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00:00[CC may contain inaccuracies] We did hear from the Premier League of Chiang saying that look China is OK to tolerate a slower growth here as long as you see what. Unemployment stay below five and a half percent inflation under three and a half percent. How. I mean are those tall orders at least for China now. Their previous growth target 5.5 percent DAX to almost areas medically impossible to achieve for the whole year. I think they will. Given that what has happening in China is that the government is ramping up the infrastructure ramping up some of investment. But a thing. The wholesale investments. Infrastructure funding. There's no positive news in the past couple weeks. I think that China will still continue to struggle in the next couple months. And not only because they'll Kobe but also because of the very weak consumption and they use the unemployment is very high. Household income growth is quite stagnate. So I think that China will not be descending into a recession but still struggling in the seconds closing the fourth quarter at least. So let's attach a number to that. The current estimate consensus is currently 4 percent. Do you think given I mean a series of things that you just mentioned that I'm guessing you think there's still downside risk to the top percent number. Yeah. My number was somewhere about three three and a half percent. And three and a half percent is already factored in. We are talking about somewhere around fourth before the fall. I hop with that in Q4. But the thing is that for the first quarter we are still talking about 2 to 3 percent growth. So therefore I think that this fall. But things do have a downside risk by the end of the year. I have to wonder. Obviously a lot of the drag has been on the housing market. This news that they might be tightening oversight when it comes to ask for accounts in order to ensure that these housing projects get completed. What is the outlook do you think for developers now to restore not just home sales confidence but also liquidity conditions. I think for developers I don't think there's much they could do. And by themselves I think they have to work with their local government local. So we even look at asset management companies to get involved. To me that's the key behind all these mortgage boy call and then China housing sector. You say households are losing confidence in in in these so-called pre-sales model. So which means that first hand housing from these private developers are getting harder to sell. So therefore I say that over all of these sales will continue to be weak as a result of these the most of the brothers who have been stringing Castro. They will continue for for as for the next couple of quarters at least. So as a result least I don't see a significant improvement in the private developers. So that the equity condition. But overall the government policy could be a macro policy with that which means that they are preventing a systematic risk but not directly helping the people of the what's going well what's going well. I think that apart from infrastructure investment not much everything going well. But I think the so far the latest Kobe wave seems to be under control. I think that the destruction the level of destruction of the current Kobe way seems to be much smaller than we have seen in March and April. I think that perhaps it can be considered as a good news. And then one of the other thing is be about the Speaker Pelosi's visit Taiwan. I think the worst case Casey that take place. I think the overall I would consider as good news for me. Is there any kind of good news that you know Marcus in positioning that the Fed eventually is going to have to pivot and maybe be less aggressive. Does that give more room for China to maybe stimulate further. Yes. But the thing is I also the market is pricing in some level of sample really of the U.S. and Europe. A recession in a sense that effect pivoting is a result of FTSE fear fear behind the US recession. In a sense that I think that these good news have been news offset each other with China. I don't think that there's much room for China kind of profit on betting that it's long and mortgage rate. So probably short term market rates are already quite low. So I don't see much room for IBEX for China to cut short term rates.

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China Economy Will Continue to Struggle: Loomis Sayles

Bo Zhuang, senior sovereign analyst of the macro strategies group at Loomis Sayles Investments Asia, discusses the outlook for China's economy, the government's efforts to support growth, and the prospects for the housing market. He speaks on "Bloomberg Markets: China Open." (Source: Bloomberg)

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