Will China lead the world into another 2008 crisis or will they spend their way out of trouble?
Comment of the Day

April 28 2022

Commentary by Eoin Treacy

Will China lead the world into another 2008 crisis or will they spend their way out of trouble?

Thanks to a subscriber for this article from the Financial Times which may be of interest. Here is a section:

Weijian Shan, whose group PAG manages more than $50bn, said his fund had diversified away from China and was being “extremely careful” about its portfolio in the country.

“We think the Chinese economy at this moment is in the worst shape in the past 30 years,” he said in a video of a meeting viewed by the Financial Times.

“The market sentiment towards Chinese stocks is also at the lowest point in the past 30 years. I also think popular discontent in China is at the highest point in the past 30 years.”

In the video, Shan said that large parts of the Chinese economy, including its financial centre Shanghai, had been “semi-paralysed” by “draconian” zero-Covid policies and that the impact on the economy would be “profound”.

“China feels to us like the US and Europe in 2008,” Shan added. “While we remain long-term confident in China’s growth and market potentials, we are very cautious towards China markets.”

Eoin Treacy's view

It seems like every central bank is chasing a soft landing. China used the pandemic induced boom in demand for exports to initiate a cleansing of the Augean stables. By clamping down on property development and private equity investment in technology, they hoped to reorient the economy to sectors that would further the dream of becoming a self-reliant global superpower.

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