In China’s Commodities Forum & 2017 Mysteel Annual Meeting, Zhang Bin, senior analyst of China Finance 40 Forum (CF 40) and director of Research Department of Global Macro-economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, shared with the attendees his ideas on China’s macro-economy cycle and Chinese yuan’s exchange rate.
Zhang Bin is delivering the speech.
Mr. Zhang noted that China has gone through four short cycles of macro-economy and has left the peak of the fifth one. Indicators like cycle of commercial housing sales, construction starts cycle, and housing price in 70 medium and large-sized cities also follow the trend of the past four short economic cycles. “Economy runs in cycles of growth and decay.” Zhang added.
“The short cycle of China’s economy is driven by credit and real estate”, the senior analyst said, “government demand deposit is higher than that of the enterprise. The capital held in the hand of the government is very likely to be contributed to infrastructure construction.”
Overall, China’s economy is now on a downward path after hitting the peak. In 2017, especially in the second half year, China’s economy will be under downward pressure.
As for China’s foreign exchange market, Mr. Zhang holds that the market in the future will develop under these principles: It will be based on the supply and demand, and pegged to a basket of currencies. Chinese yuan’s interest rate will be kept in a reasonable range.
Based on the comparison between the change in capital flow the year before and after exchange rate reform, the amount of newly added outflow is rather small, but overseas RMB holders reduce largely the holdings, which, according to Mr. Zhang, is not too much related to the surge in China’s property prices.
-Edited by Mysteel.net
-To contact the editor on this report at firstname.lastname@example.org