(18 September 2012 – China) HSBC’s Helen Wong, the head of the largest foreign bank in China, has told The Age that the Chinese economy is merely in a cyclical slowdown and will most likely have a fourth-quarter rebound.”On the ground, we’ve seen the economy slow down, and that is reflected in credit demand, in export numbers, reflected in how people tend to invest,” she told the paper.
”But that doesn’t mean China is going to stop growing. It is still growing but at a slower pace.”
While during the 2008 slowdown China launched a big spending program, this time around its response is more nuanced, which has put the focus on what stimulus measures will be taken there.
Authorities recently approved the construction of 25 subways nationwide, along with further upgrades to the regional railway network.
Other steps such as speeding up tax rebates and cutting taxes for smaller companies, may be just as important in boosting activity.
”China has enough firepower to turn the economy around, but obviously it does not want to cause other problems” such as renewed inflation, she said.
”The fourth quarter will see some growth come back. When we say [the economy] has slowed down, it still has 7.5 percent growth; it is just a move from 9 to 7.5 percent. It is too early to talk of a serious [bad debt] situation.”
For foreign banks, even though there can be criticism of the pace of liberalisation, progress still continues. Greater transparency is apparent, Ms Wong said, and while a lot of things may be open to interpretation, ”the situation has improved to what it was five or six years ago”.
Some limitations remain, ”but I think those restrictions will be relaxed gradually”.
”It is moving towards a more level playing field.”