Transcript
Speaker: Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
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Speaker: The following podcast was recorded for publication on the 11th of April 2024 by HSBC Global Research.
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Speaker: Just search for The Macro Brief.
Speaker: Hello and welcome to The Macrobrief.
Speaker: I'm your host, Piers Butler, and this week we're coming to you live from the HSBC Global Investment Summit in Hong Kong.
Speaker: Over the past three days, we've hosted over 3,000 delegates and heard insights from a top lineup of experts, political leaders, and decision makers.
Speaker: Today we're discussing two of the big themes that have been dominating the conference, China and artificial intelligence.
Speaker: I'm joined by Jing Liu, Chief Economist for Greater China, and Mark McDonald, Head of Data Science and Analytics.
Speaker: Jing and Mark, welcome.
Speaker: So Jing, let's start with you.
Speaker: Would you say that there was more optimism in the room on the outlook for Mainline China than some of the recent headlines would have us believe?
Speaker: I would say so.
Speaker: I think, you know, on one hand, we do see during our conference, we see the data that the per capita consumption in China for the first time surpassed a pre-pandemic level.
Speaker: That definitely gives people more hope.
Speaker: And on top of that, this conference, you know, through the discussion, people realize
Speaker: Maybe there's too much emphasis on the technical pressure rather than looking into the longer term.
Speaker: China still has a lot of potential and a lot of new areas to get people excited about.
Speaker: And to that point, it did strike me that all the focus has been on real estate.
Speaker: And somebody in the conference, one of the speakers said, people are not looking at the growth in consumption, which is actually very strong.
Speaker: That's right.
Speaker: Last year consumption contributed to more than 80% of the growth and this year we see the outperformance will continue and we forecast that could contribute to more than two-thirds of the growth and on top of that also other pockets of growth seem to be encouraging as well.
Speaker: The other thing that struck me in the conference was a reminder of the sheer scale of mainland China.
Speaker: I mean, there's a lot of excitement about other Asian economies and also about India.
Speaker: But even if they grow really rapidly over the next 10 years, China is still going to be the second largest or even the largest economy in the world.
Speaker: Yeah, that's right.
Speaker: We need to keep things in perspective in a sense that when an economy is relatively small, it's easier to have a faster growth.
Speaker: And China has managed the rapid growth for many years.
Speaker: And given its share size, even if it slows down to around 5% of the growth, which is a target this year, also our forecast, we still think it's going to have the big size that the important investors and the corporates cannot ignore.
Speaker: And the other theme in the conference was this point about are we really witnessing deglobalization or reglobalization?
Speaker: I mean, I was very struck by the resilience of trade corridors, which obviously play strongly towards mainland China.
Speaker: Yeah, exactly.
Speaker: We see the supply chain relocation playing out in the past several years.
Speaker: But if we look at the share of China's export,
Speaker: especially in value-added terms, we still see it growing.
Speaker: And one reason is because we see the corridor between, say, China and ASEAN, and China and Middle East, and many different other markets continue to grow.
Speaker: Mark, if I can turn to you, AI featured in many conversations and presentations during the conference.
Speaker: In particular, that it could be a game changer for productivity.
Speaker: Is that hype or reality?
Speaker: I think it's the real deal.
Speaker: I mean, obviously, there is an immense amount of hype and excitement around artificial intelligence at the moment.
Speaker: But I think that generative AI in particular is going to fundamentally change the way that people interact with information or produce content or even do research.
Speaker: So I think there are vast productivity improvements that could come through even if the models don't get any better.
Speaker: Now, of course, it will take time for those productivity improvements to manifest.
Speaker: And so the challenge for investors is trying to work out what's being priced in relative to what's actually happening, because markets have historically had a tendency to get overexcited about disruptive technologies.
Speaker: And you also hosted a fascinating panel on what AI could bring to conquering disease.
Speaker: What's the potential there?
Speaker: Yeah, the AI in healthcare session was really interesting.
Speaker: It kind of focused on two main areas in which generative AI is being used in healthcare.
Speaker: One was in drug discovery, so generative models producing and suggesting new models that can be used to treat disease.
Speaker: And another area was in using generative AI techniques to help healthcare professionals more efficiently serve a broader audience with improved patient care.
Speaker: And a quick question to finish on, Hong Kong is a super connector.
Speaker: What's your impression post the conference?
Speaker: Hong Kong remains the super connector.
Speaker: We see a lot of clients coming from Europe, US and other parts of the world joining us in this conference.
Speaker: They are still excited to see how Hong Kong can play a role to connect mainland China with the rest of the world.
Speaker: And Mark?
Speaker: I think one of the themes of this conference has been networks and it's been really interesting to see thought home with all these people from around the world, all focusing on different areas, the way that no person and no technology is an island and the links amongst all these different technologies and amongst all these different regions and asset classes are very important.
Speaker: Yes, I suppose it's important not to oversimplify the world because it is actually quite complex, but the networks are very much there.
Speaker: Jing and Mo, thank you very much for joining us.
Speaker: Thank you very much, Chris.
Speaker: Thank you.
Speaker: So that's it from us here in Hong Kong.
Speaker: Don't forget, if you have any questions about what we've talked about today, then please drop us a line at askresearch at hsbc.com.
Speaker: From all of us here, thanks for listening.
Speaker: We'll be back next week with another edition of the Macro Brief.
Speaker: Thank you for joining us at HSBC Global Viewpoint.
Speaker: We hope you enjoyed the discussion.
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