Manufacturing is – as planned by the central government – down, but services and consumption will keep economic growth for the rest of this year at 6.4, 6.5% says business analyst James Roy to Money Control.
Latha: I was wondering whether you will worry about the fact that loan growth has almost doubled to 1.3 trillion yuan as our guests have been telling us. There have been huge problems or huge worries over Chinese indebtedness and the problem of bad loans not being addressed not even being recognized, will this growth in loans be something that markets will start worrying about in the days to come?
Roy: I think we could see loan growth worries continuing to increase going forward. But in terms of the consumer component of the economy, we still are seeing very strong signs here. Bad loans have had been an issue in China and if they are not addressed, they can continue to be pretty serious drag on the economy. So, I think they will see increased attention to this going forward.
Reema: We know that the Chinese government is trying to move the economy from manufacturing to consumption. Does the recent data including this throw any light and how much of the growth in account of manufacturing and how much of it is in account of the new focus area of consumption and services?
Roy: Yes, so manufacturing has been slowing for some time now and it is at around 6 percent or slightly lower now while you are seeing consumption at a higher level at around 8 percent, agriculture down closer to 4 percent, but now services for the first time ever in China greater are than 50 percent of GDP. So you are now seeing services and consumption account continue to be the main drivers for Chinese growth going forward.
E-commerce is one of the services boosting China´s growth. Are you interested in having more e-commerce experts as a speaker from the China Speakers Bureau? Do check out this list.
One of the sources of growth is going to be the merged conglomerate of Beijing, Tianjin and Hebei Province. Journalist Ian Johnson discusses the emergence of this megacity.