China's Transition to Building Long-Term Growth

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July 15 (Bloomberg) -- Yao Wei, Asia economist at Societe Generale, talks with Guy Johnson about China's second-quarter GDP data, examining the country's approach to building long-term growth. She speaks on Bloomberg Television's "The Pulse."

We have observed this transition willing to compromise growth with sustainability.

And everything the government has been doing saying it is trying to send the market the message they're not going to do the old thing, meaning using credit infrastructure to stimulate growth, which is probably more sensible but also that brings to the issue in the near term, we may see further growth slowdown.

What sort of numbers are you predicting in growth?

You have jpmorgan down at 7.2. what are you expecting?

We are looking for 7.2% next year.

Not just next year slowdown, but looking for gdp growth to step down every year in the next five years to something very close to even the low six percent in five years.

And when you look at the store you're talking about, the credit elements to what is happening here, are we going to see no credit expansion?

How is it going to work?

Are we getting into a situation where they're able to finesse the economic growth structure?

Actually, given all of these hollis is put into place, targeting the shadow banking system -- given all of these policies put in place, targeting the shadow banking system, we expected to continue to decelerate in the second half of the bank loans is likely to remain the current pace.

The government has signaled they want more money going into the real economy, but this kind of approach we think is good for -- in the short term it is difficult to change to really order in where the money can go.

The problem is more fundamental than just guiding the banks to lend where they should go.

We actually think this year in the second half credit growth will decelerate further, slowing overall growth.

When i look at what the authorities are going to think and do about the currency, how should i be expecting the story to develop?

Actually, in the median turn, the yuan has the most space to appreciate.

In the second half, we think the chances for a good we could see some appreciation, mostly because in the first half, china got a lot of inflow in the trade data, now this flow is squeezed out and also even the external environment, changing the was dollar, we may start to see yuan driven to the weaker side.

We are currently forecast to go to 6.17 versus the u.s. dollars.

Around one percent appreciation.

Thank you for your time.

Back to you, fran.

This text has been automatically generated. It may not be 100% accurate.


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