The Hong Kong Ferris Wheel and the HSBC building in Victoria Harbor in Hong Kong.
Ucg | Universal Images Group | Getty Images
HSBC is “very positive” about the medium- to long-term outlook for the Chinese economy despite current headwinds, the British bank’s chief financial officer told CNBC.
Growth in China was held back last year by a collapse in the country’s traditional economic pillars – real estate, infrastructure and exports. This prompted Beijing to step up efforts to strengthen manufacturing and domestic technology to modernize its economy and remain globally competitive.
Speaking to CNBC’s Karen Tso on Wednesday, HSBC CFO Georges Elhedery said the lender – which is headquartered in London but does much of its business in Hong Kong and across Asia-Pacific – is confident that the The second largest economy in the world will overcome its problems in the short term.
“We are looking at a major economic transformation that is taking place, which gives us very good reasons to be very positive about the medium and long-term prospects,” said Elhedery.
He noted that China’s economic maturity has reached such a stage that now is “the right time to transition to more mature economies.”
Elhedery described this maturity as a greater reliance on consumers, the service industry and high-value and sustainability-focused products such as electric vehicles and batteries. These aspirations, he said, have been evidenced by the Chinese government’s recent massive push into these sectors.
“This transition will mean that China does not fall into this middle-income trap and is able to continue the growth pattern,” he added.
“Some of the Western economies have gone through these changes in the past, [and] China is going through a transformation today. This gives us very positive prospects for China in the medium to long term.”
The more immediate economic challenges could last “a few quarters to a few years,” Elhedery said, but expressed confidence that China will be in a better position in the long term because the country has “significantly better future prospects.”
HSBC missed its full-year 2023 pre-tax profit forecasts due to a $3 billion writedown on its 19% stake in China’s Bank of Communications, while the lender increased its total exposure to Chinese commercial real estate by $4.6 billion year-on-year -Dollar reduced.
Still, Elhedery insisted on Thursday that most of the challenges associated with China’s ailing property market were “behind us,” even as he said the sector was not yet “out of the woods.”
“We believe the bottom of this sector is behind us. We expect that, in our case, our exposure and our ECL (expected credit losses) cover the majority of the burdens behind us, but that still means there will be ongoing impacts if the sector continues to sustain. “We have to adjust and we may continue to see some impact on our borrowing costs, but not to the extent we saw last year,” he said.
Source link
2024-03-14 15:58:44
www.cnbc.com
