China’s Currency Rebounds as Economic Optimism Returns
The stock market has begun to recover from its rout two years ago as rising real estate prices reassure investors about the health of China’s developers,
and resilient economic growth suggests that corporate profits may rise.
Other signs point to China steadying its course after a stock market crash
and surprise currency devaluation two years ago shook the financial world and brought the country’s long-term problems to the fore.
In terms of his earlier worries about China’s debt, he added, “I’m having doubts about what I believed as well.”
The currency, which is one of the main ways the government controls the economy, is a gauge of the country’s health
and a source of tension for the United States and other trading partners.
As recently as May, Moody’s Investors Service, a ratings firm, lowered its credit rating
on the country’s debt, saying China’s spending spree would hurt long-term growth.
While China keeps a tight grip on the value of its currency, it allows the renminbi
to move up or down by a certain amount in its local currency market.
“There is no bank that is going to say in November that, ‘our economic outlook is not
good, we’re going to contract our loan book.’ They can muddle on for a while.”
But Ms. Chu and others see Beijing’s efforts as stopgaps: If it does not address its debt, China risks a long period of low growth, as in Japan.