“We are confident that China’s economy, even in slowdown, is on a solid ground”, he said.
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Given the worries about the debt bubble in China, it’s reassuring that US and most European banks have cleaned up their balance sheets after the financial panic of 2008.
A decline in China’s growth could lower Chinese buyer demand of US property.
But Fang downplayed recent problems on China’s stock market, which have sent shock-waves through world markets in recent months. There are rumblings that China has slowed down more than its statistics indicate, as rail freight, electricity usage and manufacturing are badly hit. Now its share is close to 25 percent.
“All of this, it’s a global business ecosystem, it is a global supply chain and it feeds into our production, whether that production takes place in the United States or another country”.
Public sector debt, particularly at the local and regional levels, has been enormous.
But US Treasury Secretary Jack Lew thinks the yuan’s depreciation is due more to a slowing economy, and that the world is confused about that because China hasn’t been clear.
In Europe, Germany is in the most exposed position as seven percent of its exports go to China. I can tell you what they’ve announced as their policy. For those of you looking to make significant Superannuation Contributions this year the strong recommendation is to complete transactions prior to the May Budget where rules may change and make future contributions less attractive.
“There is a communication issue”, Lagarde said, “Better and more communication would certainly serve that transition better”. In addition, consumer confidence was up last month, the cost of living fell, the unemployment rate is at 5 percent, and inflation hasn’t been a factor for a long time. That is the focus of the world’s capital markets right now.
Graphical representation of China’s GDP.
This confusion is only worsened by a misunderstanding of China’s goals as well as a misunderstanding of Chinese exports.
Jack Lew, the U.S. Treasury Secretary, largely echoed Lagarde on Thursday, saying that he has “been following China very closely” and doesn’t see “the situation today as being so dramatically different” than at the end of 2015.
A LEADING US economist has warned global equities are enduring a “perfect storm” of volatility exacerbated by the “manic depressive” nature of financial markets.
China roiled global markets in June with a stock market crash and ham-fisted rescue attempt, and then an unexpected yuan devaluation in August. But a weak Yuan would tend to have an adverse effect on non-Chinese exporters who depend on Chinese demand. He said there were several reasons for the slump: “The drop of oil prices, the Chinese economy slowing down, tightening liquidities of the bank, all are affecting the economy”.
Whether or not the recent market turmoil leads to a protracted slide or a violent crash, it is proof that we have wasted the past seven years propping up a bankrupt economic model.
Chinese investment in US residential real estate has grown from a measly $50 million in 2000 to an eye-popping $28.6 billion in the year ending in March 2015. As my earlier writings have indicated, this improvement began ten years ago, but only became widely apparent in the last few years, and was augmented even further by Abenomics (along with the beneficial political stability that he has brought). Mexican buyers ranked third, accounting for 9 percent of foreign buyers.
The stock market movements of the last two weeks are puzzling.
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