Fears About China’s Economy Fester at Davos
By ALEXANDRA STEVENSON

DAVOS, Switzerland — At the World Economic Forum here, chief executives and investors are blaming China for a slump in global markets.

Fears about the country’s downshift, as its official growth slowed to a quarter-century low, have dominated high-level discussions, both during public debates and in smaller, private meetings.

The financier George Soros said at a dinner on Wednesday night that a “hard landing is practically unavoidable,” adding that China is the root of the current financial crisis.

But behind the gloom and doom a more complex picture is emerging among the global elite in this Alpine ski resort. Some of it is coming from those who have lived or worked in China.

Melissa Ma, the founder of the $6.8 billion private equity firm Asia Alternatives, is one of them. “In Davos, there is a gap between perception and reality. If you’re on the ground in China, you’re not worried,” Ms. Ma said. Asia Alternatives, which is based in Beijing, invests across Asia, with about half of its portfolio in China.

China’s most influential executives could be seen this week in Davos, including Zhang Xin, the chief executive of the real estate developer SOHO China; Ya-qin Zhang, the president of the search engine giant Baidu; Jiang Jianqing, the chairman of the Industrial and Commercial Bank; and Jack Ma, the founder of Alibaba. These leaders have stepped in to argue for a more nuanced view on China.

Some have defended China’s potential for growth as Western participants voiced concerns and doubts. Neil Shen, a veteran venture capitalist and one of China’s most successful entrepreneurs, told one panel discussion about the evolution of Chinese industry, that Chinese companies were already competing in their own right in industries like smartphone manufacturing.

Within the arena of financial markets, Chinese and Western leaders alike argued that the fears demonstrated in rocky markets were overstated. Last week, stocks moved into bear market territory — which occurs when stocks are down more than 20 percent from a high — in large part on the news of China’s disappointing 2015 growth domestic product figures.

Yet many cited the larger concerns that remained over China’s slowing economy and whether its government will manage its transition from an economy focused on industry and exports to one that derives most of its growth from consumption. And many worried that an unintended consequence of President Xi Jinping’s anticorruption campaign would be continued disruption of the financial markets.

Christine Lagarde, the managing director of the International Monetary Fund, touched on these points during a debate at the start of the conference. China’s biggest problem today was how its government communicated with the rest of the world, Ms. Lagarde said.

“I would say also that given those massive transitions that are undertaken pretty much at the same time and accepted as such, there is a communication issue,” Ms. Lagarde said, adding, “It’s something that markets do not like.”

Last summer, unexpected actions by the Chinese government started a global sell-off in the markets. Some of those measures nearly brought the market to a standstill. At one point in July, a third of the stock market was frozen. Investors with big stakes in stocks were prohibited from selling those stakes. Hedge funds were raided and short-sellers investigated for what the government called “malicious” activity, according to state media reports. The government even organized large-scale purchases of stocks by government-linked brokerages and investment funds to prop up the plunging market.

Many of these interventionist actions in the market were “the exact replicas that many other countries, including the United States, have done in certain parts of their modern history,” Gary D. Cohn, president of Goldman Sachs, said.

“The communication is really what’s important here; communicating what the Chinese market is going to be and sticking with that theory no matter how painful it is in the transition,” Mr. Cohn added.

Speaking at the same event, Fang Xinghai, the vice chairman of the China Securities Regulatory Commission, told a packed room, “We are learning. We are doing it.”

Mr. Fang, whose regulatory commission was responsible for much of the stock market intervention last year, added: “We should do a better job.”

This message, however, was still lost on some of the more cynical China watchers.

Kenneth Rogoff, a Harvard economist who has long warned of a potential financial crisis in China, remained skeptical. “There is a big propaganda push to say everything is good, everything is fine.”

Earlier in the week he told attendees at the forum that China’s large accumulation of government debt would one day be a shock to a financial system that “amplifies shocks.”

Others with bearish views on China have kept their claws out. Jim S. Chanos, who once said China was “on a treadmill to hell,” said he remained deeply concerned. His hedge fund, Kynikos Associates, estimated that China’s nominal gross domestic growth in 2015 was 5 percent compared with 15 percent just five years earlier.

“China’s debt problems still lie ahead of it,” Mr. Chanos said on Thursday, referring to concerns about the extent to which China’s seeming economic growth is actually fueled by borrowing.

As for Mr. Soros, he told an audience at the Panorama Restaurant in the Seehof Hotel in Davos this year that the Chinese had waited too long to properly address the transition of its growth model. Asked by a Bloomberg reporter if there was a risk of repeating 2008, Mr. Soros said the market was in a similar time of financial crisis.

“But the source of the disequilibrium is different,” Mr. Soros said, adding that in 2008, the main cause was the United States subprime crisis. “Now,” he said, “the root cause is basically China.”

索羅斯看壞標普 加碼美債

國際投資專家索羅斯表示，他看壞標普500指數、以及商品生產國與亞洲的貨幣，美國再升息的機率下降。他也指出，中國經濟正走向「硬著陸」，這將加重全球的通縮壓力、拖累股市並拉高美國公債價格。

索羅斯在出席達沃斯世界經濟論壇（WEF）時表示，他看壞標普500指數、商品生產國及亞洲貨幣，同時買進美國公債。

他表示，儘管資產價格短線可望回升，但市場並未出現「傳統式觸底」的訊號，「真正的底部，必須經過多次的測試」。

他也說：「（中國）硬著陸實際上已不可避免。這並非我的預測，而是觀察」。他說，雖然中國政府仍有資源用於控管國內經濟減緩，但仍將對全世界造成衝擊。

索羅斯未詳述他對「硬著陸」的定義，但他說，目前中國更精確的經濟成長率只有3.5%，而非官方公布的6.8%，而且中國的負債將難以維持，加上資金外逃，都是「硬著陸」的訊號。他說，中國成長減緩，加上油價重挫及各國匯率競貶，都將加重全球的通縮壓力，從而使今年成為金融市場「艱困」的一年，因為投資人不習慣這種氛圍。

他指出，若美國聯準會（Fed）繼續升息，將令他非常吃驚，但如果降息他不會感到意外。

他認為，Fed做了錯誤的升息決策，因為通縮預期已經升高。目前利率期貨市場預期，今年底時聯邦基金利率將上升到0.6%，高於目前的約0.37%，也就是Fed今年只會再升息1碼，遠低於Fed自行預期的4碼。

「新債券天王」岡雷克、古根漢基金經理人麥洛德等重量級投資專家也都警告，全球高風險資產將進一步下跌。

但高盛私人財富管理公司表示，目前投資人可能過度誇大中國成長減緩對全球的影響，且今年中國將能避開「硬著陸」。

坦伯頓全球顧問公司研究主任阿諾德也說，中國不應成為全球投資人的憂慮，「市場深度悲觀似乎並不合理」；她正在加碼股市。

原文參照：
http://www.nytimes.com/2016/01/23/business/dealbook/fears-about-chinas-economy-fester-at-davos.html

紐約時報中文版翻譯：
http://cn.nytimes.com/business/20160125/c25db-davoschina/zh-hant/

Video：Blackstone Chief on China Slowdown: “China is actually slowing, but it’s not collapsing,” says Stephen Schwarzman, co-founder of the private equity firm, sharing his outlook on the devaluing of the renminbi.
http://nyti.ms/1OCpFaV

2016-01-23．經濟日報．A7．國際．編譯任中原