Even as new market reforms create upheavals in China’s economy, the chief of banking giant HSBC remains optimistic about the country and the broader Asian economy.
“The fears for China’s economy are overplayed. I do not believe China will have a hard landing,” HSBC Holdings Chief Executive Officer Stuart Gulliver said Friday. “The last few months have obviously been difficult. … But volatility is absolutely natural in any market-driven economy and it should not be allowed to distract from the fundamentals of China’s journey.”
He added, “The fluctuations and stock market volatility have little or no bearing on the long-term trends around China.”
HSBC still expects China’s gross domestic product to grow by 7% this year, meeting government forecasts, and continue to outpace global growth. The government will release its third-quarter GDP report on Monday. A consensus of economists expects growth to come in at 6.8%.
Gulliver spoke in London at a conference where he addressed increasing his company’s investments in China and the possibility of moving its headquarters out of the British capital. The bank was founded in China and has increasingly seen most of its revenues come from Asia and emerging markets. But rising taxes and increased regulations in Britain remain top concerns.
Gulliver has been expanding asset management and insurance in Asia and focusing on regions including China’s Pearl River Delta to strengthen the position of Europe’s largest lender, reported Bloomberg.
“China is part of the way along the path of reform. It is attempting a transition that is far from straightforward,” he said. “It is moving from an economy built on the power of the state to one increasingly supported by the private sector and it is doing this while unwinding and reducing reliance on local government debt and shadow banking and simultaneously developing its capital markets.
“China should and will continue to ease controls in a steady and measured manner,” he said.
HSBC plans to reduce risk-weighted assets across its global network by $290 billion before redeploying as much as $230 billion to support Asia and other growth areas of its business, said Bloomberg. A slowdown in the region could prevent him from investing as much as previously planned.