China Beige Book's Shehzad Qazi talks the outlook for China in 2026

2025-12-30_22-42 • 4m 37s
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China showing its military might firing rockets toward Taiwan, sending assault ships and bombers to the region for the second day in a row, the country seeming to send a message to any nation that looks to block Beijing from claiming control of the region. So, could geopolitical
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unrest in China be maybe the big wild card for the global markets? For more, let's welcome in uh managing director Shazad Kazi joining us now on set. Uh Shazad thank you very much for coming back. You just heard this sort of semi-scary conversation about Open Hand and what were
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to happen. I think China's probably the other massive variable. We had a good year this year. Are you expecting a good year for Chinese equities and anything related to China in 2026?
Shehzad Qazi (COO and Managing Director) 00:46.880
I think the uncertainty will certainly carry on. I think equities did a lot better than we would have predicted at the beginning of the year, considering the trade war predominantly. Um, now next year the economy again will be reliant on Beijing stepping in to perhaps provide
Shehzad Qazi (COO and Managing Director) 01:02.040
stimulus on the consumer side, continuing to provide stimulus to stabilize the property market if they can get there. So lots of open questions about economic growth. I think geopolitics in the first few months of the year, you can rest easy because of the Xi Trump summit, but
Shehzad Qazi (COO and Managing Director) 01:17.040
after that, once again, we may be back in a place where instability continues to just go back up.
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Yeah, and you've got more saber rattling in some cases literal saber rattling nothing happens. If something were to happen, I know you got your December of data report, I want to get to that in a second. But if something were to happen militarily, what would happen to China's
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markets? What would happen to the US markets?
Shehzad Qazi (COO and Managing Director) 01:46.560
Well, look, I mean, that would be catastrophic, I think, for our markets across the world. I mean, certainly here and certainly in China. I think a lot of the question for for folks is, what will the administration here do? Because I don't think everybody is convinced and they
Shehzad Qazi (COO and Managing Director) 02:00.400
shouldn't be that the current occupiers of the White House, the current the president and his team really firmly believe that we have to go as far as needed all the way to protect and defend Taiwan. I think there's a big question mark on there. All right,
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let's go to the December Flash data report for the China Beige Book. What are you seeing? There's so many questions around the Chinese economy because it just seems to be in a constant state of stimulus.
Shehzad Qazi (COO and Managing Director) 02:25.800
Look, the consensus narrative is has been very very negative on China. the idea that the Chinese economy is slowing down. What we've been saying month after month is that actually if you look at it, the economy is doing just fine compared to a year ago. It's growing over
Shehzad Qazi (COO and Managing Director) 02:39.440
compared to a year ago. At the end of the year, there was in December a bit of a slowdown. It's nothing alarming. I think China released extremely positive data in the earlier part of the year when they were under pressure because of the tariffs, when the political threat or end
Shehzad Qazi (COO and Managing Director) 02:54.600
pressure was gone. They were much more comfortable releasing the negative news and that's what's happened here.
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So when you give us a cheap, because I find this very interesting, but you're the expert on it. So, when you look for things, right? We know about the property market, we know about stimulus. What are the canaries in the call mine that you look for that will let us know that
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China could be on the precipice of something bigger. Because all this other stuff, dancing around it, whether it's 8% growth, now 5% growth, they're going to 4% growth, we can factor that and then we can trade trade around that. But what's the cataclysmic stuff, if anything,
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that you look for?
Shehzad Qazi (COO and Managing Director) 03:30.000
the big one has to be consumer spending. Chinese consumers are going to be very very cautious unless policy changes and unless they do structural reforms to eventually move towards a consumption driven economy. So, are we going to get another year where they do some trade in
Shehzad Qazi (COO and Managing Director) 03:44.920
subsidies and this and that to boost the GDP? Or are we going to get a year where you see Beijing say we are finally going to start working towards actual structural changes to the economy? Um, I am not very very positive at all on the ladder. I think they love the fact that
Shehzad Qazi (COO and Managing Director) 03:59.400
they're support a powerhouse. They love relying on the manufacturing sector, getting the world, keeping the world reliant on them. I think that's what they're going to continue doing. 3 1 2 3 0 0 0 0 0 0