Tags: Roach | China | growth | 7 percent

Yale's Roach: China Wrestles with 'Downside Pressure'

By    |   Sunday, 23 November 2014 07:56 PM

China's interest-rate cut Friday shows it seeks to keep economic growth from slipping below 7 percent, says Stephen Roach, an economist at Yale University.

The central bank lowered rates for the first time since July 2012.

The economy grew an annual 7.3 percent rate in the third quarter, trailing the official target of 7.5 percent. GDP growth has steadily slipped from 14.2 percent in 2007.

China's government is "doing something on fixing their structural economy that no other major economy in the world is doing," Roach told CNBC.

The growth slowdown results from a "shift in the mix of economic growth from your hyper-
growth sectors of investment, debt-intensive investments and exports to services and internal
private consumption," he said.

"When that occurs in the context of a weaker external [economic] environment, which is obviously the case, China's got downside pressure to contend with," Roach said.

"They're trying to put a floor on the economy somewhere around 7 percent GDP growth."
Other experts too say the rate cut shows government concern about slowing growth.

"This policy announcement is a big surprise, as PBOC [the People's Bank of China] has been focused on monetary easing in unconventional ways," Zhu Haibin, chief China economist at
JPMorgan Chase, wrote in a commentary obtained by Bloomberg.

"This reflects government concern about the near-term growth outlook and the desperate efforts to lower the funding cost for the corporate sector."

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China's interest-rate cut Friday shows it seeks to keep economic growth from slipping below 7 percent, says Stephen Roach, an economist at Yale University.
Roach, China, growth, 7 percent
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2014-56-23
Sunday, 23 November 2014 07:56 PM
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