China’s biggest problem is lack of confidence: CEO of Standard Chartered

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China's new economy is 'booming,' Standard Chartered says

DUBAI, United Arab Emirates – There is a lack of confidence in China as its economy undergoes a major transition and concern grows over its ongoing property crisis, a top banking CEO said while on stage at the -meeting of World Governments in Dubai.

“China’s biggest problem for me is lack of confidence. External investors in China lack confidence and domestic savers lack confidence,” Bill Winters, CEO of markets-focused bank Standard Chartered, told CNBC’s Dan Murphy on Monday during a panel discussion .

“But I think China is going through a big transition from the old economy to the new economy,” Winters said. “If you visit the new economy, which many of you have – I have – it’s thriving , absolutely thriving, well into double-digit growth rates and in everything related to EV, the entire supply chain, everything related to sustainable finance and stability, etc..”

Investors are keeping a close eye on China, whose stock market volatility, deflationary problems and property woes are casting a shadow over the global growth outlook. According to a report from the International Monetary Fund completed at the end of December 2023, demand for new housing in China is expected to fall by around 50% over the next decade.

A reduction in demand for new housing will make it harder to absorb excess material, “extending medium-term volatility and weighing on growth,” the report said. Property and related industries account for about 25% of China’s gross domestic product.

IMF chief: China must show determination to undertake economic reforms

IMF Managing Director Kristalina Georgieva, speaking to CNBC in Dubai on Sunday, emphasized what she saw as the need for reforms from Beijing to stop its economic challenges.

The international lender has discussed with China “long-term structural issues that the country needs to address,” Georgieva said. “Our analysis shows that without deep structural reforms, growth can in China fall below 4%. And that will be very difficult for the country.”

“We want to see the economy really move more towards domestic consumption, and less reliance on exports… but for that, [they need] consumer confidence,” she said, echoing Winters’ comments about domestic confidence. being essential.”

Standard Charters’ Winters, meanwhile, is finally optimistic about the world’s second largest economy, pointing out that it is inevitable that all societies that have undergone economic transition will great experiencing a level of annoyance and growing pains.

“They are trying to manage this movement without disrupting the financial system, which we have never succeeded in doing in the West,” said the CEO. major business has been associated with depression, or global financial crisis. They are trying to avoid that which means that he will be dragged out. I think they’ll get through the back end just fine.”

— CNBC’s Evelyn Cheng contributed to this report.

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