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China says economy improving, but is it?

Monday, March 21, 2016 - 01:42

China's economy is showing signs of improvement, say top officials at a development forum in Beijing. But, as David Pollard reports, the reassurances come amid concerns over a debt pile now at 250% of GDP.

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Waves and smiles from the Chinese premier ... An A-list audience that includes Ford chief Mark Fields and Facebook's Mark Zuckerberg... And an upbeat message too at the China Development Forum. Things are improving, say officials. (SOUNDBITE) (Mandarin) CHINESE VICE PREMIER, ZHANG GAOLI, SAYING: "As long as the Chinese economy doesn't see risks appearing in the financial or business sector, no major issues will appear in the Chinese economy." Even Christine Lagarde of the IMF gave a thumbs up to how China's managing its currency volatility. Economists, though: they're less reassured. A yuan devaluation for one thing, still seen as possible. (SOUNDBITE) (English) CHARLES STANLEY, CHIEF ECONOMIST, JEREMY BATSTONE-CARR, SAYING: "The dollar's recent weakness has taken the pressure off the yuan and risk assets across the world have breathed a sigh of relief as a result. Nonetheless, if the dollar was to strengthen going forward, I think we could still see yuan devaluation going forward, and whilst that might not be a bad policy mix for the Chinese economy, it's probably going to do very little to help the global economy." But officials also claim that capital outflows from China are moderating. Even if a huge debt mountain isn't. China's total debt last year stood at an estimated 250% of GDP. (SOUNDBITE) (English) CHARLES STANLEY, CHIEF ECONOMIST, JEREMY BATSTONE-CARR, SAYING: "Is it a cause for concern? Yes, absolutely. It's one of the major fragilities impacting on the Chinese economy, and there are some indications in terms of default rates ... that it might still be a problem and that the problem might grow." China is seen as having policy options at its disposal - like more monetary easing. But debt was just one of the concerns that led Moody's to lower its China outlook earlier this month. And an official target growth rate of 6.5 per cent plus this year would still see China at its slowest in a quarter of a century.

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China says economy improving, but is it?

Monday, March 21, 2016 - 01:42