IS CHINA GOING TOWARD RECESSION: THE ANSWER IS NO

China has experienced a very large real appreciation since 2011, partly due to higher inflation than in its trading partners, partly because it has tagged along with the rising dollar.
But with Chinese growth slowing and the pace of appreciation rising — and with rising competition from other emerging markets — the past five years almost surely have brought
a major reduction in competitiveness. It’s perfectly consistent to believe that China was destructively undervalued in 2010 but overvalued now as said Paul Krugman, Economy Nobel Prize winner.
Meanwhile, China’s domestic economy has clearly weakened, illustrating a weak monetary policy. It’s nothing like the situation in 2010, when China was struggling to contain an overheating economy.
Global overall economic has changed and the current Chinese situation should entice Chinese companies to invest abroad as lower return will start to occur in China.
With 7% growth rate China remains a strong and very active economy but when you are used to 10% a loss of 3 point may seems a lot especially if your neighbors
start to enjoy an upward trend, look at Vietnam for instance going from 5% in 2014 to 6.3% in 2015 or Bangladesh in the mid 6% prior to political tensions.
Looking outside of domestic market will be the first and obvious reaction. The Media industry should benefit among others so be prepared to see additional investment into Hollywood
and this is good news for a vibrant industry.

*Libra6 Management is very active in the media industry (Libra6 Media- Libra6 Films – L6M Fund).
www.libra6management.com

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