China's economy needs to cool down

MeesPierson''s head of investment strategy discusses why fears about an overheating economy have been growing.

China's transition from a rural to an industrial economy has generated immense demand for raw materials. The production facilities currently being built could shortly result in unsustainable overcapacity. The financial markets, meanwhile, are having to contend with a weak banking sector saddled with a mountain of bad debt.

The Chinese central bank is beginning to pull on the monetary reins in order to temper economic growth. All the same, our basic scenario anticipates a soft landing for the Chinese economy, thanks in part to recovery in the United States and Japan.

Pace of growth undiminished

Reforms necessitated by China's desire to join the...

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