HSBC Holdings Plc (00005.HK) chief executive Stuart Gulliver sought to allay fears about the Chinese economy, saying global markets have overreacted to the slowing growth.
Gulliver said China’s growth target of 6.5 to 7 percent is still robust, while the central bank has room for further cuts in interest rates and lenders’ reserve requirement ratio, the Hong Kong Economic Journal reported.
The country’s ability to pursue reforms has been underestimated while its currency valuation moves should be seen as progress rather than regression, he said.
Its decision to devalue the renminbi in August last year was an important step to establish two-way expectations on the currency’s value, Gulliver said.
He said China is capable of boosting domestic consumption to offset any gap in growth targets given its enormous fiscal reserves.
Nonetheless, the management of non-performing loans will continue to be a big challenge, while the liability-to-equity proposal for mainland banks is expected to drag on for some time.
Gulliver also said he expects the depreciation of the renminbi to continue.
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