Submitted by Taps Coogan on the 11th of January 2019 to The Sounding Line.
James Sullivan of J.P. Morgan recently spoke with CNBC to warn about the sustainability of Chinese growth and the idea that financial valuations will revert to ‘normal’ after last years selloff in global financial markets.
“We have to have the right conversation regarding China. This is an economy that has grown at extremely high levels for an extremely long period of time. You are starting to see the overall drivers of growth slow. You cannot add more employees into the mix. Total factor productivity is slowing, particularly as you see the Chinese administration re-prioritizing SOEs (State Owned Enterprises). So the traditional drivers of overall economic growth are weakening… across the board. And so the idea that this is China weakening and that it will come back… is one of the primary fallacies that we see in markets today. One of the biggest conversations we are having with investors is a fight against the reversion trade… Number one, China growth will never go back to previous levels. Number two, we are facing a very different geopolitical environment today which is multi-polar in nature, which is great power competition, which is very different than the last 15 to 20 years. The reversion trade will not work”
There is more to the interview, so enjoy it above.
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