China’s Yuan and Europe’s industry: a growing imbalance

Welcome to the Sound of Economics, the podcast series by Brugo, the Brussels-based economic think tank. I am Yu Yun-jian, host of our Monday podcast, Johan Mundus, that brings you recent updates about China's economy. As usual, I am with our senior fellow Alisa Garcia-Harrero. Hi, Alisa, Happy New Year. How are you? How are you? You're in Happy New Year. We're also glad to have with us today, Johan Matis, head of international economic policy, financial and real estate market research unit at the German Economic Institute. Nice to meet you, Johan, Happy New Year, and welcome to the Sound of Economics. Yeah, hi. To both of you, Happy New Year, 12. Let's directly dive into the topic. Today, we want to talk about the yuan under appreciation. So there's been a growing sense in Europe that competition with China has fundamentally changed in recent years, particularly because of concerns about overcapacity. Alisa, could you start by giving us an overview of China's trade surplus with the EU and why it has become such a focal point of the debate? Our trade deficit with China is kind of new if you think about it with a long-term perspective. We also have a rather trade balance with China for many years. It was really the post-pandemic wall that changed this, so we started to import a lot from China during the pandemic. And all of those things that were related to the pandemic at the beginning became more general if you want more value added, I would say. Because in new sectors like GreenTech, but also in sectors where Europe had dominated global markets for a long time, everything about chemicals, or one of the big players chemicals, autos. All of these became a double directional thing, so with China exporting to Europe, Europe exporting to China, but especially elsewhere, and competing in those third markets. So in a way, I would say that although Europe has remained, excluding the terrible year after the invasion of Ukraine, where Europe had to deal with a much higher cost of import of oil, where the trade surplus shrunk. To I believe a small deficit, but point is we're back to the surplus, not as big as before, but the missing link there is China. This at the peak, 400 billion is a lot of huge deficit with China that in a way is strange because we are back to the surplus, which would be much bigger without China, but we didn't go back to a balance with China by the big, big deficit. So are we competitive with everybody about China? I mean, what's the story there? It's a very strange thing to explain why we have such a big deficit with China. Some countries say Vietnam, they have deficits because they are like in this game of bilateral deficit with China, but then the re-export to the US. We're not in that game, so it's very hard to explain what's happening in Europe. That's why we invited you again, and I'm going to stop right here because he knows so much more than me. Great. Thanks so much for sending this in for us. So you're going to let me come to you in your paper. What is the central problem you address when it talks about this cost of advantages for China? Why is this debate especially relevant right now for Europe and Germany? Yeah, thanks for having me because great opportunity. Yeah, I think maybe my paper can help a bit in explaining what Lysia has just pointed out, but this strange thing of having a huge deficit with China at the same time and trade surplus with most of the other countries. Well, China has huge cost advantages compared to us. Some are because of China becomes better, it's more innovative, especially in renewables. The Lysia has pointed out, but we also see at least two major reasons for welfare cost advantages. These are subsidies in China of the state system of industrial policy that is showing it's they are larger and pervasive. We know this, and we will only slide it on the side talk about these issues, but a very underrated factor until recently has been topic of the UN and the valuation of the UN and my view and the paper shows it. The UN is significantly undervalued, so China is artificially cheaper than it should be, and this also relates back to some extent to the corona pandemic as Lysia has pointed out. So let's look a bit deeper into these costs disadvantages that we have because they are really highly relevant. We did a survey of German firms last year or in 2024, and basically half of industrial firms with China competition in their markets said Chinese competitors are in their markets with prices that are more than 30% below their prices. And we hear anecdotal evidence of 40, 50 or even more percentage, but Chinese competitors are much cheaper. And the question is, can this be only due to efficiency and innovation, or are there unfair pieces as well, and it's relevant for us because we also had half of these industrial firms with China competition saying, due to China, as a consequence of China competition, we share jobs here in Germany. And so German trade deficit with China will be in the area of 90 billion in 2025. This is really huge. It has never been as huge as that. And so if you have such a huge deficit, the question is, where does it come from? And the paper answers this in basically two steps. And I will first point out, the first step, this is the extent of our cost disadvantage that is to some extent related to the currency issue. Yeah. And then what about the unfair part that you mentioned? And the second part will be, is it unfair? Is it a real undervaluation? Is this currency manipulation? So let's come to the first step. Well, how does this cost disadvantage that we have and these huge cost advantages that China have came about? Well, when we compare early 2020, so before the current pandemic to mid of 2025, as the study does, we see that producer prices in the era area have risen by a very, very high amount and exceptionally high amount. They were higher by about 50 percent in 2023 and came down a bit. They are now still 35 percent higher than they were in early 2020, pre-COVID. The producer price inflation was much higher than price at that consumer price inflation. And what were the reasons for this? Well, most of this cost surge came in 2021 and what was happening in 2021? It was the supply chain restrictions that we saw due to the COVID lockdowns and the global logistics problems, input prices rose a lot, import prices rose a lot, and after that, in 2022, there came the energy price, prices due to the Russian war or aggression in the case of gas embargo. So basically, there were two external reasons. The supply chain restrictions and the energy prices and these were huge price shocks that made us much more expensive. Looking at China and the producer price development in China, there was a small rise over time, but mid 2020, basically the PVI, so the producer price index in China was pretty much the same level that then it was in early 2020. So basically no constant or long-term price rise. So what happened to the exchange rate between the UN and the euro, basically nothing. All depreciation happened instead of an appreciation. So when you then take all this together and look at a real exchange rate. So basically looking at the normally exchange rate and then also looking at the cost divergence that came about, you come to appreciation of the euro compared to the year of more than 40%. And this is really huge again, comparing January 2020 to mid of 2025. And this is a huge, huge cost advantage and well, it plays out because we see what we would in theory see from economics. When you look at economic theory, if you have such an undervalued currency and then such a lack of appreciation at the same time when these cost divergence happen, you will have a trade deficit and a rising trade deficit, indeed comparing to 2020. The trade deficit of the euro area was China doubled, as Alicia also had pointed out before and the trade deficit of Germany was with China rose even more. So basically what we see is, this is basically the end of the first point. No matter whether this is some fair or fair, we have this huge cost disadvantages and they contribute to our industry crisis, they contribute to the sharing of jobs that we see in Germany and European industry, they contribute to a hollowing out of our industry. And then the next question would it be, is this unfair or is it a normal development? And when you look at this question and the paper does it as well, you get indications that it is a undervaluation. So basically you have some degree of unfairness that comes from currency manipulation or comes from the way China manages its currency. So how can you argue this? Basically going back to economic theory, where you have such a huge appreciation in real terms as I pointed out. So cost divergence and no reaction of the exchange rate, well, as I said, it is natural that if you have a higher trade deficit, what does a higher trade deficit mean? It means basically, we import much more from China. So we bring on the, when you look now on the foreign exchange market, we basically bring euro to buy it, you have on the market and what happens if we had a market based, flexible exchange rate, if you bring something to buy another thing, the other thing becomes more expensive because you have more demand for you are, you are price should have risen, but it didn't. So when you then look at basically, you have this view of the foreign exchange rate market, you can say, or you can say, okay, good trade is not the only thing that happens on the exchange rate markets, you have also other other factors that come into play. And indeed we have services trade, we have profits coming from foreign direct investment that European firms have in China and we also have capital flows, but even if you take all these further elements together and look at the basically balance of payments that takes all these different issues together, you still see a much higher demand for euro when you compare 2020 and 2021 to the two following, or the three following years, so 2022 to 2024, in 2022, up to 2024, the demand for you and was much higher, but there was no reaction of the bilateral exchange rate, and I see this as a clear indication of currency manipulation. China basically must have bought up the surplus supply of euros to keep the exchange rates stable. We should see this in rising currency reserves in euro in China, but China doesn't have transparency here. Thanks very much for the detailed explanation, Jürgen. Alicia, does this answer your question and what's your take on this assessment? So when European firms say they cannot compete with Chinese prices, how much of this is normal global competition and how much reflects deeper structural differences between economic systems? So yeah, I quite agree, but I'd like to add a little bit more on the two potential stories. So the Chinese stories were more competitive and we don't basically need anything from you because we can do it ourselves now. That's the story. There's some truth in that in the sense that China has moved so, so much so fast up the ladder and it has pursued self-reliance policies to the level of not needing many of the goods that it would have imported otherwise. Fair of unfair is in a way irrelevant. You know, we're not here, I mean, this is not about values or this is about economics. The reality is that China has pursued self-reliance policies, Europe hasn't, and therefore China has substituted through also innovation and industrial policy. The good and the bad if you want, but never mind, it has substituted a lot of imports from Europe. And why from Europe? Because China has emulated if you want Europe's industrial basket if you want. Very, very similar to Europe, much more similar than to the US. So that's another reason. The US is also an exporter of oil or, you know, a show gas. We're not. Because of that is close, I mean, the impact is bigger on Europe because it's more similar to us. So that is the kind of the, you could measure it in terms of, you know, value added, we have those data. China moving up the ladder in supply chains, value added in exports, and you can see that. But not to the extent of getting to a deficit of 400 billion. The rest is price competitiveness, whether the yuan should be at seven or three. Some people say even three against the dollar, obviously, is not, I mean, I can't really judge that. China is no longer accumulating reserves, so one could argue, maybe it's market based. No, I don't think it's so market based, frankly. But the point is that the, as an economy, there is a disconnect, yeah, you're moving up the ladder. Well, if it doesn't move, maybe it's lack of trust in your currency, yeah, but if you want to believe it's market based, but certainly it's not the level you should have for your competitiveness. That's the point. That's basically the point on top of that when you become more productive and you produce your basket is more sophisticated. The prices should be higher because you're becoming more sophisticated, like look how expensive the US is. I mean, like no, China is more sophisticated, but cheaper. I mean, how can you explain that? So, you know, the deflation in prices in China come, this is very obvious, and everybody knows from the fact that the domestic demand is weak. And therefore, there is this, for China to grow, China continues to invest. Accessibility manufacturing still grows above GDP growth. So there you go. I mean, it's simple. You invest more than you need. Your only answer is the rest of the world. Even with the rest of the world buying as much as for you to accumulate a trillion in a trade surplus, not enough, you still have over capacity. And therefore, that pushes prices down, which makes you more competitive so that you can export more. I mean, that's the story. So, nobody in the nice China's moving up the ladder is just that that is inconsistent, not unfair, fair, no, no, no, inconsistent with prices that actually fall. That can happen anywhere, for, for, for very long. So, you know, and people compare this with Japan, but let's bear in mind that it's quite different, because Japan's deflation happened at the end of the bubble. And Japan's biggest export push happened at the beginning of the bubble. Japan did not have negative prices at the beginning of the bubble, when it was exporting the world. Yeah, and no, no, it didn't have deflation. It's China that is incomprehensible if you ask me, because if you are becoming so productive, so competitive, you shouldn't have, you should not need to deflate. You don't need it. You are already competitive. So, you know, there is something really strange. I wouldn't call it unfair, but that strange thing is very costly for Europe. In that regard, we can call it unfair from our perspective. You know, wow, I mean, this is, this is big for Europe. But the, the, the actually, it doesn't matter, you, you know, you, it doesn't matter. The, the point for Europe is this very incomprehensible reality is hurting Europe. That's Europe needs to react. If China believes this is normal, Europe will have to react anyway. It doesn't matter what, you know, what, what, how we label it. The reality is that this is really hurting Europe and part of that is not explained by economic fundamentals. It is just not possible to explain it. Therefore, Europe, we have to use non-market view on instruments because the market instruments are not going to happen. They're not happening. And that brings us to what to do about this. Thanks for that, Alisa. And I really agree with you. This is not a podcast to judge about value, but then here we're talking about what impact this has been to Europe and realistically what policy options does Europe have to address this imbalance and our exchange rate related response feasible or does this push the EU more toward trade defense instruments and industrial policy? I'll start with you, Yogan, because you already mentioned some of the options in Europe paper. I agree with Alisha that this hardly or difficult to explain phenomenon is a real problem for us. But I think it would make it easier for us to say to also still talk a bit about the question of whether it's unfair or not. And when you talk about this, you might not also look at whether the bilateral relationship with the euro and the euro that I looked at in my paper is relevant, but you can also look at the overall trade service that China has with the world. This is in merchandise trade. This is now more than $1 trillion US dollars. And this is also an indication that the exchange rate of China should appreciate. Even the IMF now came out to say we need more exchange rate flexibility. So I think, well, whatever China does, they might do it if it's successful for them. But if what they are doing has negative spillovers to us, then it will become a problem to us. And the lack of the appreciation of the Yuan is such a problem. And well, at least if you said we don't see a rise in the currency reserves of China. Yeah, this is true for the official reserves. I think Red Sensor from the Council of Formulation points out that China started to hide currency reserves in the state banking system for years. So probably a lot of happens on the exchange rate market that we don't really see because if you were able to point off to this exchange rate appreciation by looking at the rise in currency reserves in euro, you would have actually approved and China hides this proof. So basically coming to policy options, well, the first best policy option would be just for China to significantly appreciate its currency. This is pretty clear. And as you said, probably a very huge rise of the currency would be appropriate. And if you hear about companies here in Europe saying, well, often China even undercuts their costs, not only their prices, they cost by 30% or something, this cannot be based on a normal development. And as you said, it would be very strange if this would be normal economics. So what can we do, depreciating the euro would be only theoretical option because, well, the ECB would be in the game, the ECB is independent. So it's a difficult avenue to go in my view. We should look maybe not so much for non-trice instruments, but we have trade policy instruments. We have anti-damping and anti-subcity instruments, so trade defense instruments and undervaluation is not perfectly covered by the laws that underlie these trade defense instruments. Well, we should have smart trade lawyers that look for ways to still account for undervaluation of the UN because this should enable us to set tariffs higher if we have counter value in duties, basically in the BED case. If you also factor in the undervaluation problem, the tariffs should be even higher than they are. But the other thing is, usually when we look at EU production that comes under pressure, and we look for subsidies in China, we should do this. But we would usually look to direct subsidies or indirect subsidies as was done in the BED case for the electric vehicles that were levied in the end of 2024. But the exchange trade basically is a subsidy that is relevant for audios that we import from China. And well, when we have goods that we don't produce here, well, that's nice. We can buy them more cheaply. But if we have goods that we do produce here and have come under this pressure, the undervaluation is a reason for having an anti-subcity case because an undervaluation is basically a subsidy and the U.S. is already trying to put this into an anti-subcuting duty case, basically saying when you export, as a case against Vietnam, as a Vietnam exporter, and you have another value currency, you receive more of your own currency when you trade in dollar, and this amount that you receive more due to the wrong value of your currency can be deemed a subsidy. So there would be avenues to go this way. And on top of this, we should also bring a case to the WTO, saying with this huge traffic deficit of us, with this huge trade surplus of China with the world, basically we see a notification and an impairment of our benefits that the WTO should convey. So it would be a very general case. It would take years, but it would basically flank and give a cover for our much stronger use of trade defense instruments. So this would be my way to go. I would be more critical of going with non-prize instruments. Alicia, do you think China will appreciate Yuan and other policy options that you can see there? It was actually allowed for some recent appreciation, so it touched, it went below seven. There's been some appreciation against the dollar, which actually has appreciated after the Venezuelan event. So yes, there is a hint that they know this is a problem, you know. But we're talking about a massive appreciation here that is needed, because prices are still negative. You know, I actually estimated, how much of this 40%, I had 38 or something, but more or less the same as you, using producer prices, I separated the price effect and the exchange rate effect. Price effect is two thirds. So you know, if you want to solve this problem only with a nominal exchange rate, good luck. It has to go to maybe four or I mean, we're talking peanuts here. I mean, what's happening in the market is peanuts compared to what is needed. So because the deflationary pressures are not going to stop anytime soon, China is trying anti-imbealution measures, they're not working, there's huge over capacity. Forget about prices becoming very positive, producer prices anytime soon. Therefore, the exchange rate has to overreact. It's very hard for China to do it. I know, but China is, I think, much afraid of appreciation, because they remember what happened in the 80s and 1980s to Japan with this huge plus or a core of appreciation that led to the contributed to the demise of the Japanese economy afterwards. You can debate this, but I don't think it's very likely that China will move significantly on the exchange rate, even though they should, because well, just to remember what happened in the 1980s here in Europe, we had an exchange rate system, and we had a development where usually in Germany, prices rose little in Italy and Spain and other countries prices rose much more. So then we had this exchange rate system and pressure built because Spain and the Southern European countries ran into trade deficits, and we had huge movement or like basically pressure on the exchange rate market in the end, the German market would appreciate to balance out these effects. This would be a, we had a kind of thingy-thick exchange rate system there, but at some stages were huge appreciations of the German market, of the Dutch going and others. So it is, to some extent, normal to have these even huge appreciations if you stop your currency, or if you prevent your currency from reacting flexible, and this is just what China is doing. So again, on a theoretical basis, it would be the best option for China to really do a huge appreciation as they probably won't. We have to react, and we have to break strongly on the trade policy side. And well, we see whether there are some preparedness in this, but I read that also the European Chamber of Commerce in China, and against Eskolo pointed out that they see a problem there. So in my view, pressure is building, and Brexit's are also calculated that you need an appreciation of about at least 30%, so a huge step and not these kind of small steps that China currently allowed. Yeah, last year Alicia also wrote a paper according to the survey results from the European Chamber of Commerce in China, talking about European business confidence in doing business in China. So we will put the link there in the show notes, and also of course, your newspaper. So then for audience who are interested, you can read the papers in detail. As you said correctly, you're again, that Europe needs to react, Europe needs to react fast. But how do we keep this balance? What are the biggest risks if Europe choose not to react? And if conversely, what are the dangers of reacting to aggressively? Okay, a difficult question and an important question, obviously. We haven't yet talked about the policy reaction that we need here, so we need to raise our competitiveness. We have to bring down energy costs to some extent. We have to stop labor costs from rising further. We have to bring down bureaucracy costs. Yes, this is obviously for us the first best option to do. And with such a huge cost disadvantage, this will not suffice at all. So we can do a bit, but it's not realistic to compensate a 40% cost increase compared to China, this undervaluation of the UN is just too much. So again, we have to have to react. And if we don't react, basically we will see a hollow way out of our industry. We hear a lot from German automotive suppliers, from machinery firms in Germany, that their buyers that used to be in Europe, that their customers basically no longer sold from them, but they increasingly sold from China. So we really see, and this is in the heart of the German machinery sector and the automotive sector. So we see this hollow way out. But it's also coming on this, we want to become less dependent on the import side from China. So we want to do risk, at least in those areas where we highly and critically dependent on China. With China being so cheap, this is basically impossible. So this is another reason for why we have to act because if we don't, it will be so very difficult to do this, and yeah, this will, if we use trade policy in the way that I pointed out. This will potentially and pretty likely lead to some retaliation from China. But we just cannot accept these huge disadvantages that come up, come to us. Basically, from our perspective, it is just, or coming back to my paper, this 50% or this very huge rise of the producer prices that came due to the supply chain restrictions, where a really external, exceptional effect, and if the exchange rate relation doesn't or exchange rate doesn't react to this, we have to put up all the defenses here and try to do this in a way that does not turn us into protectionists, but trying to equalize and countervail the unfair elements of Chinese price advantages. They are difficult to pin down, yes. Well, we also must be aware if we open the Padara box of using trade policy more intensively, the danger, obviously, is that this can also be misused and we should be pretty careful in trying to prevent this. Thanks very much, Alicia. Yeah, quickly, but hopefully with the bank, I don't think we have the instruments to deal with this. I'm sorry. But our toolkit deals with specific cases of whether it's antisapsidies or, you know, subsidies or dumping, but this is across the board, these are producer prices. They affect every product. So if we wait for, I don't know, 18 months for every single investigation, we'll never get there. We don't have the instruments. This is the key message for the last part. If anybody gets to the end of our podcast, I just want them to know that that's how we can guess if they actually listen to it. And worse than that, I was actually thinking of whether we could emulate the US and instrument that I used to hate for so long, this, you know, currency manipulation instrument by the US Treasury. But that's nominal exchange rate, even that what doesn't work because two thirds are coming from negative prices. Yeah, so what do we do? So I guess we would have to go across the board, meaning monitoring producer prices and basically thinking of a mechanism on the real bilateral exchange rate. We've never heard of this. This is how bad it is that we're not even discussing it. We've never heard of such instrument. I was supposed to find something of this sort. So it's not only urgent, it's difficult because we can't use even the US instruments for this matter. If we talk about local content, restrictions, that is that are going to come with the Industrial Accelerator Act in Europe and with some other instruments, this would be the wrong way to go in my view because this opens the Pandora box to us, protection isn't even more. And it will have huge disadvantages with a huge monster of bureaucracy. My point is we have a problem of unfair cost advantages. We basically have basically and a big basically basically have instruments that should be able to address these distortions with the counter value subsidies anti-dumping. The way the rules are currently written doesn't allow us to do what we should do or what we needed to do. So if we are prepared, and I also have to say if we go for local content and we do it on a broad basis, this will very broadly break WTO rules. So if policy makers are prepared to break WTO rules, then they better go along the way that has been laid out by the WTO and we don't then basically we don't, to put it in a matter for it would be we continue to go along WTO rules but we don't adhere to every sign on the traffic sign on the side of the road. So when you talk about a under valuation, you should talk about a real under valuation. So this would bring in your price effects that you mentioned and I agree that basically this two thirds one third relationship is probably true. So you can measure the extent of under valuation and then you would put levis, counter value levis on these, the problem would be to say, well, this subsidy that an exporter gets is not specific in a narrow sense. Yes, okay, because if you trade in equity, so whatever the dollar, you also, if you don't trade with goods, you trade with, you might trade with services or you might trade with some other things with the US market that all these people that have these international transactions would get the subsidy. So it's not specific to exporters, okay, but it's specific to all those who trade in dollar and all those who do not trade in dollar. I lost you on this very last part, but I want to say something because I don't want to be misinterpreted because you jumped on this idea of the local content. I'm not proposing local content for a very simple reason, first because I do believe that if we do not become more competitive, no matter what we do, it won't help. I mean, it's just not, so local content will not make us more competitive. That's why I'm not into the local content, but also because it is only China that has negative producer prices, you know, not Japan, by the way, basically higher inflation than Europe. So the rest of the world should not pay the price of this. We should import from other parts of the world. We don't need to impose local content, but we should target and warrant it. I don't want to say I'm fair, but you said I'm fine, I'm worried it, whatever, something more neutral and their real appreciation of a currency, because that kills our market. It's very simple, it's a survival tool. Let's call it survival tool, you know, whatever, but it's a survival tool WTO compliant. What a question. We are in survival mode, you know, I mean whoever comes to me with, is it WTO compliant, sorry, I'm moving to a different room because I can't take it. You know what I mean, like we're talking about major distortion. How can I imagine, yeah, I'm swimming in a major distortion and I'm there trying to use a tiny needle for every single drop of water, where I mean, like, come on, that's the anti-damping we're trying to conceive. So we need an instrument. We can, if you want to mask it into WTO compliant thing, go to a very broke definition of subsidy. And yes, let China come to WTO, sure, Q, because there's thousands of cases waiting to, you know, like, come on, I mean, what kind of reason is this? Nobody is solving anything at the WTO now. We're not even there in solving a survival problem because of something that is not working. I mean, this is how, sorry, how religious we are on the WTO. We want something that solves a real problem for us, which is this underappreciated currency and prices together, real exchange rate. We do not want to close our markets. We can still, you know, trade with a whole world. I just want to say, we cannot solve this with, okay, damping on pork, which is what China means. No, on a specific type of pork. I mean, we'll never get there for God's sake, you know, we need something bigger. That's what I'm saying. If we want to call it anti-damping, let's call it anti-damping, I couldn't care less. I just want something broader and that does not close our market. I agree with you. No domestic content. That is not what we need. Yeah. And basically, on the same page, we need much broader trade defense instruments and have to be smart and pragmatic in bringing them. And this will not always, we could try to stay within WTO rules as far as it goes. But if it doesn't go, then we have to go beyond. And we kind of, at the same time, bring a big case to the WTO and say, under these conditions, it is just no longer fair. This, we don't get our benefits. And then this case will be there for years, but it will give us cover to break WTOs in certain respects in order to get these trade defense instruments broader, because we only have one problem. Now, this problem is China. And the problem is the unfair or the distortions that we have in the game. And so we have instruments that can tackle these. We have to become broader and we have to become more ingenious in trying to get them brought. So basically, I fully agree. And I would say something to end. What about C-Bam? How many people think C-Bam is not WTO compliant and we don't seem to care? Yeah. I mean, like, why don't we behave C-Bamly? That's the way I would behave. It looks like it complies, even if everybody disagrees, because I love C-Bam. I push for it. What about that one? You know, like a C-Bamizing instrument on the real X bilateral chain rate. What about that? So I leave it there, but I'm just saying we need to really move out of the tiny instruments. Sorry to say. We have. We can't solve this problem. It's too urgent. Too big. Too important. We're going to have an episode talking about C-Bam for our Brugel podcast. So listeners can stay tuned for that. And let's mark this the end of our conversation. And thank you very much, Yugin, and Alicia for joining this interesting conversation. I am Yoon-jian. I'm with Alicia, Garcia Herrero from Brugel, and Yugamatos at the German Economic Institute. And for listeners, you can find our research on China at Brugel.org, and sign up for Jung and this, our monthly China podcast and newsletter with link in the show notes. As our first China episode of the year, we wish you a very happy new year, and we're going to continue to bring you more updates about China's economy in 2026. So until next time, bye bye. [Music]