China’s biggest problem is a ‘lack of confidence,’ Standard Chartered CEO says

DUBAI, United Arab Emirates — China is dealing with a confidence deficit as its economic system undergoes huge transition and concern grows over its ongoing property disaster, a prime banking CEO mentioned whereas onstage at Dubai’s World Governments Summit.

“China’s greatest drawback to me is a insecurity. Exterior traders lack confidence in China and home savers lack confidence,” Invoice Winters, CEO of rising markets-focused financial institution Commonplace Chartered, advised CNBC’s Dan Murphy Monday throughout a panel dialogue.

“However I feel China goes by way of a significant transition from outdated economic system to new economic system,” Winters added. “When you go to the brand new economic system, which a lot of you’ve — I’ve — it is booming, completely booming, properly into double-digit development charges and in all the pieces EV-related, the entire provide chain, all the pieces sustainable finance and sustainability associated, and so on.”

Buyers are carefully watching China, whose inventory market gyrations, deflation drawback and property woes are casting a shadow over the worldwide development outlook. In accordance with an Worldwide Financial Fund report accomplished in late December 2023, demand for brand new housing in China is ready to drop by round 50% over the subsequent decade.

Decreased demand for brand new housing will make it more durable to soak up extra stock, “prolonging the adjustment into the medium time period and weighing on development,” the report mentioned. Property and associated industries account for about 25% of China’s gross home product.

IMF Managing Director Kristalina Georgieva, talking to CNBC in Dubai on Sunday, harassed what she noticed as the necessity for reforms from Beijing with a view to stem its financial challenges.

The worldwide lender has mentioned with China “longer-term structural points that the nation wants to deal with,” Georgieva mentioned. “Our evaluation reveals that with out deep structural reforms, development in China can fall beneath 4%. And that will probably be very tough for the nation.”

“We wish to see the economic system genuinely transferring extra in the direction of home consumption, and fewer reliance on exports … however for that, [they need] confidence of the buyer,” she mentioned, echoing Winters’ sentiments on home confidence. “And meaning repair the true property, get the pension system in place, in addition to these longer-term enhancements within the fundamentals of the Chinese language economic system, can be needed.”

Commonplace Charters’ Winters, in the meantime, is finally optimistic concerning the world’s second-largest economic system, stating that each society that is undergone main financial transition inevitably experiences some stage of tumult and rising pains.

“They’re making an attempt to handle this transition with out disrupting the monetary system, which within the West, we have by no means managed to do,” the CEO mentioned. “Each huge industrial transition has had a significant despair related to it, or international monetary disaster. They’re making an attempt to keep away from that which implies it will get dragged out. I feel they’re going to get by way of the again finish simply high quality.”

— CNBC’s Evelyn Cheng contributed to this report.