China on road to new normal
Updated: 2015-10-08 10:55
By Seres Lu for China Daily(China Daily USA)
"It's just like when you are taking a turn in your car, you have to slow down to do it smoothly," said Ma Weihua, former executive director, president and CEO of China Merchants Bank.
"That's the Chinese economy right now, we have to slow down to transition smoothly."
Speaking at the Waldorf Astoria on Wednesday evening, Ma outlined his thoughts on the current state of the Chinese economy, which has entered what he called a "new normal."
Drawing from his 14 years at the helm of the China Merchants Bank, which began as a small regional bank in Shenzhen and expanded to become the sixth largest bank in China and the 44th largest in the world under his tenure, Ma intertwined insights into the economy with targeted advice for the financial industry.
"China's economy was the envy of the world, and it enjoyed rapid development for the past few decades, but a lot of the factors that supported that growth are no longer there," said Ma.
He cited a shortage of labor, diminishing global opportunities and the growing scarcity of land as some of the reasons why China cannot, and should not, be expected to grow at the same rate it once did.
Yet he insisted this wasn't cause for pessimism. "These are inevitable challenges, but they are not all formidable, and certainly not insurmountable," said Ma.
The former banker has also served in China's public sector, holding multiple government positions including deputy secretary general of the Economic Planning Committee of Liaoning province.
Ma discussed the demographic changes in China. With the Chinese population aging rapidly, there is ever-greater need for services, both social and financial, that he said can add considerably to the economy.
At the same time, China's young find themselves in a decidedly different economic environment than their parents'. Ma said they have grown up "the kind of people that will spend and invest when they have money, and overdraft when they don't."
He called it an optimistic picture of a population better described as a consumption economy rather than a savings one, and that's exactly what many experts have said China will need in order to propel its economic engine.
"There are a lot of changes and opportunities happening in China," Ma said. "The slowdown is expected by the Chinese government because the emphasis is on making sure we can achieve a smooth transition."
His talk came at a time of increasing concern over China's economy following the
summer's stock market turmoil, when markets worldwide waited to see whether the Chinese government would take action.
While economists remain split on the government's intervention in the economy, Ma is certain on this front.
"There were systematic problems, and I don't think it is enough to rely solely on the forces of the market," he said. "There will always be room for regulation, but that doesn't mean China's direction for greater market development changes. We are still aiming toward market democratization and innovation."
The lecture was hosted as part of the Sir Gordon Wu Distinguished Speaker Forum, run by the Columbia Business School's Chazen Institute of International Business.
(China Daily USA 10/08/2015 page2)
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