WEF Davos 2016 LIVE: “There is a communication issue (about China) which markets don’t like” Christine Lagarde, Managing Director of IMF stresses from Davos

Where Is the Chinese Economy Heading ?: Christine Lagarde

DAVOS/SWITZERLAND, 21JAN16 – Christine Lagarde, Managing Director, International Monetary Fund (IMF), Washington DC, speaks during the session ‘Where Is the Chinese Economy Heading?’ at the Annual Meeting 2016 of the World Economic Forum in Davos, Switzerland, January 21, 2016. WORLD ECONOMIC FORUM/swiss-image.ch/Photo Jolanda Flubacher

At the second day of the World Economic Forum 2016 in Davos the world was anticipating very much the session on China’s outlook and how its growth slowdown affects the entire world. This issue was addressed in a session called “Where is the Chinese Economy heading?” which took place in Sanada room of the Davos Congress Hall.

The panel was moderated by Francine Lacqua, Editor-at-Large and Presenter of Bloomberg Television and among the guests were Jiang Jianqing, Chairman of the Board of the Industrial and Commercial Bank of China Limited, Ray Dalio, Chairman and Chief Investment Officer of Bridgewater Associates LP, Zhang Xin, Chief Executive Officer and Co-Founder of SOHO China Limited, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), Fang Xinghai, Director-General of the International Economic Department in the Office of the Central Leading Group for Financial and Economic Affairs and Gary D. Cohn, President and Chief Operating Officer of the Goldman Sachs Group Inc.

China’s economic outlook

The discussion began by Jiang Jianqing who stated that there is no problem in the Chinese economy which contributed to the world’s economic growth by 6.9% in 2015. Ray Dalio said though that there are four major challenges that are causing volatility in the second largest world economy. Debt, economic, capital market and balance of payments are the challenges that have to be dealt with reforms by the Chinese leadership in order for the economy to flourish. Ray Dalio also commented on this issue like this: “it is a new China”. These adjustments will need two to three years to be fully absorbed by the system and it will have a serious impact on the whole world, not just China. However, he expressed his positivism since China knows the mechanisms to deal with it and succeed in restructuring its economy.

Christine Lagarde then said that China is undergoing a transition period when relying more on consumption and less on investments. It is logical to have a financial noise when the world is not aware of the policy that China is undertaking. “There is a communication issue which markets don’t like”, the Managing Director of IMF argued.

Economic strategy change drags growth down

Fang Xinghai underlined three main reasons behind the current sluggishness of the Chinese growth. Mr Fang agreed with Christine Lagarde on the communication issue and added as reason the economic strategy followed to swift the economy from an investment-led to a consumption-led one. As a last concern, the Director-General of the International Economic Department mentioned the doubts that exist today regarding its implementation.

His personal view though was that the economy is strong and patience is needed in order to allow the system to fully communicate with the market. “We have the strongest leadership in the world; Fang Xinghai stated showing that there is nothing that China cannot overcome.

Zhang Xin remarked that the Chinese economy is doing well in comparison to the stock market and pointed that this is happening because “investors are not getting the right messages”.

Chinese companies

The Chief Executive Officer and Co-Founder of SOHO China Limited stated that the power to increase China’s growth is the private sector. Especially, Ms Zhang said that the undergoing reforms must support the Small and Medium Enterprises (SMEs) and that those companies have to get more funding without necessarily producing profit.

Gary Cohn from Goldman Sachs supported that access to the Chinese companies must be given to people and that it should be the market to decide which enterprises will be public and which are not.

Will China’s policy succeed to overcome market instability?

There was a clear positive view between the participants of the panel that China will succeed in the execution of the necessary reforms and implement the right policies to bring back economic growth and market steadiness. Christine Lagarde noted that patience is necessary during eras of volatility and made three points to be able to help the markets and the economy revive; “clarity of communication, clarity of purpose and implementation of the reforms identified”. Last but not least, Mr Fang urged major economies to cooperate and communicate better and more in order to bring the desire outcome, economic growth.

All in all, the main outcome of this intriguing session is that the Chinese economy is growing (6.9% in 2015 and 6.5% according IMF prediction in 2016) contributing largely to the global economic growth. However, a better communication is mandatory in order to be able to express which policies are going to be undertaken to achieve the economy’s transition from investments to consumption.

Stay tuned from 20 to 23 January as the Sting will be once more producing top class critical LIVE media coverage from the Congress Centre in Davos, Switzerland. 

Join the Hive!

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

Bank resolutions to remain a politically influenced affair

ECB intervenes to clean May’s and Schäuble’s mess

Young students envision turning Europe into an Entrepreneurial Society

No better year for the EU’s weak chain links

ECB settles the bank resolution issue, makes banking union tangible

“Austerity was not the alternative!”, President Hannes Swoboda of the European Socialists and Democrats on another Sting Exclusive

How the Irish people were robbed by banks, the Commission and their own government

“China is the only BRICS country to have either met or possibly slightly surpassed my expectations”, BRICS inventor Jim O’ Neil from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

Alice in Colombia

Oh, well, you are wrong, Google responds to the European Commission

Yanukovych attempts a violent and deadly cleansing of Kiev’s center

Is the EU denying its social character favouring a banking conglomerate?

Eurozone: Retail sales betray economic frailty

A Sting Exclusive: “China is Making Good Stories not Bad Ones”, Ambassador Yang highlights from Brussels

It’s not summer holidays what lead to the bad August of the German economy

ECB offers cheaper money despite reactions from Germany

A Sting Exclusive, the European Commissioner for Energy Günther Oettinger writes for the Sting on “EU Industry: a major energizer”

How did Facebook fool the Commission that easily during the WhatsApp acquisition?

The 28 EU leaders don’t touch the thorny issues

Italy’s rescue operation Mare Nostrum shuts down with no real replacement. EU’s Triton instead might put lives at risk

The EU seals CETA but plans to re-baptise TTIP after missing the 2016 deadline

WEF Davos 2016 LIVE: “You just don’t know if the oil price will be 20$ or 100$ in the next 2-3 years!” top Harvard economist Kenneth Rogoff underscores from Davos

A new proposal breaks the stalemate over the Banking Union

Brussels waits for the Germans to arrive

Exchanges of medical students and the true understanding of global health issues

Warmongers ready to chew what is left of social protection spending

Has Germany rebuffed ECB on the banking union?

Who really cares about the 26.2 million of EU jobless?

EU to pay a dear price if the next crisis catches Eurozone stagnant and deflationary; dire statistics from Eurostat

168 hours left for MEPs – ECOFIN Council to deliver a Banking Union

The consequences of Brexit seen by a European young entrepreneur

MWC 2016 Live: Roshan CEO opens up on Afghanistan challenges

Deutsche Bank again in the middle of the US-EU economic skirmishes

MWC 2016 LIVE: Intel focuses on 5G “beyond the Powerpoint”

Global Citizen-Volunteer Internships

The umpteenth Italian overturn takes Renzi and PD to unprecedented victory at EU elections

EU-US relations on the dawn of the Trump era

Parliament asks for the termination of EU-US bank data deal

A sterilised EMU may lead to a break up of Eurozone

Christmas spending: Who can afford not to cut?

The Social Committee may accept the new ‘contractual’ Eurozone

Germany to help China in trade disputes with Brussels

Will ECB win against low inflation by not following Quantitave Easing?

South Eurozone countries threatened by rising borrowing cost and expensive euro

Lithuania finds the ways to maintain its energy security

EU to fail 2050 Green targets due to lack of European citizens’ engagement

EU’s new environmental policy on biofuels impacts both the environment and the European citizen

To my Chinese friend

Community Manager – 1289

The strong version of the EU banking union gains momentum

How Germany strives to mold ECB’s monetary policy to her interests

A day in the life of a Venezuelan migrant in Boa Vista, Brazil

Schaeuble wants IMF out and bailouts ‘a la carte’ with Germany only to gain

EU-Russia relations: the beginning of a warmer winter?

EU Commission closer to imposing anti-dumping duties on Chinese solar panel imports?

Paris agreed with Berlin over a loose and ineffective banking union

Banks, insurance giants are free again to abuse the real economy

Commission deepens criticism on German economic policies

Commission facilitates the activities of ‘merchants of labour’

More Stings?

Trackbacks

  1. […] is a communication issue,” Lagarde said on a Bloomberg panel on China. On the same panel, Gary Cohn, president of Goldman Sachs, echoed that sentiment, saying “the […]

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s