We’re Going Into New Territory With China: Callow

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April 24 (Bloomberg) –- Catalyst Economics Founder Julian Callow discusses China’s economy and what they can do to foster growth with Anna Edwards and Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

When you talk about the global economy, you say it is a mixed picture.

But your major concern is china.

You have to be concerned about china.

The manufacturing confidence readings are tracking low.

When you look at gdp expansion, it was the weakest since the first half of 2009. we are seeing some weakness emerging in the chinese economy.

The housing market is also of course starting to show further signs of weakness.

It is very important because china has been the magnet that has been driving a lot of business confidence globally, particularly in asia.

But also for firms in europe as well.

A very important market.

What is more, the chinese are starting to let the currency depreciate gradually.

That is inevitable -- and inevitable process.

If you calculate the currency on a real basis, it is highly valued in relation to where it was six years ago, for example.

About 50%. when you look at the chinese growth story, is it an act of faith.

It is strange to look at what the chinese government is doing and have a view on it.

Like so many people, i find myself in a situation of assuming that china will get through this.

It is important to be aware that there are downside risks.

We are going into new territory right now.

China is not going to be the source of stimulus for exports that it has been in the last five years.

The composition of chinese demand is going to be changing.

It will be difficult to translate from having such strong exports -- sorry, such strong investment driven drove -- growth into consumption.

China is going to be looking to have a weaker currency.

Also, easier monetary conditions.

To try to foster again growth in the export sector.

If you look at the trade data, those were particularly soft.

Disappointing really in the first quarter.

I know about the phantom invoicing going on.

Which is relating to trade with hong kong.

If you look at the import data, they are very soft in the first quarter of this year.

You mentioned the chinese housing market.

The u.s. housing market could be losing steam, some say.

His history to look at the -- especially if you look at yesterday's home sales data.

Mortgage rates are higher than they were a lot -- of may last year.

That is what happened as a result of the fed starting to talk about tapering.

Affordability has significantly weakened in the u.s. housing.

Prices have risen significantly.

Didion home prices are up 12%. it doesn't take a rise to raise rates.

The only thing i would say is a lot of that reaction to the steep rise you had in mortgage rates, which was happening in q2, cute three -- q3 last year -- we will not see much further

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

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