Live Markets: Beijing may have to accept lower growth

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19/07/2024 11:12

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    BEIJING MAY HAVE TO ACCEPT LOWER GROWTH
    The main message from China's Third Plenum meeting is "high-quality development", which
means Beijing is accepting slower growth, while focusing on innovation and cleaning up debt
problems, Tommy Wu, China economist at Commerzbank AG, told the Reuters Global Markets Forum.
    Beijing may not officially downgrade its 2024 growth target below its current forecast of
5%, Wu said, as the leadership would want to show continued confidence, but "realistically
Beijing will have to gradually move the target down."
    Shuyan Feng, portfolio manager at Huatai Asset Management (Hong Kong), expected slower
consumption activity and real estate recovery pace to impact China's growth, expecting a "slight
downside."
    Commerzbank expects China to record 4.7% GDP growth in 2024, and 4% in 2025, unchanged from
their earlier forecast, despite weak second-quarter data released earlier this week.
    "We will certainly review it," Wu said, adding that he was more worried about the rapidly
changing external environment over domestic factors in China at the moment.
    A second "very likely Trump presidency" could pose challenges for China, he said. If former
U.S. President Donald Trump were to return to the White House, "the prospect of new -- and
probably heavy -- U.S. tariffs on Chinese products would trim China’s growth due to weaker
exports."
    Additionally, multinational companies and Chinese corporates could relocate at least some of
their production elsewhere due to escalating trade tensions, he added. "This will also affect
China's growth."
    
    (Divya Chowdhury)
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