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Unlike the rest of the World, China seems unconcerned by its slowing GDP Growth. In this article, Stephen Roach, a senior fellow at Yale University, who takes a bullish stance on China, argues that Jinping maintains a long term, stable approach to policy. Unlike many of the Western economies, China is enjoying fiscal and monetary leeway with plenty of room for rate easing and infrastructure spending. Further, Beijing portrays patience in their strategic decision making, and policymakers aren’t planning any sways no matter who wins the 2020 Election or what their views are on China. Further, Roach sees the Huawei restrictions from the US as inevitably harmful but short-lived – China has the potential to build its own chip industry within only two years, as opposed to the expected ten.
Why does this matter? China appears resilient to short-lived headwinds and attacks from the US. Don’t be quick to judge, however. As we have previously discussed, China’s corporate defaults are at record highs and consensus predicts another halving of the Chinese economy.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)