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China's economic
2015-09-09 21:49:00

Based on the stock market fluctuations, the western countries can predict regularly the economic downturn pressure and slowdown trend. This year, does the fluctuation of China’s A stock release the similar signal ? On 9th September, at the sub-forum, Annual Meeting of the New Champion 2015 Dalian, “Adapt to the New normal”, the experts and scholars revealed that the fluctuations of stock market will directly affect the investors’ psychology and it will just have  little to do with the entity economy. China’s economy has remained unaltered fundamentally.

Wang Hongzhang, Chairman of Bank of China Co. Ltd. said that China’s stock market in July indeed  had some influence on the investors both home and abroad to some extent. However, in fact, the influence just embodied the influence on people’s psychology and it didn’t have some strong direct influence on the entity economy, including China’s capital market and currency market. The psychological factors predominate the actual influence factors. Wang revealed that after high vitality appeared in the stock market, the supervision departments including the Central Bank and the Ministry of Finance in China  carried out a series of measures, including reducing interest rates and cutting the required reserve ratio, injecting liquidity to the market and suspending IPO, etc., which turned out to be quite effective. From 9th July to 10th August, the A stock market went up over 400 percent points, showing a 12 per cent increase. It will have a positive influence on both China’s economy and world’s economy.

Li Jing said that China’s stock market emerging in 1991 was quite unique and the institution investors didn’t have large market share. In light  of its essence, compared to the western stock market and the global market, China’s stock market will undergo much more frequent fluctuations. Looking at China’s economy of 20 years, you’ll find the relation between the stock market and the entity economy, that is, if the economic downturn pressure increases, the monetary policy will be eased and if the liquidity increases, the stock market will probably perform better. Li Jing thought that in terms of various signals released from China’s markets at present, it’s believed that in the fourth quarter of this year, both China’s stock market and the entity economy will enjoy great stability.

Xie Baiman, President and CEO of Royal DSM, said that sometimes the emotion revealed from the stock market is radical. Great changes have taken place in China’s basic conditions in the past two months . “We see that the growth rate of China’s economy has stepped into a comparatively slow-down period, which shows China’s development condition in the past one year, and so does it in the later periods. But comparatively speaking, China’s economic growth rate has maintained a comparatively high level. “ Xie Baiman thought that for China, what matters a lot in economic development is whether the basic factors have changed or not. “Nowadays, about 600 million people in China have joined  the middle class group and they are able to participate into economic consumption.”Xie Baiman said that this is a development phase of China and it’s more necessary for enterprises to focus on innovation and create a global brand, etc.

“We don’t need to be shocked by one diving in China’s stock market.”Xie Baiman said, actually China’s economy has remained unaltered fundamentally. What matters is that China’s domestic consumption has not been released enough. The Europeans and Americans don’t like saving money, while Chinese are keen on saving money, for the sake of housing, buying a car and providing for their old ages. Efforts should be made to fully release the domestic demands to steer economy. It seems to be a good direction to promote economic recovery. In order to achieve economic recovery, it is not necessary to always depend on the export and investment pattern.

Su Shimin, scholar of Tsinghua University, and Li Daokui, Project Director thought that currently China’s economy doesn’t need too much stimulus. The method of “Acupuncture” should be applied to stimulate the key nerve nodes. He revealed that generally speaking, China’s economy has been restructuring. It is a good signal and we don’t want to upset the current situation. The “acupuncture points” needed to be stimulated for government should include reducing borrowing costs and promoting the reform of state-owned enterprises. Currently, the borrowing rates of enterprises and local governments are on the high side. Besides, China is the largest savings country in the world and is faced with high rate of loans. Efforts should be made for China to make due adjustments in the aspect of interest rate and to develop some tools for raising capitals. The plan for reform of state-owned enterprises has been released and our attention has been put on formulating the contents of the further reform schedule in detail.

Li Jing, managing director of JPMorgan, thought that China has experienced economic slowdown, but from the absolute numbers, our economy has still maintained a comparatively healthy rate of growth. At present, China’s infrastructure should not just include building airports and high-speed trains, but also incorporate and focus on “soft and basic” infrastructure, that is, social welfare and security. It’s necessary to rebuild confidence of consumers and the protection of social welfare is fundamentally needed. If much more money has been spent by our government on the pension system and medical care of citizens, Chinese citizens won’t have too much pressure of saving money. Instead, the citizens will be ready to pay out their savings. Due measures should be taken to make consumption account for much larger shares in strengthening China’s GDP, thus steering economy through consumption.