Various salient points were discussed about China’s economic growth moving forward at the media roundtable by Schroders. According to Schroders Associate Investment Director Dionne Cheung, China has structural problems that are not present in the west.
For starters, unemployment rate among the youth is high, mainly due to a softening software and education market which were key absorbers for employment. Since 1994 to 2019, private enterprises has provided the most employment opportunities, followed by state-and collective-owned, and finally, foreign companies.
Cheung said consumer sentiment in China remains weak since the majority of the population hold real estate, and the falling property prices is a significant dampener to their wealth.
The good news here is that there is much capacity and room for improvements. Cheung suggested some solutions such as the Chinese government restoring confidence in the private sector.
Policy clarity can be improved to reduce uncertainty in the business landscape so that business people could make economic decisions with certainty. Government should indicate the sector they plan to support through clear indications by providing tax incentives.
To restore consumer sentiment, the government should take robust policy measures to increase property demand. For example, mortgage rates can be reduced and purchase restrictions minimised.
Further on, Inflation in China is relatively low when compared to the west. The Chinese government may interest rates to stimulate more investments.
