China is idle. Between sluggish consumption, below-forecast growth, a drop in exports and now entering deflation, the Chinese economy is struggling to restart. Despite the relative confidence of the markets, the indicators “are quite bad” and “send a rather alarmist message”, estimates Christopher Dembik, director of macroeconomic research at Saxo Bank, about BFM business.
The Chinese economy is “massive” and will be difficult to restart without substantial “stimulus”, but China is “not going in that direction”, argues Christopher Dembik. In addition to the “debt problem”, it is in particular the “restructuring of the real estate sector”, “an extremely important engine of growth in China”, which weighs on the country’s activity, he analyzes. Added to this are rising labor costs and geopolitical considerations.
A business “awakening”
On the investor side, “we need to stay away from China today,” he says. After the health crisis, then the tensions with Russia over the war in Ukraine, risk “has become an integral part” of corporate strategy. Today, Christopher Dembik continues, “being heavily exposed to China, especially in the field of supply chains, this poses a problem.”
According to him, “there has been an awakening of the big companies, after a kind of somewhat happy globalization, where we told ourselves that business dominates despite everything.”
Source: BFM TV
