China will lead Asian expansion: IIAC

There’s no shortage of analysts forecasting a slowing of Chinese economic growth, says Ian Russell, president and CEO of IIAC, in an industry letter.

He adds, “The export model appears to be faltering, with domestic demand apparently unable to fill the gap. [This results in] social unrest and instability [that] could exacerbate the slowdown.”

However, news of the possible slowdown isn’t what headlined the Asian Financial Forum that occurred last month.

Read: Don’t bet on a China slowdown

Instead, Russell says the delegates were “surprised [by] the conclusions drawn from the many presentations at the two-day conference, [which] point to an optimistic near-term outlook.”

He adds, “Economists’ pessimistic growth forecasts for China have rarely proven correct…Many of the speakers and panelists at the conference expected growth in China to stay in the 8-9% range this year—a significant harbinger since the forum is one of the foremost global conferences analyzing financial and economic trends in the Asian region.”

Read: Will China’s economy improve?

These experts predicted strong growth this year, as well as continued demand for resources, machinery and equipment, and finished goods. They also boldly stated, “China will be the engine of growth in East Asia, and will shape the financial and economic landscape in Asia and the global economy.”

They gave four reasons for their optimism, says Russell, which were:

• The export sector will drive growth despite rising labor costs and alleged eroding competitiveness.
• The growing middle class will boost consumer and investment spending
• Inflation is under control and fear of a property boom has subsided
• There will be adequate spending stimulus to supplement weakening demand

“Though there are risks to any forecast,” says Russell, “the likelihood is that strong growth will continue in China in the coming year. It’s important to recognize this not only means an expanding Chinese economy—already 40% larger than four years ago—but an increasingly sophisticated and modern China.”

He adds, “[Strong] investment flows will complement capital flows into the thriving and competitive export sector, and a…growing China will exert significant influence on trade and investment flows in international markets.”

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