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J.P. Morgan's chairman of global markets on China's major economic trends and the next big growth engine.
Editor’s note: The author is the editor-in-chief of the business channel at China’s People’s Daily.
BEIJING, China — One of the biggest economic stories right now is the continuing struggle of the world's biggest growth story of the last decade. China's GDP has slowed to 7.5 percent in the second quarter, marking the 11th slowdown out of the past 13 quarters.
However, the slowdown comes at a time when China is transitioning its economic model, diminishing its reliance on manufacturing for export and government investment in core industries while boosting domestic consumption as a new driver of the economy.
In a time of global recession, will a cooling China continue to power the world economy? What new investment opportunities will emerge from China's much-anticipated economic reform?
As the managing director and chairman of global markets, China at J.P. Morgan, Jing Ulrich is especially qualified to comment on China's economic and investing matters.
Ulrich is regarded as one of the most prominent advisors to some of the world's largest asset management companies, sovereign wealth funds and multinational corporations. She was included in Fortune's 50 Most Powerful Global Businesswomen and Forbes' 100 Most Powerful Women in the World.
She has frequently been voted by global institutional investors as the best China strategist. Her insight directly affects trillions of dollars of assets every year. Her expertise and sources have made her an important figure shaping the international community's approach toward investing in the world's largest and most dynamic developing economy.
Ulrich recently sat down and had an in-depth conversation in Beijing with Zhenyu Li, editor-in-chief of the business channel at the People's Daily, a Chinese government publication.
Interpreting the complex economic issues in a conversational manner, the "Oprah Winfrey of the investment world" shed light on China's economic slowdown, its transition to a consumer-driven economy, the under-the-radar investment opportunities in China, the country's current financial reform and other engaging topics.
Here are excerpts from their conversation, edited and condensed by GlobalPost.
Zhenyu Li: As you know, China has long been the growth engine of the global economy. But the country's GDP growth has been slowing down, which has garnered a lot of attention recently. There are both bullish and bearish views on China's economic outlook.
I know you are known for your candid and accurate assessment of China's economic conditions and trends. So, what is your take on the cooling Chinese economy?
Jing Ulrich: China's economic performance has indeed been closely watched by global investors, because it's the biggest growthstory in the world. Right now, everyone is focused on China's economic data and its growth potential.
I think there's no need to overreact to the slowdown of the Chinese economy. China has been deliberately slowing down the economy to maintain a more sustainable level of growth. Although China's growth rate has been in decline over the last few quarters, it grew 7.5 percent in the second quarter, which is still within expectations. We expect the country's economy will grow 7.4 percent in the third quarter, just a little bit slower than the second quarter. For 2014, we expect GDP growth of 7.2 percent.
Although recent economic data have shown deceleration in growth, we believe the long-term picture for the Chinese economy will be positive. The growth rate should come down in a gradual way and expand at a stable and healthy pace for years to come. The risks of a hard landing in China are small.
Zhenyu Li: How do you see China's role as a global economic powerhouse? Compared with China's double-digit growth in the past decade, China's current economic figures have caused some concern among other economies and global investors. How do you see China's GDP growth rate?
Jing Ulrich: Well, although China's current GDP growth is lower than before the financial crisis, it's still quite high compared to developed markets such as the US and Europe. China's GDP growth is still the fastest among major economies.
At its current stage of development, decades of double-digit growth have become unsustainable for China. It is not only the rate of growth that matters, but also the quality of growth. The current growth rate is slower, but more sustainable over the medium and long term. Such a trend would help sustain growth in Asia and the world.
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