China's Premier Li Keqiang, has implied in a recent speech that Chinese growth rate may falter yet again. People's Daily reported that he said China would not defend any "target to the death". So the Chinese are flexible as to targeting new growth. With PBC lowering rates 6 times in just under one year, and with a 2 % devaluation of the yuan the Chinese seem latched on to a slower growth. A Ph D from Peking University, and a well established economist, Li must be fully aware of the implications of his statement. He seeks new engines of growth, : (a) mass start ups, (b) Internet (c) sustainable , new technologies in manufacturing.
The markets will have to accept that China is slower than expected. That means commodities markets should fall further. People should sell assets in China linked countries like Australia and Singapore. China has been selling its forex reserves to protect its currency. So the current statement could mean further mini runs on the yuan. Corporations with China focus like Ericsson have naturally suffered.
China is slowest in nearly a quarter of a century. The world must watch with some trepidation.
This blog recommends no investment.
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