Executives at a business meeting at the BRICS summit in South Africa said they believe a slowdown in China’s economy could lead to more investment in other emerging economies.
As China’s economic slowdown, weighed down by a real estate slump, rising local debt and rising youth unemployment, rocks financial markets, investors are wondering what impact China’s weak demand will have on commodity markets. I’m trying to find out.
Chinese President Xi Jinping (Pretoria, South Africa, August 22)
Source: Bloomberg
Business leaders who attended a business meeting in Johannesburg said they did not see a dramatic cascade of negative effects from China’s economic slowdown, but rather that it could be positive for other BRICS members. Indicated.
Goldman Sachs Group Inc. strategists echoed the sentiment, noting that the impact of Chinese earnings and stock declines on their peers in other countries has fallen “precipitously” over the past three years. .
“It’s a big opportunity for other countries, especially India,” said Onkar Kanwal, chairman of Indian tire maker Apollo Tires and chairman of the BRICS Business Council. Reform is expected, and overall we are ready to welcome those who want to do business in India.”
The BRICS consists of China, the world’s second largest economy, South Africa, India, Russia and Brazil, but China has an overwhelming presence in the BRICS.
China’s gross domestic product (GDP) is more than double that of the other four countries combined, and the International Monetary Fund (IMF) expects China to grow 5.2% this year despite the recent economic downturn. Although this is less than India’s 5.9%, it greatly exceeds Brazil, Russia and South Africa.
China’s Commerce Minister Wang Wentao attended the business forum on behalf of President Xi Jinping. “The Chinese economy has strong resilience, tremendous potential and great vitality,” read a speech by President Xi on his behalf. “The fundamentals that underpin China’s long-term growth remain unchanged,” he said.
But some analysts say Xi doesn’t have good options to correct the country’s economy, and China’s economy could head for a Japanese-style stagnation after decades of staggering growth. warned. It will be bad news for other countries dependent on exports to China.
Shim Tusiavala, CEO of Standard Bank Group, Africa’s largest financial institution, 20 percent owned by Industrial and Commercial Bank of China, said he expected changes in China’s economy to reshape global supply chains.
“The Chinese economy is clearly shifting, focusing more on consumption than investment,” he said, adding that production in China is becoming more expensive and “this will make Africa the end point of industrialization and value chains.” It’s a good opportunity,” he said.
Amid a real estate recession and a deflationary crisis, the Chinese government has refrained from implementing large-scale stimulus measures.
Source: Bloomberg
Original title:China’s Economic Slowdown Has an Upside for BRICS Dealmakers (excerpt)
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2023-08-23 12:31:12
