According to a JP Morgan piece discussed on CNBC by Weizhen Tan, the Chinese economy is slowing and the measures that Beijing is putting in place are “ineffective” in turning things around. In this piece by JP Morgan, penned by Alex Wolf, “So far the measures they`ve taken have been fairly, fairly ineffective, they have not really produced the rebound in economic growth, and they have not really produced the rebound in confidence either.”
Mr Wolf makes it clear that there are attractive stocks in China that, due to the massive sell0-off are somewhat attractive, but he suggests that investors be wary. He points out that in recent years, Chinese officials have encouraged extensive stimulus to keep the economy moving forward, but now there are exceptionally high debt levels and there are signs that Beijing is now moving with caution. The credit explosion, which authorities have pledged to contain, stoked worries about financial risks – there are concerns about the future of the economy saddled with this amount of debt.
It seems that one long-term investor who intends to be in China for decades to come is Elon Musk as he is building a factory there. This will be a wholly foreign-owned factor that will follow the stated goal of Tesla, to build out production in the future. Still, short-term over the next 5 years, China growth is likely to slow….
Chinese officials said that the economy faded to 6.6 percent GDP expansion last year, making this the slowest growth in 28 years. The key concern now is the trade pressures with the US that are clearly having some negative impact on the Chinese economy. Many analysts feel that the first half of 2019 will prove to be weaker still.