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Comment on how the £50 billion Chinese bank injection will help provide future sustainable growth Print E-mail
Tuesday, 23 September 2014

Commenting on the People's Bank of China (PBOC)’s move to inject £50 billion (CNY500 billion) into the top five Chinese banks, David Stevenson, Head of Product and Business Development at Baring Asset Management, said:

“We welcome the move by China’s central bank to inject £50 billion into the banking sector as part of its ongoing strategy to move loans from the shadow banking sector into the official banking channel and a liquidity boost of this size evidences the government’s commitment to this initiative. China has received a lot of criticism from across the globe regarding the threat of slowing economic growth relative to the record growth rate it’s experienced over the past two decades but in the same breath to also move the economy to a more sustainable consumption led model – the two don’t necessarily go hand-in-hand in the short term as there are frictional losses to growth as you transition any economy. In our view the Government continues to manage this transition in a highly controlled and committed manner through various initiatives including the recent liquidity boost. We view this as part of the Government’s economic reform plans for sustainable growth rather than a sign of distress.
 
“The transition to a consumption-led economy is well underway as indicated by the successful, recent IPO of Alibaba, and will help spur long-term growth for China. We’re investing in some very exciting companies in areas such as automation, IT, Western medicine, hospitality, media, private medical care and financials which are directly  benefiting from the transition as well as a more open market model.”

(Source - Baring Asset Management Press Release)
 

 

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