China, Achilles Heel, The Deal discussed on Bloomberg Daybreak: Asia

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Leverage overhang is one of the least important factors for gdp if you take the number seriously in china between de risking and deal leveraging because taking the risk and the speculative nature out of it is probably a good thing leverage china's events that cocktail that is fed this amazing story in china here the governor's china um and you as you pointed out in the previous segment you know the dollar is obviously on the back foot uh if he or stable or weakening um that hugely stabilising for china because i think the the achilles heel for the economy has always ban in an over leverage system if you started getting panic devaluation expectations in capital flight that a huge problem and in an environment with the dollar's going nowhere that's really not machine so that's buying them lots of time uh nominal gdp will keep growing and they they will trying to deliver that way so how do you see them balancing the deal leveraging issue i mean we've got you want stability even a stronger currency how do you see them tweaking interest rate policy given the delicacy of the de leveraging issue i mean uh i had a i had a client recently asked me whether china is uh now switching from a deflationary equillibrium to an inflationary equilibrium and i think the reality is if you take the leverage over hanks curiously which which we do uh then two things that we're switching into an inflationary equilibrium and china contributing to gold one place and i think that's just not the case so do i think that there is a case for um hiking monetary tightening of course not uh i think the the the basic policy backdrop is is going to be very stable and basically try and keep it that he is she goes but using other tools other than that benchmark rate which they've kept at that record low four point three five percent all right robin brooke's managing director chief economist institute of international finance always good to hear your views all right well coming up just after the break we're gonna delve into japan it's in attract mode when it comes to the video gaming industry fascinating story coming up in just a couple of minutes this is bloomberg with a bloomberg business of sports report i'm michael barr data patrick's racing career is winding down her final two races will be in the daytona five hundred next month.

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