BEIJING: China’s economy is going through a series of historic transitions, and recent short-term market volatility will prove temporary, experts attending the World Economic Forum (WEF) Annual Meeting 2016 here said on Thursday.
The Chinese government is implementing wrenching reforms trying to shift its growth driven from investment and manufacturing to services and consumption. Experts warned that the uncertainty during the process will lead to periodic market disruptions.
China witnessed a turbulent year in 2015. Growth in the world’s second largest economy hit a quarter-century low of 6.9 percent, compared with 7.3 percent a year earlier.
“We see the transitions as manageable,” Christine Lagarde, Managing Director of the International Monetary Fund (IMF) said, stressing calm in the face of recent volatility.
“There needs to be acceptance that there will be a certain degree of volatility; this is entirely compatible with market-driven principles,” she said.
The International Monetary Fund said it expected China’s economy, a major contributor to global growth, to grow by 6.3 percent in 2016.
“Indeed, China is going through a cyclical adjustment,” said Ray Dalio, Chairman and Chief Investment Officer of Bridgewater Associates, USA.
“The reforms and leadership in China is fundamentally very good. What we are dealing with should be short-term challenges,” said Dalio.
“This may last two to three years,” he said, “the future of China is vibrant and young, and any volatility is global and linked to monetary policy.”
