China Premier Warns Of Economic Turmoil In 2020, Continued Deceleration Means Global Rebound Unlikely | WHAT REALLY HAPPENED

China Premier Warns Of Economic Turmoil In 2020, Continued Deceleration Means Global Rebound Unlikely

Bloomberg has compiled a list of long-time China watchers that are warning about an extended slowdown.

George Magnus, a research associate at Oxford University's China Centre and author of "Red Flags: Why Xi's China is in Jeopardy:"

In the spirit of self-criticism, I'd say my best call on the economy was an early spot of the huge demographic shift that kicked off in earnest in 2012, an abiding assertion that China's elevated growth rates could not be sustained, and anticipation of a financial crisis that turned up in 2015-16. Worst call was thinking that crisis might turn into a 'Minsky Moment' for China, as per 2007-08, and failing to integrate properly the tools the state has to prevent catastrophic failure.

I expect China to flirt with officially recorded growth of around 6%, but the reality is that the tempo of growth is ratcheting down to somewhere between 3% and 4%. In 2020, perhaps 5.8% to 6%, officially, not least because the economic news has to remain upbeat ahead of the CCP centenary in 2021. The consequences of over-indebtedness, demographic change, inadequate wealth transfer and income redistribution policies, and stagnant total factor productivity growth associated with institutional flaws are the main drags on growth. The 2020s will be a challenging time for China.

Jim O'Neill, the former Goldman Sachs Group chief economist who coined the term BRIC:

The BRICs path assumed China would grow 5% a year in the decade 2020-29 and I have no reason for changing this. If it does, and so long as the renminbi doesn't decline a lot in value, then by the end of the decade, China will be very close to being as big in current dollar terms as the US.

As this decade nears its end, China has major problems positioning itself in the world. As evidenced by the Uighur situation, China's approach to life now gets much more global attention than when it was smaller. In the coming decade, China has to somehow develop a more subtle and sophisticated stance on many of these issues, and I am not sure Beijing fully realizes this yet.

Edward Yardeni, president and chief investment strategist at Yardeni Research:

Demography is starting to really weigh on China's growth. China is rapidly evolving into the world's largest nursing home.

The biggest takeaway is China produced 60% of the world's debt over the last ten years and is the biggest driver in global economic growth. A slowing China means the global economy will likely remain stagnate in 2020.

Comments

SHARE THIS ARTICLE WITH YOUR SOCIAL MEDIA