China’s Economy Not Likely To ‘Crash’ Fears Are Overblown
Over the past several weeks and months and into this holiday weekend we have heard a lot of Noise about China’s weak economy. But investor fears “are vastly overblown” that its economy will crash.
Stephen Roach, a senior fellow at Yale University and former Morgan Stanley non-Executive Chairman in Asia, says that while growth in China has slowed, the economy is “not going in for a crash … and that will present, I think, an opportunity for shares to re-evaluate the China threat, big time.”
“They did not do a great job of handling the equity market bubble on the upside by encouraging it and fighting it on the downside,” Mr. Roach said.
He played down last month’s devaluation of China’s currency (RMB Yuan), saying the more important development there has been the progress in transitioning from an export-led to a more consumer-led economy.
“Structural change … is very, very hard to do and normally takes a much longer period of time,” he said.
“The world has relied on China as its major engine of global growth,” so the slowdown is a global economic issue.
Monetary conditions are accommodative globally.
With China’s property market showing signs of a pick-up and authorities showing readiness to take policy measures, I expect the economy to stabilize in due course.
Have a terrific week.
HeffX-LTN
Paul Ebeling
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