Business / Economy

Foreign experts confident of China's long-term prospects

(Xinhua) Updated: 2015-08-27 17:19

WASHINGTON/BUENOS AIRES/LONDON - Foreign experts on China's economic development have expressed confidence in China's long-term growth potential after the steep fall of its stock markets on Monday and Tuesday, dismissing claims that China is the cause of economic reversals.

Recent volatilities of China's stock markets and currency depreciation are "natural" as China meant to transit from an export-driven manufacturing economy to an economy based on internal consumption, saving and investment, Chairman of the US-based Principal Financial Group Larry Zimpleman said in a recent interview with Xinhua.

Zimpleman, also chief executive officer of the company, said that he remains confident about China's economy as the government has long been "trying to re-engineer the economy."

"This is a difficult transition," he said. "The natural consequence of that is there is going to be volatility."

It is "the right thing to do" and "the right shift of the economy" as it will make China's development more sustainable and depend more on China's domestic market instead of the overseas one, Zimpleman said.

Talking about the recent rising concerns about the Chinese government's intervention in the stock market and the depreciation of the Chinese currency, the yuan, against the US dollar, Zimpleman said those interventions are "not unusual for a government" and "perfectly logical" as the government has a role to support the economy and manage the capital market and exchange rate.

"The United States government through Federal Reserve has been involved into the capital market for the last seven years. They were influencing single interest rate, pushing interest rate down," said Zimpleman, adding "the European Central Bank in Europe is doing the same thing."

"Every government to some extent is watching its currency. And in fact if they get outside what they think it is reasonable area they start to take steps to manage that," Zimpleman said.

"At this point I would say I don't see anything that causes me great concern" as the actions taken by China's central bank are "almost like using a tire pump to push a little more air into the tire because the tire was going to be a little bit flat," Zimpleman said.

Although China wields a strong economic influence on the world, China is not to blame for the current economic reversals, Gustavo Girado, director of the Asia and Argentina consultancy, said in a recent interview with Xinhua.

"I do not believe that all of these problems are due to China's economic reality. The global economy is undergoing a time of important adjustments, particularly in the European Union (EU) as it grapples with Greece's debt," he said.

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