What Will Drive Economic Growth in China?

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

Oct. 10 (Bloomberg) -- JPMorgan's Jing Ulrich talks with Bloomberg's Pimm Fox about the outlook for economic growth in China. She speaks on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

Thank you for having me.

Let's start off with what is going on in china right now.

How do you address the concerns of those in china and looking at china and how do you explain the growth rate?

The growth rate has been to sell a rating in the last several quarters.

However in the last month or two, we have seen growth begin to stabilize.

That is largely the reaction to the government's measures to stabilize growth.

In the meantime, they are also promoting reform.

In the coming several months, we think growth rates will be above 7.5%. and indeed for the full year of 2013, jpmorgan is forecasting growth to be around 7.6%. but you say this is because of government reforms.

What specific reforms are they going to introduce?

We are anticipating a host of programs to be announced at the planning meeting in november this year.

Several areas.

Number one, fiscal reform.

Tax reform between the central government and the local governments.

Financial reform, and reform of the state owned enterprises, and also the government will be unveiling a new program for organizations, as well as reforming the so-called household registration system.

Basically, giving migrant workers more social welfare protection.

Previously, we have seen some dislocations in the overnight funding markets in china, and then that worry seems to have gone away.

What can you tell us about what happened and what the landscape is like now.

At his right, the interbank rates went up in june.

It really spooked the markets because for a wild, interbank rates went up to 20% or more.

If that had persisted, we could've had a financial crisis.

However that was resolved very quickly in the third week of june.

Now things are pretty much back to normal.

However going forward, we are anticipating some reforms in interest-rate as well as the currency.

In the area of interest rates, lending rates have been freed up.

However, deposit rates have not yet been freed up.

Retail deposits in china only get 3.5% on their deposits.

While inflation is running about three percent.

They are getting negative real rates.

The government needs to reform deposit rates, giving depositors a real return on their money.

I know that you travel all around the world and talk to people about china, china's relationship with the world, with the domestic economy and the export economy.

What is the biggest misconception you find among non-chinese investors when it comes to investing in china?

It is always easy to generalize about china.

Some people say china has a property sector that is going to go bust.

Some people say china as a country has a problem with debt.

It is very difficult for outsiders to truly understand what is happening in each problem, in each city, and in each industry.

Therefore i think one of the biggest misconception is to take china as one country, everything is the same, painting everything with one brush.

We do things a little bit differently.

We analyze macro data.

We also do a lot of them." digging around -- we also do a lot of him." digging around -- a lot ofe impirical digging around.

What is happening in the property sector?

You cannot say the whole sector is a bubble.

In the first year, it is very strong.

You cannot generalize the public sector as a whole in a bubble.

The first year it is doing very well.

But lower cities are suffering from oversupply.

While you cannot generalize that much about china, you cannot generalize that much about the u.s. what is the reaction in china to the current budget impasse that exist in the u.s.? china is watching the situation closely, because china has lent a lot of money to the u.s. as we all know, china has the biggest foreign reserve pile in the world, about $3.5 trillion in u.s. dollars.

Of that, about $1.5 trillion is invested in u.s. history.

And china holds about $700

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

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change