Finance & Economics

Standard Chartered CEO Says About China’s Biggest Problem

Bill Winters, CEO of Standard Chartered Bank, said during a speech at the World Government Summit in Dubai that China is currently facing a lack of trust, which, in his opinion, is the most serious poser in the context of economic problems of this Asian country.

Standard Chartered CEO Says About China's Biggest Problem

Mr. Winters also noted that the mentioned state’s economic system is currently undergoing a large-scale transition period. Separately, he drew attention to the crisis in the Chinese real estate sector, against which concerns that demonstrating a trend of growth are forming. It is worth noting that in this case, the anxious moods extend to the vision of the overall prospects of the Asian country’s economy, without remaining within one of its segments.

Bill Winters on Monday, February 12, during a conversation with reporters, said that external investors lack confidence in China. Also, according to him, domestic savers are currently showing a low level of trust. The CEO of Standard Chartered says that the problem of confidence is the main one for Beijing in the context of its efforts to improve the economic situation.

The financial institution headed by Mr. Winters is focused on emerging markets.

The CEO of Standard Chartered believes that China will be able to survive a serious transition from the old economy to the new one. According to him, the economic systems of the new formation are flourishing, demonstrating double-digit growth rates. Also in this context, he noted the successes in the industries related to electric vehicles, sustainable financing, and sustainable environmental friendliness.

Currently, investors are closely watching China. In the Asian country, there are not only problems such as a lack of trust and a crisis in the real estate sector. Beijing is also facing other negative circumstances, including deflation and stock market gyrations. China’s problems significantly worsen the prospects for global economic growth. A report by the International Monetary Fund published at the end of December predicts that the level of demand for new housing in the Asian country will decrease by about 50% over the next decade.

A drop in consumer activity in the real estate sector will make it difficult to absorb excess inventory. This circumstance prolongs the adjustment in the medium term and puts pressure on economic growth. The relevant statements are contained in the IMF report. Real estate and related industries account for about 25% of China’s gross domestic product.

IMF Managing Director Kristalina Georgieva, during a speech at an above-mentioned event in Dubai, said that, in her opinion, Beijing needs reforms to solve its economic problems. She also noted that the international lender discussed with China the long-term structural problems that the Asian country must deal with. According to her, without deep reforms, Beijing may face a drop in economic growth below 4%. Kristina Georgieva noted that the process of implementing such a scenario will be a very difficult period for China.

The IMF Managing Director said that the international lender wants to see that the Asian country’s economic system is more focused on domestic consumption and less dependent on exports. At the same time, Kristalina Georgieva noted that the corresponding state of affairs is possible with the trust of consumers. She said that Beijing needs to normalize the situation in the real estate sector and get in place a pension system.

Bill Winters is generally positive about the prospects for the Chinese economy. According to him, every society that has experienced a serious economic transition inevitably faces certain shocks and the problem of growth. The head of Standard Chartered says that Beijing is trying to manage the specified transition, which the West has never been able to do.

Bill Winters noted that every fundamental industrial transition entails a major depression or global financial crisis. According to him, Beijing seeks to avoid the mentioned costs, which means that the transformation process will be longer. Mr. Winters believes that China will cope with the current challenges.

As we have reported earlier, China Cuts Banks’ Reserve Ratio.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.