Ralton Asset Management: The risk of Chinese policy mistakes is rising

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Ralton Asset Management: The risk of Chinese policy mistakes is rising. China has commenced the necessary changes to its growth model, however, the transition faces many speed bumps due to vested interests and structural imbalances. The risk of policy mistakes triggering a sharp downturn in infrastructure and property construction (even if not a dramatic slowdown in GDP growth) is rising. This would have negative implications for Australian commodity exporters and the broader Australian economy via the terms of trade. The Chinese authorities have aggressively pursued the development model centred on exports and urbanisation (i.e. infrastructure and property development). This model was successfully deployed by the Japanese and Koreans, but it must be remembered they both stumbled at the point where they needed to transition to a domestic consumption driven growth model. Full report here: (VIEW LINK)

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