China’s slowdown should not be seen as a sign the world’s most populous nation is headed for economic instability, says global asset manager AB.
Anthony Chan, Asian sovereign strategist at AB (formerly Alliance Bernstein), has issued a white paper watering down panicked responses to a Chinese growth slowdown from “some observers”, assuring global investors the Chinese economy has a solid outlook.
“Recent data suggest that the Chinese economy is now solidly entrenched in the new normal slower-growth era,” Mr Chan wrote. “Key growth engines such as industrial production and fixed-asset investment have slowed to decade-low paces, while retail sales and housing investment have decelerated to their lowest growth levels since the global financial crisis.”
However, while the outlook is perhaps less rosy than it has been over previous years, “panic will only set in if the job market starts to creak”, Mr Chan continued.
“So far, employment looks fairly stable, based on published official data and anecdotal evidence,” the white paper said.
“At least, no abrupt, mass layoffs like the ones seen in the aftermath of the 2008/2009 global financial crisis have been observed.”
The pivot to a services-based economy will be crucial for continued Chinese growth, it said.