Three reasons why China will continue to represent a long-term growth story – Morgan Stanley

FXStreet reports that Lisa Shalett from Morgan Stanley points to the speed and durability of China’s economic turnaround.

“China’s economic balance continues to improve as domestic consumer and business demand makes up a greater percentage of spending. The country is less dependent on exports, which are now only 17% of GDP, down from 35% in 2007. We see room for more growth as per capita disposable income and consumption spending return to their long-term growth trend, after a vaccine is available. Vacation-related spending is still off by close to 60% currently in China.”

“China’s interest rate and currency dynamics remain attractive, suggesting a healthy backdrop for attracting foreign capital flows and protecting investor capital gains. China 10-year bonds are yielding nearly 3.2%, the widest premium in 15 years to the US 10-year Treasury, which yields less than 1%. For its part, the yuan, which China’s central bank generally keeps within a targeted range, is now at the strongest level since 2018, trading at 6.65 to the dollar. Such metrics point to the ongoing internationalization of the renminbi. Morgan Stanley & Co. strategists estimate that 10% of global reserves could be held in China’s currency by 2030.”