China is managing slowing growth aggressively, the fund manager states

August 25, 2022: -According to one portfolio manager, policymakers in China control to be “more aggressive” in keeping the economy before markets can be convinced that growth will improve.

Mary Nicola of PineBridge Investments said rising prices and scorching heat in China, which led to power rationing in a few parts of the government, will affect economic growth.

“We thought, particularly after the lockdown in Shanghai, that the worst would be after us,” she told on Tuesday.

“But potentially with the worries about inflation, with concerns about the heatwave leaking in, it could mean that the policymakers will have to act a little bit more decisively and increase some of the stimuli,” she said.

Thus far, the government has cut interest rates and taken targeted steps to support the parcel sector.

“That’s all positive, but in our view, there needs to be something more aggressive for the market to feel a little bit more relaxed that growth will pick up in China,” Nicola expressed.

She expressed China’s growth hasn’t been as strong as expected despite the steps accepted by authorities, and more should be done.

“The key thing here is, as evolution slows, that policymakers will have to act a bit more responsively, more decisively in terms of something over what we’ve seen so far, to mitigate some of that growth pressure,” she said.

Investment banks, which include Goldman Sachs and Nomura, cut China’s growth targets this year as Covid’s actions impacted the economy.

In July, the country’s top leaders said they would focus on stabilizing prices and work in the year’s second half, downplaying the GDP target of about 5.5%.

China’s GDP increased 0.4% in the second quarter this year compared with a year ago.