Video Webcast

60 seconds with Rajeev De Mello on the China conundrum


Rajeev De Mello

Rajeev De Mello

Head of Asian Fixed Income

Well, China has been slowing down and we've seen this decline in the growth rate over the last couple of years. There's a lot of concern right now in markets about how far that will go, and at what rate China will finally stabilise. In the meantime, we've seen quite a few policy actions – China's cut interest rates, has started to boost its fiscal spending and is talking about doing more, and is arresting a bit of the decline in the property prices, which was engineered as property prices had got out of hand a few years back. So, we've seen policy support but we still have a lack of confidence by domestic investors, as well as foreign investors.

Domestic investors are tending to take their money out of the Chinese local currency, the renminbi and put it into dollars, and that's creating a bit of concern around the currency. And, so that is one of the big worries that we face right now. We've had some volatility in the equity market, which has less impact on Chinese growth, but that does translate into some concern about what policy makers can do. All in all, we do think that Chinese growth is stabilising, but it will be a very gradual process and asset classes have to be chosen which will cope with that gradual recovery.

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