HOME > BUSINESS > Worries over China overdone, recovery in progress – Fitch

Worries over China overdone, recovery in progress – Fitch

CHINAFitch Ratings said in a new report that pessimism over China’s short-term outlook is overdone and a growth pick-up in the second half is already in the pipeline.

‘But expectations for the economy’s growth potential in the medium term are shifting lower as the scale of the restructuring challenge becomes clearer,” it said.

Global capital markets have seen big corrections over the last few days over worrying signs that the Chinese economy has slowed down markedly and is unlikely to continue as the world’s growth engine.

China is estimated to account for much of the world’s demand for commodities such as metals. However, the country has developed into an export oriented economy where local people do not like to spend, but prefer to save. This has helped the country’s economy grow in double digits in recent decades.

The Chinese stock market has lost over 30% of its value in recent days.

Fitch expects China’s trend growth rate to decline further as the country adjusts and rebalances.

“One scenario of gradual rebalancing could see the growth rate decline gradually to about 5% on average over 2016-2020. The declining productivity of investment, the cost of supporting China’s high and still-rising debt burden, and emerging pressure on the Chinese yuan and foreign reserves all point to tightening constraints on China’s investment-led growth model,” it said.

Fitch also expects more volatility around the new normal of slower growth, both in real economic activity and in financial markets.

“The authorities have experimented with more volatility in interbank funding markets, real estate prices, and recently equities and the currency. The major exception remains credit, where explicit default remains rare. Continued reluctance to permit explicit default could inhibit the re-allocation of the economy’s resources into new, more productive forms of activity, weighing further on medium-term growth prospects,” it said.

Follow ULTRA.news
India draws closer to US under Modi, to restart ‘COPE INDIA’ The Narendra Modi-led National Democratic Alliance government of India is ramping up defense cooperation with the United States, and will restart COPE INDIA, a mock combat exercise between the US and Indian Air Force.COPE INDIA was first conducted in 2004, and subsequently in...
Expecting waivers, farmers stop paying back bank loans? The write-off of farm loans in Uttar Pradesh and Maharashtra seems to be encouraging farmers in other states to stop paying back their farm loans to make sure that they will get the benefits of any farm loan waiver program in their state. This has led to a sharp increase in farm ...
Xiaomi sells half a crore Redmi Note 4 so far Even as attempts are made to lower the consumption of Chinese products in India by a section of the population, Xiaomi said it has sold 50 lakh units of Redmi Note 4 smartphone in India in six months.A total of 100 mln smartphones are expected to sell in India in 2017, and go...
IT companies using illegal tactics to force workers to resign: FITE The Forum for IT Employees, arguably the IT workers rights organization with the largest number of well-wishers and supporters, accused IT companies of using illegal and unethical means to force their workers to submit their resignations.In a meeting with Maharashtra Chief Mi...
SLOW START: India adds 8.3% of 2017 target solar capacity in three months India added only 827 megawatt of solar power generation capacity in the first three months of the current financial year, indicating a slow start to the yearly program.The addition of the first three months represents only 8.27% of the 10,000 megawatt that it is supposed to c...
Demonetization took India forward by 3 years – SBI The demonetization of currency notes late last year has doubled the number of card transactions and helped push India's payment digitisation by three years, State Bank of India said in a note."Even after seven months post demonetization, the transaction value is quite large ...
Are ‘truly free’ demat and trading accounts here in India with Finvasia? Finvasia, a technology-driven online broking start-up, announced that it has rolled out what it claimed was India's first 'truly' free online demat account for investing in stocks and derivatives, including futures.There have been many 'free demat account' providers in the p...
Raymond opens Ethiopia factory to cut costs, easy access to US, EU Textiles and garments brand Raymond inaugurated a garment manufacturing plant in Ethiopia to gain duty-free access to the US and European markets.The plant was set up at a cost of Rs 100 cr and will employ over 2500 people in the first phase. More people will join later, the...
Glaucus questions stock price of Hong Kong-listed Fullshare Holdings Ltd Glaucus Research Group, a California-based short seller, said it was selling Hong Kong-listed developer Fullshare Holdings due to peculiar trading patterns seen in the stock's counter."Fullshare is supposedly a commercial and residential property developer, but this business ...
Indian IT industry facing layoffs as conditions worsen, warns Assocham Trump unveiled his 'Buy American, Hire American' program yesterdayIndian IT companies are bound to see "some laying off" of their work force back home due to various negative forces impacting the industry, Assocham -- an association of various industries -- warned."With ...
India sets up committee to study Chinese interest in power grid India's ministry of power has set up a committee to examine concerns around the participation of Chinese companies in the country's fast-growing transmission sector.Since large Chinese firms typically have close ties to the Chinese government, concerns have been raised by bot...
US Fed unlikely to reverse quantitative easing this year: HDFC Securities US Federal Reserve BuildingBroking and financial firm HDFC Securities Ltd said it does not expect the US Federal Reserve to start sucking out the liquidity that it has infused into the global financial market in the last nine years any time soon.The comments came in the ...
Rs 1.7 lakh cr deposited via demonetization may not be withdrawn – SBI Monthly cash withdrawals for all banks | source:SBI ResearchThe Indian banking system is likely to get a permanent liquidity boost of Rs 1.7 lakh cr due to the demonetization of high-denomination bank notes, State Bank of India chief economic adviser said in a note to bank c...
Apparel exporters bemoan rising rupee, seek support Apparel manufacturing is a big job creator in Tamil NaduIndian apparel makers have sought government intervention to stabilize the rupee, which has been rising in recent months, in stark contrast to the situation in other countries that compete with India in exporting garmen...
Smuggling down on Indo-Bangladesh border, up on Bhutanese side Incidents related to smuggling of fertilizer and narcotics on the Indo-Bangladesh border fell sharply in 2016, but there was a compensatory increase in drug smuggling cases along India's border with Bhutan and Nepal, according to data from the Union Home Ministry.Fertilizers ...
Yes Bank denies billion dollar QIP rumors Yes Bank, one of India's youngest, and fastest-growing banks, said it had no plans to go for a billion-dollar qualified institutional placement of its shares as reported by the media.The bank had tried to do a mega share sale in September last year, but the effort didn't find...
SEZ exports eligible for rewards under MEIS and SEIS schemes SEZ exports are now eligible for scripsThe government has extended the rewards under its merchandise and services export from India schemes to units located in special economic zones.Special economic zones are areas -- usually located close to seaports or airports -- whe...
Can’t block imports of cheap chinese solar panels – Nirmala Seetharaman The government of India said it cannot seek to slow down imports of solar power generation equipment from China as it has to watch out for the interests of Indian consumers as much as those of Indian industrialists.Responding to questions from the opposition in Lok Sabha ...
After missing twice, India comfortably meets power sector targets for 12th five-year plan After missing its targets by wide margins in the previous two five-year plans, India is all set to comfortably meet or exceed all its power sector targets for the 12th five-year plan that ends this month.Five-year plans, borrowed from the Soviet Union, are a legacy of Nehruvi...
Wholesale price inflation hits 3-year high on high diesel prices High fuel prices, particularly that of diesel, lifted India's wholesale price index to its highest level since the Narendra Modi government took power almost three years ago.On an overall level, wholesale price of various items jumped 6.55% in February when compared with ...
No immediate plans for universal basic income: Indian Government India's welfare budget, 2016-17The Indian government has no immediate plans or proposals to institute a scheme of 'unversal basic income' in place of the myriad social welfare scheme run by the country at present, the finance ministry said in response to a query.The clar...
Gadkari to miss ambitious highway target for 2016-17 Nitin Gadkari, who is slowly building up a reputation as a pragmatic and capable minister, is likely to face major disappointment in the ongoing financial year as his ministry is unlikely to meet the steep road construction target it set for itself.Unlike the term of the ...
Stock markets pricing in a BJP win in Uttar Pradesh – analyst Officials tally votes in a recent electionThe recent strength in India's key stock market indices indicates that market participants are pricing in a victory for the Bharatiya Janata Party in Uttar Pradesh, according to an stock market analyst.India's largest state has b...
DEMONETIZATION: SBI sees GDP growth fall to 6.1%, miss govt projection of 7% The country's largest bank, State Bank of India, said today that it expects the growth in India's gross domestic product to fall to 6.1% or lower in the current year from 7.9% last year due to the impact of demonetization.It said the projection by government of India's Centra...
ViVo, Oppo, Xiaomi need cheaper smartphone models to grow in India in 2017 China's LOVE brands -- Lenovo, Oppo, Vivo and Xiaomi -- will have to introduce cheaper models in 2017 to continue their strong growth in India, CyberMedia Research said in a report.The reason? India's replacement and upgrade market -- Rs 10,000-13,000 -- will no longer be...