty twenty five, and it's looking very likely that
it's going to hit that, but that's the consensus anyway,
and there's actually no surprises that even in the last
quarter that China was well on track to hit that goal.
So a lot of economists and investors they have moved
on to the next question and to look at what
the Chinese economy is going to look like in the
coming year, because a lot of the factors that helped
China last year may not be around anymore and have
changed in material ways. So one thing that I'd be
looking at is what Trey looks like with China in
a coming year. And obviously there's a lot of external
factors affecting what on not China China's factories could sell
abroad and how much they can do that.
Alan, I'm curious to get your take on how high
tech industries in China have been contributing to the overall
growth story, and I'm thinking of electric vehicles in particular.
It's hard to believe that it's been two decades now
since policymakers in Beijing decided to overtake Western carmakers by
betting on evs, and now it's clear that China is
the undisputed world leader. There's also this story on artificial intelligence,
and I'm thinking of last year's so called deep seek moment.
So when you consider EVS and AI, are these industries
having a significant impact when it comes to growth?
I think the EV sectors certainly contributed to China's economic
growth materially AI. I think we're not quite seeing that
just yet, but just and also it's much harder to
measure than the value of goods flowing out of China's border.
So if you just take a moment look at the
EV exports, and just one of the posted children of
China's industrial might is that EV growth. EV sales growth
has been in a double digits for many many months
in a row, and that really helped China export to markets,
especially outside the US, because in the US, Chinese imports
of EV's face a lot very high terriffs as basically prohibitive,
But elsewhere China has been doing much better. But it's
quite interesting that too, if you compare the production of
EV's with traditional gasoline vehicles. One thing that people might
overlook is that actually China's still producing mostly conventional vehicles,
and that is part of China's economic story, is that
the bright cand of bright spots outshine the decline in
traditional industries. And I think in EV is one such
example where the growth is not really offsetting the slum
in the rest of the industry. And if you look
at a broad economy, that might be happening at a
bar scale as well.
Maybe we can talk just a bit about the big
news from the last week. China's trade surplus set a
record last year of one point two trillion dollars. We've
talked a lot about evidence that Chinese goods had been
flooding markets around the world last year. So I'm wondering
about the degree to which the Chinese export economy fits
into the story on the trade surplus.
EV exports are just part of that picture. China's explus
have been strong outside the US. We're talking about selling
to the African continent, to Southeast Asia, to the EU,
and it's a wide variety of products and the growth
has been stunning. And then one reason is that a
lot of the meant for the US have been routed
through those third markets. Either it's by China exporting input
materials to factories in those places where they assembled and
then shipped onward to the US, or through some tray
rerouting that may or may not be above board that
to meet the final demand in the US. But overall
that the big the overarching story is that China managed
to survive Trump's tariff assaults and came out with the
biggest tray surplus ever one point two trillion dollars.
So when we talk about China, there is no escaping
the story on deflation.
Now.
To be fair, the latest reading on consumer prices did
show a pickup in December, but that was mainly due
to higher food costs. The problem is with wholesale inflation.
Producer prices in the month of December were down by
one point nine percent that's an annualized rate, and this
made for the thirty ninth straight month of weakness in PPI.
So the question becomes, will twenty twenty six be the
year when we're going to see some type of reflation
in China? Do you think that's possible?
Economists do expect reflation this year, but then there's no
consensus on just how much prices will jump, and this
is something that's on Chinese official's mind because they want
to fight what they call involution. They want to fight
the endless prize wars that are dragging prices down and
really squeezing companies profit margins. Even the ev sector of
such a shining example of China's industrial success, is suffering
from over competition. And then the carmakers, they're not really
making that much profit from selling a lot more cars,
so that has many implications for the economy. If companies
aren't making enough profits, then that means that there's limited
room for them to raise wage is which is very
important for domestic consumption. Right this is the part of
the stories that we haven't talked about yet. When the
export to the rest of the world have been so
strong domestically, and perhaps because domestically consumption has been so
weak that exporters have nowhere to turn to except outward,
and that is creating also of the problems right with
even if explicitly EU jumped, we're seeing pushback from EU
officials to those what they call state subsidized exports, and
that's destroying competition locally, and they don't like it. That's
why they also put up their trade barriers. And now
the politics is coming in and then you know, there's
a negotiation between all different parties and we're still waiting
to see just what kind of deal that they could
they could reach to end this standoff.
So from what I understand, and you can confirm this
or deny it if you'd like. The property market, the
weakness that we have seen in the housing sector in
China continue used to cast a Paul weak confidence is
something that we talk a lot about, more so on
the side of the consumer perhaps than the business community.
Where does this leave the Central Bank when it comes
to adjusting policy in the new year. Do you think.
The reason that the Central Bank hasn't done more easing
last year than many economists expected was probably due to
just how well the economy fared under tariff pressure. They
just saw no urgent need to release more easing and
to support the economy. And the outlook for this year
is somewhat similar. It's reactive, like based on how the
economy is doing against the external pressures. If it's doing well,
then then once again PBOC may have less reason to
support the economy to the amount of cash that banks
must keep in reserve and release more money to the
economy for lending. That is to say that we I
think most economists don't expect massive stimulus to come. And
you mentioned the property market. It sounds like beating a
dead horse now, but we haven't seen the bottom yet
in the property market, and it's a matter of whether
the government sees is as necessary to restore confidence in
a property market to in order to increase people's mood
to consume like that is a like. The government has
said that they want prices to stop falling, but so
far the measures that they have rolled out so far
have been incremental and haven't had a major impact on
getting prices up.
And higher equity prices really haven't solved that problem. It
would appear at any rate. So Chinese presidenci we know,
has recently welcomed a host of leaders maybe can say
that they are looking to mend fences. And I'm thinking
of South Korea as Leeb Jamjung along with Canadian Prime
Minister Mark Carney and Britain's Cure Starmer. How do you
think she is orchestrating this. We talked a moment ago
about the fact that China maybe as a result of
the tariff policy from the US has been working for
a while now become less dependent on the United States.
Is there a success now in trying to negotiate greater
access to markets outside of China other than the United States.
I think the fact that these leaders are visiting China
over such a short period of time, and for many
of those leaders is their first visits in many years,
shows that there's some modest success on China's part in
trying to get the West to re engage with it.
But there are lots of nuances here because while those
countries want to re engage China, manage their ties with
China economically, in terms of national security, there's still very
much part of the Western Bloc. There's still very much
in bed with the US. There is not It's very
hard to imagine a world where because of economic interest,
these countries would choose China over the US. So what
we're seeing is mostly these countries trying to manage their
ties with China, try to get as good an economic
deal with China as possible, and also because of worries
that China's exports are hurting their local competition, So there's
a lot of incentive for them to talk to China
to begin with. And also what the elephant in the
room is that China showed that it has massive leverage
over rare earth materials that a lot of countries rely
on to make stuff to in the high tech sector.
So if China threatened, I mean successfully used rare earths
to to get concessions from the Trump administration doing the
train negotiation, and they have used the same dominance as
a form of punishment on Japan. So it's also in
those countries trying to engage with China's interest to make
sure that they can manage to maintain that access to
the eras.
Alan will leave it there. Thank you so very much,
Bloomberg's Alan Wong Alan is Bloomberg's ecogov editor for China.
Joining today from our studios in Hong Kong, and I'm
Doug Krisner. You can catch us weekdays for the Daybreak
Asia podcast. It's available wherever you get your podcast Nathan.
Thanks Doug.
Man.
That does it for this edition of Bloomberg day Break Weekend.
Join us again Tuesday morning at five am Wall Street
Time for the latest non markets overseas and the news
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