The Chinese economy will “muddle through” and defy a downturn in its property market, the Asian Development Bank’s chief economist has predicted while arguing that Australia’s biggest trade partner needs to increase competition to weed out poorly performing firms.
Last week, the Reserve Bank used its six-monthly review of the financial sector to note that stresses in China’s property sector could spread to the rest of its economy, its financial system and through to the rest of the world. “A lot of doomsaying about the Chinese economy is way overdone. The most likely scenario is that they’ll muddle through to some extent,” he told this masthead.“All of the talk about deflation, a year of Japanese-style decade of lost growth, I think that’s not going to happen.”
Park said a long-standing issue for Chinese authorities was the conservative nature of consumers and the heavy investment of the government in supply-side responses to economic slowdowns.
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