ETTIENNE LE ROUX: SA can’t bank on China
Hopes that a significant stimulus in China could lift SA from its growth slump are unrealistic. Better to zero in on challenges closer to home
Some may think SA has less to worry about, now that China is again pump-priming its economy. The logic here is that it should be only a matter of time before a likely rebound in Chinese GDP growth boosts import demand, and props up real economic activity in SA. Unfortunately, those expectations are unrealistic. Eager as policymakers are to help turn China’s business cycle around, it won’t be easy. The fact is, Chinese legislators lack the leeway to loosen policy — at least to the extent they did in the past two economic downturns. For more than a decade, China’s economy has benefited from the boom in debt-fuelled fixed investment, egged on by huge monetary and fiscal policy expansion in 2008 and 2015. But as significant as the gains in jobs and wealth creation have been for the average Chinese citizen, it’s only now that the unintended consequences of this spending binge are beginning to bite. Corporate China is a case in point. Chinese companies are burdened with about $10-trillion...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.