Natixis’ Alicia Garcia Herrero: China’s economic growth will remain “moderate”

Alicia Garcia Herrero, the head economist for the Asia Pacific region at French investment bank Natixis, has said lower growth in China has the country focused on maintaining its trade surplus and sustaining its manufacturing sector, especially its high-value exports.

Traditional drivers of growth in China – the debt-fueled building of infrastructure and real estate – have cooled off, while foreign investors remain wary of the country’s long-term prospects and its apparent prioritizing of national security over economic growth. The result is large capital outflows, according to Herrero. 

Data from China's State Administration of Foreign Exchange revealed the net outflow of foreign exchange reached USD 53.9 billion (EUR 50 billion) in September 2023, the highest level in seven years. The international business environment has further soured in China with a revised Counter-Espionage Law causing apprehension among foreign executives visiting and living in China.

Additionally, demand in China’s domestic economy has cooled, with the central government targeting 6 percent GDP growth in 2023, half the level seen a decade ago. While Herrero expects China’s growth to improve slightly after its post-Covid stagnation, the country’s longer-term economic growth will remain “moderate” for the foreseeable future due to structural issues like aging and high municipal debt levels. 

“Growth markets will be elsewhere, certainly in South Asia and Southeast Asia,” she told SeafoodSource.

China's cabinet has …

Photo courtesy of Natixis