Economic insights - the continuing battle with inflation and China's economy
London Business School’s Dr Linda Yueh made her monthly appearance on SiriusXM's The Business Briefing in which Dr Yueh spoke about the continuing battle against inflation in the US and in the eurozone, while examining China’s economic outlook.
There is, said Dr Yueh, a difference of approach between the EU and the US in the ongoing battle against inflation, with the EU experiencing slower growth and tackling inflation in a tougher way.
The United States Federal Reserve (US Fed) is expected to cut interest rates, announcing its first interest rate cut in more than four years since 2020, months ahead of the US presidential elections scheduled in November 2024. The announcement is expected on September 18.
Elsewhere in the world we are, said Dr Yueh, seeing other major economic powers such as China facing significant slowdowns.
China has been experiencing a property slump since 2021 and we have begun to see [this malaise] spread to the financial sector, risking a spillover into the wider economy. "Today, China looks a bit like Japan as the country tries to work out what to do with over-indebted property and building developments that are not getting built. This is of wider economic concern because the biggest asset for Chinese households is property," commented Dr Yueh.
"Chinese people often own multiple flats, and concerns about property valuations feeds into spending because people feel that their assets aren’t worth as much."
Economic commentators have expressed concern about China’s deflationary pressure. Moreover, the former head of the Bank of Japan (BOJ) has expressed concern that China might be experiencing the problems that Japan faced in the 1990s and first decade of this century. China is plagued by insufficient domestic demand and excess capacity. At a time when other major economies are struggling to bring inflation under 3 per cent, China is struggling to keep inflation modestly positive.
Dr Yueh concluded her conversation with Sirius XM's Janet Alvarez by talking about the abiding concerns people have with cybersecurity, particularly now when one considers the lightening fast changes taking place in the field of artificial intelligence (AI).
Dr Yueh passed on a tip to those plagued by suspicious calls and correspondence, often requesting urgent assistance for loans for family members. "Simply have an agreed family password and if someone is purporting to be a family member and requests financial assistance, ask for the family password."
