What's new

China to slow sharply: Citigroup's Richard Cookson

Roybot

BANNED
Dec 14, 2010
20,064
-2
44,859
Country
India
Location
Australia
CHINA'S economy is likely to slow sharply this year as the country's recent growth has been unstable and driven by credit and property bubbles, a senior Citigroup private bank executive said yesterday.

"Bubbles don't end well," global chief investment officer Richard Cookson of Citi Private Bank said at a briefing in Singapore.

He said China's economic rise has been fuelled by a "phenomenal" growth in credit. The bank calculates as a percentage of gross domestic product, total outstanding credit in China has risen by 60 percentage points in the last four years to 180 per cent of nominal GDP in 2011. As the lines of credit are reigned in, Mr Cookson said property prices will fall and growth decelerate.


The spectre of a sharp economic slowdown in China has troubled equity market investors in Asia in recent months. Recent data from the world's second largest economy have been less than encouraging, such as its November Purchasing Managers Index which showed a surprise contraction in manufacturing activity. Home price data from China Real Estate Index System also showed average property prices eased 0.25 per cent on-month in December -- the fourth straight month of decline.

The implications of this, Mr Cookson said, are profound for the Asia Pacific region. "It's going to mean some question marks for all the countries, such as Australia, that have relied very heavily on exporting stuff you dig out of the ground to China; and it means exports from the rest of the region into China are going to be dented," he said. This will lead to weakened Asian currencies against the US dollar and also the Chinese yuan, he said. In such a scenario, combined with an expected collapse in European growth, the bank believes Asian risk-sensitive assets will continue to underperform, in particular, Asian equities.

Chief investment strategist for Asia Pacific John Woods said at the same briefing despite the 20 per cent fall in Asian stocks last year, most of the bank's clients are sitting on the sidelines, "waiting for the knife to fall further".

He said the time to re-enter the market won't come until the macro issues in China, Europe and the US stabilise.

China to slow sharply: Citigroup's Richard Cookson | The Australian
 
China's growth target... has been 7% for ages already.

----------

Wen Jiabao: Growth target is 7 percent - People's Daily Online

Chinese Premier Wen Jiabao said that China would lower its annual economic growth goal to 7 percent at the press conference after the annual session of the National People's Congress concluded on March 14.

The 7 percent growth target is widely regarded as showing China's determination and confidence. It is a major step taken by the Chinese government in transforming the country's economic growth pattern during the 12th Five-Year Plan period and years to come.

Then why does China set 7 percent economic growth rate as its target?

First, the seven-percentage annual growth is conducive to cool down China's "overheated" economy. China has set an annual economic growth target of 8 percent for seven straight years. However, the annual actual growth has always surpassed that figure. Growth peaked at 11.4 percent in 2007 and hit 9 percent in 2008.

Of course, we always beat our growth target. Unlike India, who always sets the target high, and always fails to reach it.
 

i was so worry after reading this news but then this came up

Roach Sees China Better Placed Than India to Withstand Slowdown


China has scope to loosen fiscal and monetary policy, making it better placed than India to weather a global economic slowdown, said Stephen Roach, non-executive chairman of Morgan Stanley Asia.

China is bringing inflation under control and has a small budget deficit, Roach said in an interview today with Bloomberg Television. In contrast, India has a currency under pressure, an “inflation problem” and a large fiscal shortfall, he said.

India’s “got its hands tied: It can’t cut interest rates because of the inflation and currency issues, and it’s got no leeway to increase its budget deficit,” Roach said. “India is in a much tougher place right now than China in the midst of this weaker global economy.”

Roach’s views differ from those yesterday of Nouriel Roubini, the co-founder and chairman of Roubini Global Economics LLC who called China’s growth model “challenged” and said India is “positioned well.” The two developing economies account for more than a third of the world’s population.

The International Monetary Fund is preparing a “substantial” cut to global economic projections that in September showed China and India leading the world’s recovery this year.

Prime Minister Manmohan Singh’s efforts to bolster the Indian economy have been hampered by corruption scandals, inflation and the decision last month to stall the easing of foreign investment rules in multibrand retail.

Indian Inflation

Indian central bank Deputy Governor Subir Gokarn said last week the Reserve Bank is “very concerned” about the impact on inflation from the rupee, Asia’s worst-performing currency in the past year after sliding 13 percent.

Roubini said yesterday that China’s growth model “is now challenged” because the U.S. can no longer be the consumer of first and last resort. “Unless China changes its growth model there’s even a risk of a hard landing in the next couple of years,” he said

“In relative terms, India is actually positioned well,” Roubini said in an interview with Bloomberg UTV in New Delhi. At the same time, the pace of “structural reforms” in India has been “mediocre” and unless India pushes ahead with those changes, economic growth in “absolute terms” will “disappoint,” he said.

India’s economy expanded 6.9 percent in the third quarter of 2011 and the Reserve Bank paused rates last month after a record 13 increases since mid-March 2010, as the benchmark gauge of inflation dropped to a one-year low of 9.11 percent in November.

China’s Growth

Roach said today that China is “very serious about engineering a shift” from an investment- and export-led economy to consumer-driven growth.

“You’ll be pleasantly surprised at the progress they make in building out a consumer-led growth model,” he said. “I’m of the view that we can look for positive surprises from China not negative surprises.”

The IMF is scheduled to release revised global projections on Jan. 24. Olivier Blanchard, the Washington-based fund’s chief economist, said in a Bloomberg Television interview last week that with European growth “very close to zero at this point,” there would be a “substantial” cut to the most recent 2012 global expansion estimate of 4 percent.

Roach Sees China Better Placed Than India to Withstand Slowdown - Bloomberg
 
A slowing China is bad for China, west and India. If its true, the biggest market to sell stuff will not grow as rapidly as world would like to see.

In an interconnected world, everybody loses a little bit.
 
What Indian member will never understand is Chinese debt is 98% domestic. Govt can make it all disappear into an SIV. Happened before.
 
Bl[i]tZ;2489799 said:
A slowing China is bad for China, west and India. If its true, the biggest market to sell stuff will not grow as rapidly as world would like to see.

In an interconnected world, everybody loses a little bit.

On the contrary, a reasonable slowdown for China is a very good thing.

First, China’s growth is causing lot pollutions, because the growth with phenomenal quantity does not have high quality. Slowdown can allow people to have a look-back and fix the problems.

Second, a slower growth can mean better social welfare. You pull down those sectors with high-growth and high-profit to compensate the areas with low growth and low- or no-profit. Thus, ordinary people will feel better and internal consumption will be raised.

Thirdly, a slower growth will help to quench jealousy or otherwise qualms of other countries with inferiority complex, especially in some of China’s neighbors. Thus, a slower growth will give China a friendlier environment to further its development toward next more superior stage.

It is high time that China focus on the quality of its GDP, not just the quantity.

Thus, this is good news to China.
 
I had read the news that our PM said chinese economy will back to substantial economy, This make me so happy, These year we had find that many people are enamored in the Stock and House, Just think how gain the money fastly. These make the inflation and will hollow the country. I hope government can make the policy to encourage enterpriser to invest in the manufacture and R&D, to upgrade the industry, We need the quantity to feed people, we also need the quality to promote our competitiveness!!!
Now we have the trouble, But if we can use it, It will be the chance, Just like in 1998!!! slowdown is nothing special, In the process of development, nobody can proceed smoothly without a hitch.
 

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)


Pakistan Defence Latest Posts

Back
Top Bottom