Chinese authorities take strong enough measures to stabilize economic growth. The most important factors in the development of the Chinese economy is internal consumption and sphere of services, – says the head of investment solutions Swiss Bank Julius Baer, Andreas Feller.
MOSCOW, 18 Jan./strong>. The growth of domestic consumption of goods and services will be the long term driver of growth in the Chinese economy, despite the ongoing slowdown of the country’s GDP, says the head of investment solutions Swiss Bank Julius Baer, Andreas Feller.
“Indeed, if in 2005 China’s GDP growth, at an annual rate of 12%, in the first and second quarters of 2015, the figure was 7% and the third decreased to 6.9%. Many analysts therefore view China with pessimism. However, note that if four times higher than in 2005, production base, even the seven percent growth means that this year the Chinese economy grew 60% faster than in 2005,” said Feller
According to him, the Chinese authorities have taken sufficiently vigorous measures to stabilize economic growth. The most important factors in the development of the Chinese economy is internal consumption and sphere of services.
“In the long run, important factors in the growth of the Chinese economy is consumption and services. These aspects are even more important than the production of goods. Everyone knows that the growth of production in China mainly relied on cheap labor. However, for the people were satisfied, needs to improve the conditions of workers. Now China does. With regard to consumption and services, every year the volume of these indicators is growing as grow requests are mostly the younger generation aged 16 to 35 years, the population in China of 400 million people”, — said the head of investment Bank solutions.
The most “advanced” young people — the inhabitants of the growing cities. “Urbanization has a direct impact on the economy, this is one of the world’s “Megatrends”. In the countries “the big seven” the level of urbanization reaches 70%, but in China the percentage of the urban population has reached 50%, while in India it is only 25%, although they are gaining momentum similar processes,” explained Feller.
One of the most important drivers of demand are, in particular, advanced digital technologies that violate the “old paradigm” of consumer behavior. “The development of digital technology we can also refer to the main Megatrends of the global economy and China is no exception. The most common example is the popularity of smartphones, with which you can make use of the increasing number of electronic services,” said Feller.
He added that the Chinese economy hasn’t suffered such a large burden of social security for the older generation as it happens in European countries.
“Do the elderly in China is not so dependent on pensions and state support, as in other countries. For Switzerland and EU countries pension provision is a big problem in China this issue is solved differently. Older people traditionally support their families. For them there is a problem, but it is not as acute from the point of view of economy”, — said the representative of the Swiss Bank.
He also drew attention to prospects of development of Russian-Chinese cooperation.
“Basically, Russia exports to China natural resources. I believe that in the long term, Russia is also actively invest in innovative technologies and in the production of consumer goods based on them. In my opinion, China could import such goods, in particular, because of a number of production costs in Russia are lower,” said Feller.
In turn, the head of Bank Julius Baer on Russia, Central and Eastern Europe Evgeny Shmushkovich told that on-going consolidation of banking sector players is a trend, which should increase the role of private banking in banking groups, who provide their services internationally, including in China and Russia.
“The last 1-2 years have been very tough time for the financial services market. We saw a large wave of consolidation of players in the banking sector and asset management companies that offer their services to individual servicing of wealthy clients. As a result of the consolidation will increase the importance of Private Banking departments, and the profitability of the business. Competition will be tough, more technological, and professional”, — concluded the head of the Swiss Bank in Russia, Central and Eastern Europe.
He recalled the successful strategic cooperation with a Chinese Bank Bank of China in which they conduct joint marketing activities. “We are jointly creating a private banking culture, which still largely not known on the local market of financial services. This, in our opinion, one of the ways to enter the markets of developing countries,” said Smoskowitz.
Julius Baer Group — leading Swiss banking group, which specializes in servicing and advising private high net worth clients. The Bank operates in more than 20 countries, including a representative office in Moscow. The group is listed on the Six Swiss Exchange and are included in the index Swiss Market Index (SMI). In 2015, Julius Baer Group celebrates 125 years.