China, US And Simon discussed on Biz 1190 Overnight


Ways of stimulus. They recognize that I think that the trade tensions with the US that the slowing pace of investment in China. A drag on growth, and so they want to support the Chinese consumer. That's part of the reasoning. I think behind the tire cuts it, it's a it's a step in the negotiation with the US, but also it supports the Chinese consumer an part of the context is an ongoing re-balancing of the Chinese economy. I mean, this is an economy that for a long time was principally driven by very high levels of investment, and that was great for the past decade, but you really need the Chinese economy to rebalance until a lot of the moves that the Chinese authorities are taking in pursuit of lifting Chinese consumption and shifting away from an investment, heavy growth model. Simon. Oftentimes, we talk about debt in China, and I find I find chart which is fascinating. So they economy's me thirteen trillion in terms of their external debt is one point one point nine trillion. Sixty two percent of that comes up for refinancing this year. Is this a risk twenty thousand nine hundred the perhaps we're not talking enough about? I think there is a risk because if it was just about refinancing. You could point to the re the reserve levels in China and say that there's potentially a lot of firepower that the Chinese authorities have to to support a refinancing as it were. But you also have other issues like for example, capital flight. So when you look, for example, at the Chinese tourism data that is a good amount of sort of anecdotal evidence to suggest that some a lot of the tourism spending. You UC is capital flight. And I think it's reasonable to expect that capital flight will continue from China as the economy. Slows and as we balance it. So it's not just refinancing the debt that's built up in the past five to ten years. It's also how does China manage a large capital a private capital outflow as growth slows? I'm going to get a more of a cut razor on that slowdown in growth later this week saw the manufacturing indication numbers last week and apple. Do you think the growth story in China is perhaps worse than we are anticipating? Well, one thing I think is you look at China in two thousand fifteen sixteen and the sort of headline GDP number was still pretty strong. But if you look at some other data, for example, if you look at electricity consumption. Sort of slow growth in that slope below trend. And it's possible that we see a repeat of that in one thousand nine hundred twenty twenty as as the Chinese economy continues to rebounds, and the trade dispute with the US has to be part of that. So I think yes, you have an economy that by virtue of size because of the base effect should be slowing anyway. But I think there's also a cyclical slowdown happening. Yep. As you say they've got to get to grips with this though and keep the rebalanced on track. Simon kitchen managing director and head of strategy. Thank you very much forgetting up suspended and London up next on the show. President Trump says he's not concerned.

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