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Ekonomické zprávy
20.10.2021

China needs new growth engines as property drags down economy - analyst

CNBC reports that Leland Miller, chief executive of the China Beige Book, said that China’s property sector slowdown is hitting economic growth — and it’s not clear there are new growth drivers to pick up the slack.

“The major risk going forward is that as the party intentionally ... deflates the property sector, what is the growth driver that will at least set a floor on growth? Nobody knows yet,” Miller said.

“They hope it’s consumption, but it’s not consumption yet,” he added.

Beijing has stepped up efforts to rein in heavily indebted property developers as it wants to move away from an investment-led and debt-fueled economic growth model.

At the same time, China has not made enough progress to transition to a consumption-led economy, said Miller. He said structural changes that could boost consumption — such as strengthening the currency and increasing the social safety net — remained absent in China.

“Yes you’ve seen a fall off in investment in the past several years, but you haven’t seen consumption pick up. So right now, this is a goal but it’s one that’s not being worked toward — it’s no where near in the data and I think this is a major concern going forward,” said Miller.

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