Kapronasia Sees Large Domestic Challenges Ahead for China

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A new article from Kapronasia, a Shanghai-based Financial Industry Consultancy, sees not only slowing growth in China, but critical domestic issues that could change the country's future.

A new article from Kapronasia, a Shanghai-based Financial Industry Consultancy, sees not only slowing growth in China, but critical domestic issues that could change the country's future.

The article, entitled "China: The Balancing Act," details how China's socialist government has been instrumental in guiding the Chinese economy through a period of tremendous growth, but how the policy levers may not be enough to ensure continued growth and domestic stability should the world slip into a global recession.

"Earlier this year, the mood of many industry observers was that China could come out of the Olympics, weather the credit crunch and continue on the path of the fantastic growth that the country has experienced over the past 10 years," said Jane Li, a Senior Consultant at Kapronasia. "As the situation in the United States worsens, both as a result of the credit crisis and the worsening economic situation, that feeling is changing."

The article talks about the Chinese government's recent policies on margin and short selling, corporate credit, and land reform as all being indications that the government understands the challenges and is taking steps to meet those challenges, but it may not be enough. The domestic challenges may even be beyond what China's internal policies can fix.

"A large part of China's growth to date has been a result of global trade," said Zennon Kapron, Director of Kapronasia. "Now, as the world economies slow, China will have to find another source of growth to keep the economy going. This will come from increased domestic demand, but how China develops that will be critical. They need to maintain both economic growth and domestic stability. These issues will pose some pivotal questions to the Chinese government over the next six months the responses to which will define China's future."

The "China: The Balancing Act" article is available on the Kapronasia website: http://www.kapronasia.com.

About Kapronasia:
Kapronasia is a China based Financial Industry Consultancy focused on helping companies do business in the Asia Pacific Financial Industry through a combination of research, strategy and implementation. Clients include 3 of the top-10 global banks and numerous financial technology companies.

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Jane Li
Kapronasia
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