China's Economic Comeback Story | Henry McVey, KKR Head of Global Macro, Balance Sheet, and Risk Team and CIO of KKR Balance Sheet

  

25% of Global Growth

He says China needs more foreign capital

6,332 views May 24, 2024

Henry McVey, KKR Head of Global Macro, Balance Sheet, and Risk Team and CIO of KKR Balance Sheet has been to China four times in the last five quarters and sees opportunities in its domestic economy =======================================================================JANET YELLEN REMARKS ON CHINA

CHINA’S OVERCAPACITY AND UNFAIR TRADE PRACTICES

Finally, we’ll be focused here on China’s industrial overcapacity. 

• As I’ve communicated directly to my Chinese counterparts, China’s macroeconomic imbalances are being aggravated by Chinese direct and indirect government support to the manufacturing sector. 
• This is currently leading to production in some industries that significantly exceeds not only China’s domestic demand but also what the global market can bear. 
• Without a new policy direction, including to lift Chinese demand instead of just boosting supply, this can lead to large volumes of exports at depressed prices. 

This is not a bilateral issue between the U.S. and China. 

• German Chancellor Scholz raised this issue in his April trip to China, and 
• Macron and President von der Leyen emphasized the need for balanced trade relations with China earlier this month. 
• The G7 has collectively recognized the need to protect our workers and businesses from unfair practices. 
• And overcapacity threatens the viability of firms around the world, including in emerging markets. I believe it also poses a challenge to China’s growth.

President Biden has made clear that he will take action to stand up for American workers and companies, and last week the United States announced strategic and targeted steps in key sectors to respond to unfair trade practices by the PRC as a result of the Section 301 review. 

The EU and other countries are already using their authorities to investigate and consider remedies to China’s actions with regard to electric vehicles, and many emerging market countries have launched anti-dumping investigations in a range of sectors.

• This week will be a key opportunity to discuss how China’s macroeconomic imbalances and industrial overcapacity can affect our economies. 
• We’ll also discuss our responses and the approaches that we’re taking to raise these concerns directly with China.
• It’s critical that we and the growing numbers of countries who have identified this as a concern present a clear and united front. 

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