Policymakers expect China’s growth to slow at a sustained rate, perhaps even faster than consensus estimates, calling the transition from an infrastructure and investment-led economy to a consumption-led one “difficult”.
With the crisis in the world’s second largest economy being structural rather than cyclical, policymakers expect it will result in lower global growth prospects but will also help ease inflationary pressures as commodity prices cool. cousins
Takahide Kiuchi, a former Bank of Japan governor, told Reuters World Markets Forum (GMF) that he expects China’s growth rate to slip “below 4% or even below 3%,” adding that this is having a negative impact could affect the global economy.
For his part, Goushi Kataoka, another former Bank of Japan board member, predicted a “bleak future” for the Chinese economy. “The inflation rate in China is around 0%, which means a distortion of domestic demand and supply,” he said.
Service activity in China grew at its slowest pace in eight months in August, amid weak demand. This comes after economic growth in 2022 was one of its worst in almost half a century.
“This certainly poses a risk of a negative external demand shock for Europe and the global economy,” said Boris Vujcic, member of the ECB Governing Council, expressing caution.
The head of the Croatian central bank sees less and less scope for an expansive policy in China and adds: “We have to be careful.”
His partner on the ECB Governing Council, Austria’s central bank governor Robert Holzmann, believes that economic momentum will not return to China as long as his government “remains unsure of which direction to move”.