How Does The Chinese Economy Work?

Tracy Alloway (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:15)

And I'm Joe Weisenthal.

Tracy Alloway (0:18)

So Joe, you know I'm over in Hong Kong, right? You've realized this.

Joe Weisenthal (0:22)

Yeah, that much I did know, yes.

Tracy Alloway (0:25)

Excellent. So now that I'm in the Asia region, and I'm very, very close to China, I've taken a great, great interest in Chinese monetary policy and economics.

Joe Weisenthal (0:37)

What is it like, Tracy, as someone, like I've only ever worked in New York, basically. And you've worked in New York, you've probably worked in London, I'm not sure, but I suspect you have.

You've worked in Abu Dhabi, you've worked now in Hong Kong, probably like a bunch of other places. You're very international, just a very international person. So do you go around the world just like acquiring new interests and having to learn on it, get familiar with new things, and then you sort of drop the old thing as you move to the next city?

Tracy Alloway (1:10)

Yes, absolutely. I develop short-term expertise and then quickly forget it.

But on the subject of expertise, clearly I sort of wanted to build up my knowledge base of how China's economy works and how its monetary policy works, and specifically the People's Bank of China, the central bank over there. And it's very different to how the Fed works. So even if you've been watching the Fed for decades and decades, it might not actually be that useful when it comes to applying your knowledge to the Chinese market.

Joe Weisenthal (1:45)

Yeah, I've always felt this way, that I have some familiarity with how the Fed works in the United States, and I have some familiarity with how the US economic system works and the data that we're supposed to look at to gauge the health of the US economy.

But when I think about China, by every facet, I just feel like I must be such a tourist because I have some passing knowledge, but I never really think that I have any real understanding of what's actually going on. And so, yeah, it just feels like this very sort of closed-off world to me that I can't really begin to grasp the mechanisms and the levers and all that.

Tracy Alloway (2:27)

And if you think about it, there are some things that immediately spring to mind when you think about the PBOC.

I mean, notably, I guess, the complexity of a lot of its monetary policy operations. It has dozens and dozens of things that it does. And then another thing that people talk about a lot when it comes to China and economics is, of course, the quality of the data. People are always suspicious about the economic data being published by the Chinese authorities. So there are immediately some idiosyncrasies, some differences to the US that come up straight away.

Joe Weisenthal (3:03)

Okay, so am I going to be a Chinese eco-expert after this episode?

Tracy Alloway (3:09)

I hope so.

So in the same way that I sort of got shipped off to China, Matt Boesler, Bloomberg's longtime reporter on the Federal Reserve and US economics got sent out there late last year for a job swap. I think he was there for about three months. And the really interesting thing about his experience is because he's followed the Fed and US economic policy for a long time, he's the perfect person to sort of give us a great overview of exactly the differences between the US and the Chinese monetary policy system and what it's like to actually go out there as a Fed reporter and suddenly start reporting on the PBOC.

Joe Weisenthal (3:50)

Well, it's a cliche, but they always say that people should report on topics kind of as if they were a foreign correspondent. And so I think what that means is if you get too familiar and too comfortable with the story, then you could sort of miss the forest for the trees and you miss the things that other people might find really interesting and are actually really important. And I feel like Matt had the opportunity to sort of see this new world from the outside and maybe give us some interesting perspectives.

Tracy Alloway (4:19)

Yeah, so let's bring him on. Matt Boesler of Bloomberg News. It's so good to have you.

Matt Boesler (4:23)

Hello, hello. Thank you guys so much for having me on today.

Tracy Alloway (4:26)

So Matt, did I describe your career path correctly, writing about the Fed and economic policy for a long time and then in Beijing late last year for a few months, right?