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

EU Commission retracts on the Chinese solar panel case

Greece did it again

Greece: The new government of Alexis Tsipras shows its colors

Chinese economy to raise speed and help the world grow

Ahead of State of the Union the European Youth Forum highlights lack of action on youth employment

Minsk “ceasefire” leaves more doubts than safety, with EU already planning steps further

Far from a healthy Health Workforce: lack of workforce planning leaves our citizens without access to proper care

On Youth Participation: Are we active citizens?

Syria: Why did the US now take the Russian offer for a truce? What next?

ISIS fighters fleeing Mosul for Syria can topple Assad. Why did the US now decide to uproot them from Iraq?

An introduction to ‘Eco-Medical Literacy’ and its importance in shaping expert medical professionals

Council Presidency: Floundering with the EU 2014 budget

Commission to decide definitely on genetically modified Maize 1507 seed

The European Parliament x-rays the troika’s doings

Commission considers anti-dumping duty on Chinese solar glass imports

MWC 2016 LIVE: The top 5 themes of this year’s Mobile World Congress

ECB offers cheaper money despite reactions from Germany

Who threatens the lives and livelihoods of Ukrainians?

Nigel Farage and Boris Johnson: who forced the two ‘brave’ Brexiteers to quit?

Does the EU want GMOs and meat with hormones from the US?

Politics still matter in the US but not in Europe

Entrepreneurship in a newly shaped Europe: what is the survival kit for a young Catalan and British entrepreneur in 2018?

TTIP: why it is worth not to pull the covers over your head?

The Eurogroup protects Germany and blames others

Tsipras imposes more austerity on insolvent Greece; plans to win new early election soon

A new world that demands new doctors in the fourth industrial revolution

EU seems to fail its moderate migration promises postponing them for end 2015

Bankruptcy or referendum: which one is going to be first?

Public opinion misled by the Commission on air transport safety

EU Summit’s major takeaway: a handkerchief cannot save Greece from austerity

Access to ‘affordable’ medicines in India: challenges & solutions

Mobile 360 Africa 11-13 July 2017

A Sting Exclusive: “Regional Policy: a fully-fledged investment policy”, Commissioner Cretu reveals live from European Business Summit 2015

IMF asks Europe to decide on bank resolutions and the Greek Gordian knot

Who is to profit from the quasi announced ECB rate cut?

EU Commission: Germany can make Eurozone grow again just by helping itself

Bitpay @ TheNextWeb 2014: Innovation’s Best Friend

Innovation and Entrepreneurship Changing the Face of Europe

Education expenditure in the EU not hurt much by crisis

Love unlimited

Will Europe be able to deal with the migration crisis alone if Turkey quits the pact?

Brexit update: Leave campaign leads race but undecided voters will determine the outcome of the EU referendum

Drowning in the Mediterranean this summer? Many happy returns

The Brussels bureaucracy blocks the Youth Guarantee scheme

EU Top Jobs summit ended with no agreement: welcome to Europe’s quicksand!

Does the world have strong enough institutions to handle risks like Trump and Brexit?

GSMA Mobile 360: Connecting Cities, Connecting Lives, Connecting Europe

G20 LIVE: “ISIL is the face of evil; our goal is to degrade and ultimately destroy this barbaric terrorist organisation”, US President Barack Obama cries out from Antalya Turkey

Refugee crisis: Commission proposes a new plan urging EU countries to help Italy

France: New labour laws for more competitiveness

Merkel’s triumph will make Berlin more unbending

A new arrangement between Eurozone’s haves and have-nots

European Business Summit 2015: In search of a vision for the future

France sneaks into the Geneva US-Iran talks to claim its business share in Tehran

A Sting Exclusive: “There can be no global deal on emissions without China and the USA”, Conservative MEP Ian Duncan stresses from Brussels

UK economy in dire straits: leading banks now officially plan to Brexit too

European Youth Forum on Summit on Jobs and Growth

The West and Russia accomplished the dismembering and the economic destruction of Ukraine

Greece: Tsipras’ referendum victory does not solve the financial stalemate of the country and its banks

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