Chinese economy ‘facing growth challenges’

<p>A number of challenges are facing the Chinese economy.</p>

The Chinese economy is coming under an increasing amount of pressure and there are many challenges it faces if it is to continue to grow.

Legal & General Investment Management's emerging market strategist Brian Coulton explained some analysts believe the fast pace of growth in the last two decades means a "hard landing" could be on the way for the Chinese economy.

"While understandable, China has a significant advantage as it still has a sizeable current account surplus and domestic savings, making it less vulnerable to foreign funding," he said.

Mr Coulton's comments come only a short time after the International Monetary Fund announced it is lowering its growth expectations for the Chinese economy.

First deputy managing director David Lipton suggested the country's economy could grow by 7.75 per cent in 2013 and 2014, which would be a slowdown as it recorded an expansion of 7.8 per cent last year.

Mr Coulton said maintaining demand without leverage expanding will be the key to sustainability of future growth in China and the nation's administration understands this.

Learn about the Asian markets and CFD trading at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.