00:00But will it work? Hong Hao is managing partner and CIO of Lotus Acid Management.
00:06The amount in the subsidy is only a very small amount.
00:12It's about 2,000 to 3,000 yuan per customer.
00:16And also there are some conditions attached to the subsidies as well.
00:20For example, for each institution that you're trying to borrow money from,
00:24there's a cap of upward 2,000 yuan.
00:28And also the total amount is cap as well.
00:32So because of that and also because this is a new form of subsidy,
00:36so back then even though there are consumption subsidies,
00:40it's mostly in the form of coupons and cash handouts.
00:44And this time around, it's trying to get the customers to borrow loans from banking institutes.
00:51So it really remains to be seen because of the small amount
00:54and also because it's a new form of subsidies that we haven't seen before.
00:57Is there a risk of either unintended consequences or perhaps even no consequences?
01:04I would say at this stage, it is still nice to try out some new forms of subsidies.
01:12Reason being, in the first half of the year,
01:15we've seen 200 billion yuan worth of subsidies being handed out to Chinese consumers.
01:22And it really did help the first half consumption.
01:25So the first half Chinese consumption is actually better than expected.
01:29But that 200 billion yuan subsidies has already been spent.
01:34So going into the second half, if we don't have some more subsidies,
01:39more likely than not we'll see a decline in Chinese consumption growth.
01:45So I would say that, you know, this is a, once again, this is a new form of subsidies.
01:49We haven't tried it in next year before.
01:52So I would say that even though the results remains to be seen,
01:57it is still a nice force to try.
02:00Confidence is in short supply around the world, isn't it?
02:03Whether you are sitting in Asia or Europe or the United States,
02:07people are slow to spend.
02:09How do you rebuild confidence?
02:11Ever since the COVID lockdown,
02:15the Chinese consumer confidence has been staying at around historic low level.
02:22So, and it still hasn't been recovered.
02:25You know, we call it the scar effect from COVID.
02:30I think going forward, you know,
02:31the Chinese government has been, you know,
02:35doing new policy for longer term social welfare.
02:41You know, for example, you know,
02:42sending out, you know, 3,600 yuan per kids per year to newborns.
02:48And also it's trying out, you know,
02:50free preschool education for kids as well.
02:52And also there are some social security reform for the Chinese people.
02:57And also, you know, hopefully going into the next year,
03:00there will be tax reform, you know,
03:02trying to change from the indirect evaluated tax to consumption-based tax
03:08and also capital gain-based tax.
03:11So, you know,
03:12many new policies are being rolled out in the coming future.
03:17So, you know,
03:18we will say that, you know,
03:19this is a very good initiative in the sense that
03:22it's trying to reform a longer term incentive for people to consume.
03:27So, you know,
03:28hopefully we'll get more details about the policies in the coming months.
03:32Then one shouldn't be too surprised to see, you know,
03:36some of the policies found to help out a rebound in consumer confidence.
