Chinese Economy to Experience a Slowdown in 2019 - Fang Shanghai, CSRC

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Wednesday, January 30, 2019 5.30PM / Bukola Akinyele for Proshare WebTV / Image Credit: FT

 

China will experience a slowdown in economic growth in 2019.

 

Mr Fang Shanghai, Vice Chairman of China Securities Regulatory Commission said this at one of the panel sessions at the recent world economic forum (WEF) in Davos, Switzerland.

The panel which discussed the “ Rethinking Global Financial Risk”  explored developments across the global economy and how it will key markets.

Mr Shanghai said it is certain that the Chinese economy will slow down a little bit this year as a result of trade reduction and the slowing down of the real estate market which was overheating.

He noted that the slowing down of the Chinese economy does not suggest a collapse.

According to himLast year we grew at 6.6% this year perhaps you know something around 6% let’s say and 6% is not a very slow pace. Now the Chinese macro policies are very data- dependent and at this point the government has quite a strong  fiscal and monetary policy, but if things continue to be challenging going forward on the fiscal side there’s lot of room to expand; I think debt in the corporate sector is a little too high but the government can still leverage a lot and you are already seeing the local governments issuing more fixed income instruments called project bonds.

“The ability for the central government to also borrow more is very large. The bottom line is that China is slowing down but this is not going to be a disaster” he said.

Speaking further he opined that recent export figures was an example of slowing growth, as the data from December for exports was not very encouraging and maybe a response to the trade dispute with the United States.

Shanghai also noted it could also be an indication of a general global slump and this will be reflected on the consumption side, as at last year China did quite well in the real estate market because housing prices were skyrocketing and squeezed a lot of money from households.

Shanghai was of the opinion that China needs to do a lot more about housing and infrastructures which has hitherto been the responsibility of local governments,  and in the last few years China has tightened the implicit debt that local governments can borrow.

He was optimistic that the Chinese macroeconomic policy was very responsive and largely data-dependent.

At the moment the trade war between the United States of America and China, according to Aidan Yao  of the International Monetary Fund (IMF) will cost  $430bn of global GDP.


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