Rishaad indeed we should get some feelings on what is going on with the chinese economy, factory gate prices, cpi as well. Lets look at this breakdown. Negativears of industrial gate numbers, exemplified by this yellow line, then suddenly september last year, we went positive. Expecting 6. 4 . ,hat has been lifting inflation something seen as inflation to come in the pipeline for the cpi, the turquoise line. All against the backdrop of some dictating inflation or core prices in china, that is food inflation. It has gone into deflationary territory. That was september. The is all to be digested, and all of that ahead of the 19th Party Congress taking place in beijing. Singapore, taiwan, and malaysia have come online. Lets have a look at what has happened so far. Another good day for the nikkei. Sophie gaining. 9 percent, rising for a 10th straight session, building on 1996 highs in a key election week in japan on sunday. The stock rally in asia continues, higher for a seventh session. Stocks in singapore, taiwan, and kuala lumpur and join upturn after policymakers shrugged off concerns about soaring asset prices. Aussie shares on the advance, rising. 6 . The asx 200 level. The kospi clocking highs, the korean won rising. South koreas joint navy drills begin today with United States. Ground, downsing. 2 ahead of china cpi and pp data, giving us a hint on the inflation 2. 0 story. The Malaysian Ringgit rising as malaysia is reducing its dependence on oil revenue. That benchmark has added only 7 this year, lacking 23 in the regional benchmark. Funds are favoring malaysian equities over Southeast Asian peers. This chart shows the yeartodate foreign fund inflow. Philippines, vietnam, indonesia, and thailand. In2 billion worth of stocks the malaysian equity market. Budget coming out in november. , the back to the oil patch rally in crude sparked by the conflict around kurdish oil fields may have a fighting chance of sticking around. A strategist points out the reduced positioning in wti net longs. The line in blue, coming down in recent weeks. A rampup given that september high of 5286. The oil patch in focus today. Rishaad thank you very much indeed for that. We will look at the China Central bank governor, hitting out at merck keep borrowing by local governments, reigning in corporate debt. Sunday, at the g 27 on lets bring in Tom Mackenzie for this. A fairly candid warning from the pboc governor. Thats right. A few interesting nuggets coming out in the answers he gave at the event on sunday in washington. On theup his sights local governments, municipal and Regional Governments, where he says there is a opacity around our ring and lending by chinas local governments around borrowing and lending by chinas local governments. There is a problem and fiscal policy transparency, it is not good enough. There is intergovernmental , has arelationship is lot of problems. Clearere is no very fiscal constraint on this local governments. This ties into another concern he highlights, the debt levels, particularly corporate debt levels. This chart shows a breakdown of chinas debt over 10 years, corporate debt, household, government, bank debt. The standout is the corporate debt level at 160 , the white column, 160 debt to gdp. There is a bit more of a balance because you have local government financing vehicles being involved in some of this credit for the corporates, so a little bit corporate debt and more government that is what he was saying, but that should still be a renewed focus on tackling this corporate debt according to the pboc governor. He talked about the Asset Management sector and Online Finance as well, so a number of things coming out. He is seen as something of a reformer here in china. How do his comment square with the recent credit data from china . Tom another thing he highlighted which was interesting saying we could get 7 growth in 2017. Some of that growth is fueled by the credit. We got the credit data over the weekend beating forecasts across a range of measures, aggregate financing or total social financing, money supply, all above expectations. Bloomberg intelligence illustrates that deleveraging has not properly started in earnest and that the policymakers continue to open the liquidity taps to get growth around 6. 5 or higher. It could hit 7 by the end of the year. We will get another gauge at nine 30 local time with those ppi and cpi data points coming out. Producer Price Inflation expected to pick a marginally from last month, beneficial for corporate profits and helps them to pay down debt. Cpi expected to softened 1 or 2 lower than what we got in august. Tom mackenzie there. To a certainget central bank stress guest on rising prices and when they will move to the upside. That story and first word news courtesy of paul allen in sydney. Isl fed chief janet yellen leading other global central bankers saying she expects inflation to speed up. Speaking at the imf reform meeting, she said it will accelerate after a long softness and her colleagues generally agree. My best guess is that the soft readings will not persist strengthening of labor markets, i expect inflation to move higher next year, and most of my colleagues on the fomc agree. Paul Iraqi State Television says Government Forces have captured areas of the kirkuk oil hub without a fight. The Kurdistan Regional government says iragi forces attacked peshmerga forces. Been rising since the referendum last month it backed independence. Opec says it expects demand for oil to grow to a healthy pace over the next five years as renewables show the fascists expansion of any type of energy. The secretarygeneral gave a preview of the global outlook, forecasting demand will climb an average of 1. 2 Million Barrels a day through 2022 before sliding back. Opecs World Oil Outlook will be released on november 7. South korea and the u. S. Launch military exercises today amid signs the north is preparing a rocket launch. Officials say kim jongun may test a longrange missile in the runup to chinas Party Congress this week and president trumps trip to asia next month. North korean state media criticized the war games, calling it a reckless act of maniacs. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad still too, chinas options in dealing with crporate debt still to ome, chinas options in dealing with corporate debt. All that and more, this is bloomberg. Right, we heard looking at chinas Party Congress kicking off wednesday has the leadership grapples with slowgrowing, debt, and reforming stateowned enterprises. Joining us now is a senior fellow at the carnegie endowment. Thank you for joining us. Lets start off with a look at the here and now and half an hour before the latest read on inflation. Is it a concern . Position whenood it comes to cpi at least. What is your view . The government is feeling good these days. Inflation is under control, Producer Prices rebounding, reserves stable, growth picking up slightly, so you will have this 19th Party Congress at a moment when the economy looks better than it has for years now. Rishaad is there anything to be worried about from the data we get . Reading, 2 strong being the absolute sweet spot, Producer Price numbers as well, in deflation for all those years , they normally portend higher inflation, it does not look like that in china, does it . Why . You are coming off several years when Producer Prices were stagnant or negative. This has a huge effect on corporate profits. The fact it has rebounded is the reason why the profits of state owned enterprises have rebounded significantly. ,dp growth has picked up a bit so this rebound is a good thing. What other people are looking at is the debt issue, the extent the nominal gdp increases , makingppi is going up debt servicing easier to deal with. When looking at your research, suggesting world Financial Markets have been fixated on chinese surging debt, debt to gdp ratio, tell us about it. In the waydifference people there look at into the way people look at it externally. Absolutely. In my book i point out chinas debt to gdp ratio has increased dramatically over the last 79 years. People say it must be too high. To 260 of gdp. If you plot that ratio against the largest economies, it is right in the middle. Higher than most developing, lower than most developed. Increasedis that it so much. Why did it increase so much . Is there Something Special to china that is not a factor in these other countries which have debt crises . There is. It is land values. 500 to 600 ed by in the last decade. Credit expansion has gone into the increase in value and property, so china is quite special. Are these asset value sustainable . If it is sustainable, they dont have a debt problem. If the Property Market crashes, they do. Being thate point china is immune from financial financialcks or pressures because of the nature it is constructed as a command economy. Tell us about that. It is different in the sense that it is domestic debt. They burrow very little from overseas. It is packed by an enormous amount of Household Savings part with banks. That protects china a lot. It is backed by 3 trillion in reserves and trade surpluses. Countries which have financial crises tend to have balance deficits and barbering more overseas. Growing 6 or 7 . The basic fundamentals of china are strong. The issue then becomes the surgeon property values. Where looking at the margin expansions, very rapid. ,hen the money supply increases we ask is gdp increasing . The answer is no. What about inflation . Where is this money going . It is basically asset appreciation. Why it iswould be different in compared to other countries. The answer is simple, private property and china, i Property Market in china, did not exist a decade ago. So which are having is a market economy, a marketoriented economy in china, trying to figure out the value of land, which was hidden initial source system. It largely drives the debt indicators. When you see that death numbers going up or down, you also see that it mirrors the rise and fall of property prices in china. This is quite different than the financial crisis cases we are familiar with. Rishaad hold that thought. We will discuss more on that and this dissonance in the next session. Right, lets get back to our discussion. Thank you for sticking around. We are talking about the dissonance in the way people look at things are broad and how they are perceived in china and the difference between the two. Lets talk about competition and how competition in a command economy such as china is not really understood outside its borders. West, we see competition has coming from market forces. Our concept of competition is between firms. China is very different, a socialist economy, and we dont typically see competition strong in a command economy, but competition is ferocious in china because it is globalized, so it imports and exports, so there is competitive competition from outside. In china, competition across provinces, across boundaries, this fierce internal competition in a regional sense. We have never seen this kind of forced to the extent it operates in china. Isre the competition deficient in china is that there is not much competition between private companies and state owned companies. This is one of the big issues in terms of the 19th Party Congress and what xi jinping has to deal with in the future. Ashaad what about having level Playing Field with the rest of the world and liberalizing some of the things are now restricted, such as investing in companies in china . I fully agree with you. If you think about the perception of Foreign Investment relations with china and washington, and there is a common view in washington that American Companies are investing too much overseas, too much in china. This leads to job loss or loss of competitiveness. Only 1. 5 percent of americas Foreign Investment is going to china. If you look at europe, the Foreign Investment from europe to china is multiples higher. It that European Companies are finding more opportunities in china compared to American Companies . Strength liesnies in services, and the chinese system is extraordinarily restrictive in allowing Foreign Investments in highvalue services to come in. A legitimate issue for discussion between the u. S. And china, opening up the Chinese Market to highvalue services, and this would cater to u. S. Strengths. Rishaad the west has to do the same to allow Chinese Companies to have more say in investing in some of their hightech companies. On wednesday, the 19th Party Congress starts off. To see anything substantial coming out of it . The big issues of the Party Congress and for the months after is not so much whether xi jinping will be anointed as chinas most powerful leader, but will he be seen as a transformative leader . Will he change the nature of the economic system. It is really about the policies. He has to do with the major contradiction in terms of the parties policy agenda come of the role of the state versus the role of the market. If you are going to move it further or backwards . Issues the biggest policy to be discussed in china in the coming years. Rishaad it will not be discussed in the terms you put it in. It will have to be done in an incremental way with policy reform. What do we do to get onto the road to that then . Plays out in various ways. Foreign investment, for example, are they going to liberalize services entry so markets determine who comes in and who goes out . State enterprises, can they define more clearly which sectors the enterprises should operate in, and which areas of the market. Even in areas of great sensitivity, the corruption issue, the government is serious about tackling and moderating corruption, but corruption operates in china because the state is involved in such a heavy weight in many activities. Backou going to scale this and introduce more rules and regulations . If you do, you can make progress on corruption. Examplesare all these where it has to be addressed in a practical sense. Rishaad great talking to you. , it is nearly upon us, the start of the first trading day of the week in hong kong,. 6 , similar for futures. Having a look at this after the news emerged friday about the end of you in talks with the countries take his maker of sport attila the vehicles, possible production of mini cars, marking the First Manufacturing project outside europe. Great wall motor, watching that one come up 6 in the premarket. Coming up, the latest inflation data out from china, breaking down those numbers as soon as they are released. This is bloomberg. 9 29 a. M. In hong kong. Kirkuk what our Market Participants looking at . Janet yellen saying cpi will accelerate after a long period of softness. The Inflation Numbers still below target for the federal reserve, but heading in the right direction. We have the 19th Party Congress kicking off wednesday, xi jinping with the opening speech. The unitedson in states in full effect, Goldman Sachs and blackstone about to report figures. It is also inflation in china, and important data point, cpi and ppi coming out any minute now. In the premarket, the hang seng up by. 6 , futures confirming that gain. Various Companies Including great wall motors. Lets get it to sophie kamaruddin. We have chinese large cap rising for a 10th straight day. The hang seng for a third session, december 2007 hi. Before the chinese Party Congress, the pboc set the rate stronger. An stability, stability, stability. The aussie septa snap afford day advance. Chinese equityup cages to see the shanghai composite. It is gaining ground slightly come extending fridays gains. Otherd picture in equities marches, hshares rising. 7 . Stocks, we arel anticipating an increase in prices, evidence of gathering momentum. This chart shows you this could bode well for earnings. 6. 4 , upnsus forecast, from 6. 2 , the line in blue on this chart. The csi has gained 30 , but on the back foot today, down. 1 . Some early movers, great wall motor in hong kong. Jumping earlier by the daily toit, in talks with bmw bring mini to china. The company sold an office tower for 5. 15 billion. It is all about that inflation data out of china. Rishaad we have got it. Lets go to beijing. Consumer prices in line, but that ppi number, blowing away expectations. 6. 9 for september, a year on year increase for ppi. The survey have been lower, 6. 4 . August, 6. 3 . That will be seen as a positive for the corporate Balance Sheets here. It will ben marginally easier to service some of that debt. Pmiaw the breakdown in the numbers, input and output prices picking up, metals, energy, all feeding into this. It does suggest Strong Demand as well. Bloomberg intelligence points out some of that may be down to stimulus, rather than cutting back on capacity. Still but 6. 9 will be seen as a positive broadly to the economy. The cpi in line with estimates come a. 6 increase. A