Conference Call: Global Markets and the Chinese Economy

LEVI: Good morning and welcome to this Council on Foreign Relations conference call on the Chinese economy and what it means for global markets. I’m Michael Levi. I’m a senior fellow here at the Council on Foreign Relations. And I lead the Maurice R. Greenberg Center for Geoeconomic Studies.

I am very lucky to have with me here two colleagues today to help guide all us through what’s happening in China and what it means. Sebastian Mallaby is the Paul Volcker senior fellow for international economics here. He is the author of several award-winning books. Currently finishing up his latest biography of Alan Greenspan which will be out later this year. Sebastian wrote recently on the Chinese economy on CFR.org, and is an all-around authority on global financial markets.

Our other fellow joining us is Brad Setser, the newest senior fellow at the Council on Foreign Relations, though one who has been with us before. He is a senior fellow here, focusing on international economics, international finance. Until extremely recently he spent four years as the deputy assistant secretary for international economic analysis at the U.S. Department of the Treasury. Before that, he was director of international economics, serving jointly on the staff of the National Economic and National Security Council. So two great guys for us this morning.

Before we dive into details of what’s happening I want to ask each of you the same question, starting with Sebastian and then Brad. As you look out at economic risks and economic variables over the coming year, how do you rank the importance of what’s happening in China and what might happen in China? How would you rank it if you’re looking at it from a markets perspective? And how would you rank it if you’re looking at it from a policymaker perspective?

Sebastian?

MALLABY: I think from a market perspective, and probably also from a policy perspective, because the two often go together, China is the biggest economic thing to watch. You know, the only rivals I think would be some big sort of political shock, either something military in the Middle East or with North Korea. Potentially if the British vote on being a member of the EU were to go for exit and then whole sort of future of the EU was open, perhaps that could be a big event for Europe. But I think—you know, barring those sort of mainly political dangers, in economic terms China is by far the biggest.

And the reason is not that it’s the second biggest economy in the world, and the reason is not just that it’s slowing down. Everyone knows that it’s slowing down. The reason is that the sort of potential variance in how much it slows is big. And it’s big because of feedback loops. I’ll just quickly highlight two. One is between growth and investment. So in the past, high growth in China justified high investment, and in turn that high investment explained a large part of the big growth.

But if growth slows, for well-understood reasons like demography is shifting, the potential for technological catch-up is diminishing, the easy productivity gains you get from shifting people from their farm to a factory, that game is becoming harder to play as it runs out. There’s all these good reasons China’s growth has slowed down. And therefore, this positive feedback loop between growth and investment could be a negative one, where all of a sudden growth is slower so that justifies less investment. Less investment means less growth. Less growth means less investment.

And the second feedback loop, just quickly, is between growth—not between growth and investment, but between growth and debt. So the flipside of all that investment was that companies took on a lot of debt to go out and build infrastructure and other projects. And the premise for those investments was that there would be high growth, and therefore high consumption to absorb whatever you’re producing with that investment. Now, if growth slows down you get suddenly a lot of bad debt that can’t be paid back. And that then causes potentially a retention in how much lending is going on, and that slows growth. And then the slower growth makes even more debt turn bad. And so you can see this potential for a downward sort of negative feedback loop. So I think that’s why China, in my mind, is the thing to watch in 2016.

LEVI: OK. Brad, how do you rank China among the pantheon of economic forces at work?

SETSER: Well, I think China’s pretty clearly in the—in the top two, if not at the very top. The only thing that I think is of comparable magnitude is the—and it’s deeply related to China in some sense—is the global adjustment, the much lower commodity prices. You know, oil 35 and how that impacts the oil exporters is very big story for the global economy this year. And then I think China is up there.

And China, because of the investment-intensive nature of its growth in the past, and because that is shifting, and that’s leading to big falls—or, important falls in Chinese demand for commodity and putting downward pressure on a broad range of commodity prices in a broad range of emerging economies. It’s kind of a highly interrelated issue. And in addition to the risk that Sebastian articulated, and there’s an obvious question about China’s exchange rate policy and whether the current policy configuration, whatever it currently is, is viable and can be sustained through the year. And thus, it’s a big policy issue as well.

LEVI: When people look out at what’s happening in China, there is a piece that has to do with the actual development in the Chinese economy. And then there’s a piece that has to do with perceptions or expectations for Chinese policy and for China’s ability to manage whatever is happening. When we had—when we had big fears, prominent fears last summer, a lot of that was drive by concerns or a new lack of confidence in Chinese policymakers.

Sebastian, how do you think about the relative weights of actual, on the ground economic developments and concern about policy in driving current worries?

MALLABY: Well, Michael, you put your finger on a very good question there. I mean, both in the summer when China triggered global market uncertainty and just in the past three days, you’ve had this kind of combined problem of weak data from the real economy in China. So this time it was a soft manufacturing number. But it’s been compounded by a sort of sense that the policy response is a bit sort of chopping and changing. It was—I think there was more sense of policy fumble back in the summer. This time, you know, there’s been a fairly determined and a fairly rapid response. So I think I count five different kinds of policy response which were pretty clearly in the direction of just simply sort of stifling the market instability.

So the Chinese began with their circuit breakers on the stock market, whereby trading was simply stopped when the market went down by 7 percent on Monday. So that was sort of policy intervention number one. Then they rolled out new regulatory guidelines—or, they said they were going to through the official media—which would extend the restriction on stock sales by large shareholders, which are defined as shareholders who earn 5 percent or more of one company’s shares. Thirdly, state financial institutions were reported to be stepping in immediately to buy shares.

Fourthly, the central bank pumped in emergency liquidity. It was reported nearly 20 billion. Just to put that in context, that’s kind of—you know, 20 billion in, say, 48 hours, it would be what the ECB does at the moment with quantitative easing over more like a week and a half. And China’s economy is considerably smaller than the eurozone. So that’s a significant monetary response by the Chinese. And finally, they switched from having sort of appeared to, what, having weakened the renminbi deliberately. They guided it down on Monday. On Tuesday there was reports of intervention in the opposite direction, to prevent too much devaluation. So you’ve got this sort of quick policy response.

Now, it’s still the case that people look at what’s going on and they say, gee, I don’t understand where China is going. And that sense of policy—you know, there is still a sense of complaint about policy drift that exacerbates the underlying downshift. I think one should be a little bit sympathetic towards the Chinese in this policy development, because if you think about the debate over communications in the U.S. with respect to the Fed, the supposed masters of communication who have thought about communication more than anybody else in the world, even the central bankers seem to have trouble actually doing communication in a way that makes markets feel comforted.

So I think when—you know, when economies slow down you inevitably get complaints about communications. They were probably more justified last summer than they are this time. But you’re never going to escape them. In a climate of, you know, underlying economic slowing down, communication is always going to be perceived to be an inadequate balancing tool.

LEVI: So, Brad, two questions that arise from that. First, you have these natural forces pulling China’s economy down. And you have this suite of policy response that Sebastian is talking about. So, first, just talk to us a little bit about how you think that ends up netting out. And second, Sebastian talked about this injection of liquidity into the Chinese economy. Where does that end up?

SETSER: So on the first, you know, the—in addition to the sort of structural slowdown in Chinese growth that China—that everyone is well-aware of, there’s an important cyclical slowdown underway because the property sector was overbuilt and there’s been a sharp fall-off in property investments. And that’s been apparent for some time. And that’s had spillovers into the manufacturing sector. And for me, the core question around policy is whether or not those sort of organic spillovers from the slowdown in the property market, and the fallout that has on China’s domestic manufacturing sector, and the potential impact that could eventually have on wage growth and other sources of internal demand, whether that downward pressure is being fully offset by what is clearly an easing cycle inside China on the policy side.

You know, and there’s been some fiscal easing. Not enough, in my view, but there’s been some. And the monetary policy cycle is now clearly in an easing mode, with cuts in required reserves, cuts in the domestic interest rates, along with some effort to target where policy easing is having the biggest impacts. So some desire not to allow an indiscriminate expansion of credit. So the basic debate, and I think why the PMI number earlier this week was so important, is whether the policy easing and the impact that has on China’s economy will be powerful enough to offset the forces dragging down growth that are associated with the fall-off in property investment.

As to where the liquidity goes—I may disagree ever so slightly with Sebastian in that I don’t know that there’s been a net injection of liquidity from the domestic repos until we know how many reserves China had sold. So there’s a significant possibility that China is, by buying domestic assets, just offsetting the sale of domestic assets and there hasn’t been a significant increase in the availability—you know, a significant domestic monetary expansion, just a shift in the composition of the assets on China’s balance sheet. But in general, the Chinese do not want the liquidity to flow indiscriminately into sectors that are already overbuilt. So not into further expansion in, say, the steel sector. But the basic challenge about how you allocate credit in an economy that still is a mix between market and nonmarket in very important ways is an open question, I think.

LEVI: All right. Let’s talk a little bit about currency and exchange rates. Sebastian, a lot of the focus has been on Chinese exchange rate policy. How do you read the current situation and what’s your framework for thinking about how Chinese policy might evolve?

MALLABY: Well, I mean, I think it’s pretty clear that, you know, given a situation in which growth is slowing down and in which the Chinese leadership—politics plays importantly I think here—bases its legitimacy, after all, in making sure that that economic slowdown is not too rapid. They want a weaker exchange rate at the margin. They’d rather have a weaker exchange rate that boosts manufacturing and keeps jobs going and makes—and sort of soothes the pain of dealing with this cyclical adjustment that Brad was describing. So I think clearly they want—you know, the Chinese government wants a weaker currency from that perspective.

Furthermore, they—you know, it’s consistent with a different policy they have, which is to move gradually towards a more liberalized capital account, that that also produces a weaker currency because if you allow Chinese citizens to get some of their copious savings out of the country they’re going to do that, just because of portfolio diversification and political diversification. People want to get money away from China because the rule of law is less reliable.

And so I think, you know, there’s this cyclical demand management side which points towards a weaker currency. There is a sort of—you know, if they’re serious about capital account liberalization, that will also tend towards having a weaker currency. And thirdly, because markets understand that, there’s a big pressure on the part of investors to get out ahead of that likely renminbi weakness and move money out, not tomorrow but today, and therefore bring forward the expected weakening. So what all that points to is this dangerous overshoot that, you know, they want—the government wants a weaker currency.

But since everyone knows that, it might weaken faster than they want and turn out to be destabilizing. I think that’s what you see in play. And by my reading of the reports out of Beijing in the last three days, you had, you know, guiding the exchange rate down on Monday, intervention to stop it from going down too much on Tuesday, further guiding of it down on Wednesday. And that’s what, you know, leads to this confusion about what the real policy is. But I think, you know, stepping back, the real policy is devaluation, gradually, and controlled devaluation. And so along the way to that controlled devaluation there are going to be these moments when they intervene in the opposite direction.

Now, just one last point on this, and that is that anytime you see this dynamic, you know, you think, and as I wrote my last book about, hedge fund traders, you think about how they would see it. And the answer is, they would probably see an asymmetric bet. And what I mean is that, you know, nobody expects—I mean, we’re having a debate here about how fast the renminbi will weaken. Nobody expects it really to significantly appreciate. So if it’s not going to significantly appreciate, the risk of being short in renminbi is de minimis.

So you can put on a fairly large position, if you can figure out a way of doing that, of betting on renminbi decline, because the policy—you know, the government might control that decline, it might stop for a while, so you might not gain a huge amount of money from that short renminbi position. But you’re not going to lose an awful lot, because it’s hard to imagine that the government, facing this cyclical and structural growth deceleration, would want a stronger currency.

So it’s an asymmetric bet, where you can be short renminbi, you won’t lose a lot, you might gain quite a bit. And those bets tend to be dangerous. They tend to be destabilizing, because people want to make them in size. And then it becomes kind of a political issue, which is can the government through threats and cajoling of its own citizens and its own state-owned companies essentially strong arm people into holding its own currency, people who don’t want to. And what’s the balance of power between, you know, offshore investors who are not constrained by Chinese political threats, and onshore ones who are?

LEVI: So, Brad, also on the currency dynamic, is there anything in what’s likely to happen in the framework that you think of Chinese policy approaching this, or do you differ with what Sebastian has laid out?

SETSER: I think Sebastian outlined the basic issues well. The counterforce is that the Chinese have historically placed a great value on stability. And during times of uncertainty and stress, the Chinese have historically put more emphasis on stability, particularly on the exchange rate, rather than less. So I think one of the big sources of uncertainty now is how that desire for stability balances against the various forces that Sebastian outlined that are pushing towards a weaker currency.

And then the other big component or source of uncertainty in the markets is whether or not China is transitioning away from a policy where it essentially manages its currency against the U.S. dollar to a policy where it essentially manages its currency against a broader basket or an index that includes many more currencies. And then, if so, how do—will all the technical machinery of China’s exchange rate management, which is basically geared around management against the dollar, adapt to a policy that is directed at a broader index of currencies?

And the one point that I think is critical, because everyone is trying to evaluate how China’s currency regime is evolving in real time, is that if China truly is moving towards a world where it manages against a basket, then there will be days and times when this—the Chinese currency appreciates against the dollar because the dollar is depreciating against the world. And so then it’s not necessarily a simple one-way bet. But right now, I think the complexities of that transition, combined with uncertainty about whether the Chinese are transitioning to a basket or a management against a basket or simply looking to guide the currency down, is a very important source of uncertainty.

LEVI: All right, I’m going to go in a moment to questions from people on the call, so get your questions ready. I want to ask each of you one last question—quick answers. When you look out and try to assess the state and future of the Chinese economy, your inputs are essentially information about the underlying economy and information about what policy is doing. Where is the bigger uncertainty for you?

Sebastian?

MALLABY: I mean, I think as the tone of this call suggests, the uncertainty—the bigger uncertainty is around the policy. I mean, I think, you know, the underlying growth slowdown, you know, is a sort of gradual and ineluctable force, whereas a policy shift could much more abruptly shift the growth rate up or down by, you know, as much as two percentage points in a year. I mean, I think that that’s where the really big delta lies. And that’s why people are focused on trying to understand what Beijing is really up to.

LEVI: Brad?

SETSER: I completely agree with Sebastian.

LEVI: All right, operator, can you please give instructions for people to ask questions? I should remind everybody first that this call is on the record.

OPERATOR: Thank you very much. Ladies and gentlemen, at this time we would like to open the floor for questions.

(Gives queuing instructions.)

Our first question will come from Michael Lalyveld, Radio Free Asia.

Q: Yes, thank you. There has been some skepticism, as I’m sure you are aware, about China’s GDP numbers. And we’re awaiting China’s GDP numbers for the past year shortly. And I’m wondering if you can both give your views on whether you consider their GDP numbers today to have been accurate, or if they, you know, appear to be lower, how much lower do you think they actually are?

LEVI: Brad, I’m going to go to you first, and I want to append something to that. How much do you care about the GDP number as opposed to other economic indicators?

SETSER: Sure. You know, I think the GDP number is one of many important numbers to watch. I think it probably is smooth. And it looks to me as if it is smooth. Right now, it is being smoothed in the direction of raising growth rather than lowering growth—lowering growth. So my personal guess is that underlying GDP growth is maybe a little bit lower are doing relatively well. The domestic services side are intrinsically difficult to measure and have a very small external footprint. So you don’t see much of an impact on the global economy of more Chinese spending on haircuts inside China. And the parts of the Chinese economy that are most visible and easy to measures are often the parts of the Chinese economy that have clearly slowed the most.

And so there’s a very significant disconnect between the very visible slowdown in those parts of the Chinese economy—the property sector, manufacturing now—and how you can visibly see that in a range of physical indicators inside China, and how you very visibly see that in the trade data. And so I don’t think it’s terribly important to focus, except as an indicator of policy where the GDP number and the GDP target is an important signal around policy. I think it’s far more important to look at how the different components of the Chinese economy are performing, and how strong and how powerful the evidence is of a downturn in those parts of the Chinese economy which clearly have slowed and clearly have had a big impact on the world.

One easy way of seeing this disconnect is, you know, most people think that China will have grown by around 7 percent last year in real terms, in 2015. If you look at Chinese imports of goods from the rest of the world, and we still need one month’s data, those are going to be down about 2 percent in volume terms. So there’s a little bit of an uncertainty band around my number, but there’s already a very significant disconnect between the amount of stuff that China’s buying from the rest of the world, which is shrinking, and the overall evolution of China’s own economy, which is growing, but it is growing in ways that in the short run, at least, have relatively few measurable impacts on the rest of the world.

LEVI: Sebastian, any take on this?

MALLABY: Yeah, I mean, I agree with everything Brad just said. And I think it points to the way that in fact the GDP number maybe isn’t the main think to fixate on. I’d say that if you—it depends what question you’re trying to get the answer to. If you want to know what is going to be the evolution of China’s economy’s impact on the rest of the world, then you probably want to look at numbers on Chinese imports and exports, as Brad was saying.

And those—you know, the import side can fall even if the economy is growing. And I think that’s important point about what’s going on in China and why it’s importing emerging markets substantially, is that if China were to grow more because it successfully stimulated more domestic consumption, that wouldn’t be terribly great news for commodity exporters because the domestic consumption isn’t so commodity-intensive. It’s the trading part of the economy and kind of the investment part of the economy that is commodity-intensive.

I equally find—I’d look at the export-import numbers for a sense of the impact on the world. Equally, you could look at capital flows in terms of impact on capital markets. Secondly, I’d look at—if I were thinking about domestic political stability I would look at consumption growth because if supposing, you know, aggregate growth is extremely low but consumption is rather healthy, Chinese consumers might be rather happy, and that would portend positive things for the—you know, the view that Chinese citizens have of their government.

And thirdly, I think a key thing to look at is debt, because it’s the—it’s the debt overhand in China that I think is the most threatening in terms of some sort of blowup, that—you know, if you get to a stage where, depending on how you count it, you know, China’s debt becomes pretty much, you know, beyond the government’s capacity to bail out—I don’t think we’re there yet, but there are different ways of thinking about the fiscal strength of the government. And that’s the real danger where you could get a meltdown that, you know, becomes sort of a domestic financial crisis that would then reverberate politically within China and then also externally in terms of China’s impact on global trade.

LEVI: All right, thanks, Sebastian. And I may pick back up on that later. Operator, do we have anyone else in the queue?

OPERATOR: (Gives queuing instructions.)

LEVI: While we’re waiting for the next question, Brad, melt down, financial crisis, are you as scared as Sebastian seems to be?

SETSER: I am not as scared about the risk of a domestic financial crisis, so long as the Chinese authorities don’t make major policy mistakes. There’s been a big increase in debt, no question. But China has a very high level of domestic savings. And so it’s a question of internal financial mediation. And I think there are still important policy levers available to the Chinese authorities—the policy banks, their control over the state commercial banks—that mitigates against those kinds of risk—again, assuming there’s not a policy mistake that leads to a collapse in confidence in the banking system, but also the broader financial system, including some of the more systemic parts of the shadow banking system.

I want to pick up, though, on one thing that Sebastian said, which is that an increase in domestic consumption would not have a positive spillover to, say, the commodity exporting, emerging economies. And I think that’s unquestionably true. On the other hand, the increase in domestic consumption that sustains domestic demand, that keeps domestic employment growth moving forward would significantly reduce pressure for China to weaken its currency, and thus a growth in—a strong growth in consumption and strong policy support for consumption would reduce the risk of a destabilizing shift in China’s currency that has a big impact on the advanced economies. So I do think that strong consumption growth and policy support for consumption is of vital importance.

LEVI: Excellent.

Operator?

OPERATOR: (Gives queuing instructions.)

LEVI: Brad, Sebastian, I want to ask both of you another question, following up on this piece about the exchange rate. If there is a significant depreciation in the Chinese exchange rate, how do you expect other countries to respond? Maybe Sebastian first.

MALLABY: Well, I mean, I guess for competitive reasons other emerging markets are going to want to follow China down. If the exchange rate is depreciating, it means that there are capital outflows from China quoting depreciation. And you know, the question is where those go and what happens to them. If they wind up in sort of safe-haven currencies—the dollar, I guess one just about lists the euro in this—(laughs)—the Swiss franc, the British pound, you know, maybe the Swedish currency—you know, then you’ve got to ask the question, what does that currency appreciation mean for those countries? And I think it’s partly kind of where the flows go.

If the flows were concentrated, for example, in dollars, you know, you’d then have pressure on the U.S. economy vis-à-vis its rich-country trading partners. And that would, all things equal, decelerate the Fed’s path of monetary tightening because the exchange rate would be sort of tightening for it. You can also imagine that there is sort of peripheral—in the peripheral haven currencies, like the Swiss franc or in Sweden, because those are sort of smaller economies, a relatively small outflow of money into those can drive their exchange rates rather faster. And then you’d—you know, you’d have policy dilemmas for Switzerland or Sweden as a result.

LEVI: Brad, you follow Chinese capital flows quite intently. What’s your take?

SETSER: You know, I mean, I don’t think we know enough about how—where private capital outflows from China are going in order to make a definitive assessment about which of the dynamics that Sebastian outlined is most important.

I would make, I think, two big points. One is that, within the emerging world, I think it’s important to differentiate between the commodity exporters and China’s direct competitors. Right now, all of them are under pressure. Commodity prices are weak because China is weak and Chinese investment demand is weak, and so that’s pulling down, you know, currencies like the—like, you know, that of Colombia, or other oil or iron exporters like Brazil. And then there are countries like Korea, Taiwan, Malaysia—which is a little bit—straddles the fence, both a commodity exporters and a manufacturing competitor—where there’s natural pressures, when China depreciates, for their currencies to move down so that they don’t lose out relatively in the various markets of—in the advanced economies. So that’s point one, is there’s just—there’s an important differentiator there, and you can imagine circumstances when all emerging economies wouldn’t move together.

The second point—and I think it’s a far more important point—is that China is now a very big economy. Its currency matters for a lot of other countries. And if the Chinese currency moves down against the dollar, and a bunch of emerging economies’ and other economies’ currencies also move down against the dollar, then China’s own currency is not moving as much as you might think in a broad, trade-weighted sense. And therefore, China wouldn’t get the expected benefit of the move. And that was part of the dynamic, one thinks, that led China to sort of shift or at least reevaluate policy in the fall. The big move, down move, in China’s currency in August was triggering such big moves in other currencies that it wasn’t clear that it was generating much of a net gain to China. So that’s become part of the difficulties that the Chinese—one of the difficulties that the Chinese authorities have to manage as they are thinking about the tradeoffs between taking policy steps to assure stability in the currency and allowing market—versus allowing market forces to move the currency down.

LEVI: Very interesting.

Operator, do we have any other questions?

OPERATOR: Yes. Our next question will come from Pan Tao from Xinhua News Agency.

Q: Hi. Thanks for this call.

I just wanted to follow up with exchange rates crashing. Last month, Chinese central bank established a(n) exchange rate index that measures the value of the currency against a basket of 13 foreign currencies. I’m wondering, what’s your interpretation of this move? Do you think it’s a small step forward in the direction of China’s (exchange ?) to package a basket of countries? Thanks.

LEVI: Do either of you want to jump on that?

SETSER: I’ll start. I’m sure Sebastian will have more to say.

I think it is natural over time that China would look to a broader set of currencies than just the dollar when determining and evaluating China’s currency strength. So in that sense I think it’s a natural evolution. Linking exclusively to the dollar in some long-run sense probably isn’t the right policy for China.

In the short run, the introduction of the currency basket has created uncertainty about what China is targeting in a policy sense, and whether or not it is truly moving to a policy where it is looking to manage its currency to assure stability against the basket or whether the introduction of a basket is meant to be a mechanism for facilitating a depreciation not just against the dollar, but against the broader basket. And so I think in the short run it’s the introduction of the basket has added to the uncertainty, and I think, you know, the decision to set the fix at a weaker level this morning is a classic example of that. That was not obviously a response to moves—it wasn’t obviously a decision driven by the evolution of the basket, so it leads to a set of questions about what China’s policy target effectively is now. And until those questions are definitively answered, I think there’s going to be a lot of uncertainty in the market.

LEVI: All right. We are almost out of time. Lightning round, quick answers from each of you. If you had to watch one thing, one indicator for the Chinese economy that you’re going to be paying attention to in the coming days and weeks and months, what would it be? Sebastian?

MALLABY: I think the single thing which has the—you know, the biggest potential to be disruptive and the biggest external potential to be of concern is, indeed, the exchange rate that we’ve been talking about.

LEVI: All right. Brad?

SETSER: I agree with Sebastian, so it’s hard to come up with an additional indicator. But the evolution of domestic consumption and whether domestic consumption can continue to—and retail sales can continue to grow robustly, and thus provide an underlying basis of support for the Chinese economy and have reduced pressure on the authorities to allow a weaker currency is, I think, also highly significant, but harder to follow on a real-time basis.

LEVI: All right. So watch the exchange rate and, if you can, domestic consumption.

Brad, Sebastian, thank you both for your time, for guiding us all through a difficult and murky territory that, by your own telling at the top of the call, is the thing to watch in the global economy this year. So thank you both. With that, this concludes our call.