China’s richest man Zong Qinghou said the nation’s growth will slide further in the second half of the year and proposed cutting taxes and breaking up monopolies to drive an economic recovery.
“People will only invest if there is prospect of making a profit,” Zong, chairman of food and beverage conglomerate Hangzhou Wahaha Group Co., said in an interview in Beijing yesterday. “Medium and small companies are not willing to take loans. If they can’t make a profit, why bother taking a loan?”
The government’s pledge to limit additional stimulus is adding to the risk of a deeper slowdown in an economy jolted by a cash crunch and weakened by faltering global demand for exports. China’s economy grew 7.5 percent in the second quarter from a year earlier, slowing for a second straight period.
“Economic growth will slow down again in the second half because there have been no major economic policies rolling out,” he said.
Zong’s prescription for driving a Chinese recovery is in line with Premier Li Keqiang’s call for a reduced role for the state in the economy, with the billionaire urging the breaking up of monopolies and easier administrative approvals from the government.
Zong, who has a net worth of $11.3 billion, was pessimistic about the world outlook, saying “the global economy is declining.” China will recover faster than other countries, he predicted.
The 67-year-old plans to add more shopping malls across Chinese cities as he considers an initial public offering for those operations. There is no specific time frame for the share sale, Zong said at a press conference in Beijing yesterday.
Wahaha plans to have about 100 malls in China in the next three to five years, according to a statement from the closely held company.
“We will need to make profit on our retail business for three consecutive years if we want to sell shares and we will need to see whether there is still demand for our IPO by that time,” Zong said in an interview.
Profits from Wahaha’s drinks operations have helped boost the fortunes of the billionaire, who with his family holds more than 80 percent of the company. Wahaha is investing 1.7 billion yuan ($277 million) in the mall business initially and will spend another 10 billion yuan in future, Zong said at the briefing.
Wahaha, which makes bottled water to baby formula, generated $10.3 billion in revenue in last year. Its only shopping center called Waow Plaza in the company’s home base in Hangzhou sells high-end products, including European furniture, jewelry, clothes and children’s wear, catering to young, trendy and modern families, it said in a statement.
Wahaha, whose name means “Laughing Child” in Chinese, will also discuss co-operation opportunities with Taiwan’s Far Eastern Department Stores Co. and Singapore’s Raffles, Zong said.