StanChart bullish on China’s growth outlook
Lending giant sees opening-up, pro-biz measures as key to unleashing potential
Standard Chartered PLC is very sanguine on China’s economic outlook over the medium to long term, while some downsides such as the sluggish property market are shortterm and “normal” phenomena amid the country’s ongoing economic transformation and upgrades, said Bill Winters, CEO of the financial major.
Winters said that China’s financial opening-up creates valuable business opportunities and development dividends for the bank.
“We agree that the growth rate for China this year will be around 5 percent, and the economic data in the early part of the year is reassuring in that regard,” he said, adding there are some negatives including subdued property investment and sales, but “electronics, the electric vehicle supply chain and everything in green tech are growing extremely fast”.
His remarks came amid the country’s efforts to stabilize economic growth through measures including expanding effective investment and fostering new quality productive forces, which led to better-than-expected January-February economic data.
The country’s industrial output grew 7 percent year-on-year during the period, following a 6.8 percent rise in December. Fixed-asset investment increased 4.2 percent year-onyear during the same period, compared with 3 percent annual growth for 2023.
“We would expect that things that are growing at a negative rate would stabilize, and the new economy sectors, or the new quality productive forces, will continue to accelerate. So we’re very optimistic about the Chinese economic outlook in the medium to long term,” Winters said in Beijing before the twoday China Development Forum which wrapped up on Monday.
“The short-term pressures are real but will pass. Consumer confidence is beginning to come back. We’re seeing that export volumes are beginning to recover. We see that the equity market is beginning to improve, too,” he added.
Jerry Zhang, China cluster CEO (China and Japan) at Standard Chartered, said that the latest version of a regularly released development index on small and mid-sized enterprises by the bank bounced to a 10-month high of 51.6 in March, as activity gained momentum after the holidays. The subindices for key performance and expectations of SMEs rebounded sharply in March, while their access to bank credit became easier.
“This year we believe will be a year of strengthening recovery (for the Chinese economy). There will be challenges, but also many opportunities. We have good reasons to be optimistic,” Zhang said.
Winters said Standard Chartered will increasingly focus on new economy sectors to further tap potential in China. The executive also said that the lender is benefiting from China’s continued opening-up.
“Everything we’ve seen is very supportive to the opening-up agenda, but in a thoughtful and careful way,” he said, adding the bank is able to “work extremely well with both the Chinese government and Chinese clients as the opening-up agenda is pursued”.
Over the years, Standard Chartered has well positioned itself for China’s opening-up, including making substantial investments in crossborder payments, Winters said.
Its fully developed interest rate and currency risk management and trading team in China can facilitate clients’ cross-border payments and cross-border investment flows, and it also has a strong presence in China’s important trading partners.
“Our role is to help facilitate the flow of goods and capital back and forth between China and other markets,” he said.
Speaking about foreign investor sentiment in China, he said: “Some foreign companies in other industries have had fantastic success in China and we see substantial ongoing interest in investing in China, both to tap into the very strong technical capabilities here, the highly educated labor force and the Chinese consumers.”
Meanwhile, it is a fact that factors including disruptions to supply chains during the COVID-19 pandemic have caused some investors to pursue diversification in supply chains. Yet such diversification doesn’t mean leaving China, he said, adding some companies leave because the Chinese market is an extremely competitive one.