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Bull in a China shop
The Emerging View
14 March 2014
Amidst yet another bout of fears about China’s future, we set out our views on the outlook for growth, the financial system, China’s public finances, reforms, and the country’s external balances. China is in the midst of a storming change. Interest rate liberalisation is coming as China prepares to let the bond market play an ever-greater role in macroeconomic policy.
Why the need for change? In our view, the export-led growth model of the past few decades is no longer fit for purpose. As the largest holder of foreign exchange reserves in the world China will be more impacted by the unwinding of global imbalances than any other country. Political realities require dramatic change, quickly. We think it is essential to look at China in a dynamic setting. Contrary to the current prevailing sentiment, we like China. We see a country facing up to the world of tomorrow, and adapting instead of merely languishing in denial that belongs to yesterday.