The Hong Kong Ferris Wheel and the HSBC building in Victoria Harbor in Hong Kong.
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HSBC He is “very positive” about the medium- to long-term prospects for the Chinese economy despite current headwinds, the British bank’s chief financial officer told CNBC.
Economic growth in China was slowed last year by a slowdown in the country’s traditional economic sectors such as real estate, infrastructure and exports. This has prompted Beijing to step up efforts to support manufacturing and domestic technology as it seeks to modernize its economy and remain competitive in the global market.
Speaking to CNBC’s Karen Tso, HSBC Chief Financial Officer Georges Elkhedery said the lender, which is headquartered in London but does most of its business in Hong Kong and the Asia-Pacific region, is confident the world’s second-largest economy will overcome the crisis . short-term headwinds.
“We are seeing major economic transformations taking place that give us very good reason to be very positive about the medium to long term outlook,” Elkhedery said.
He suggested that China’s economic maturity had reached such a stage that now was “the right time to move to a more mature economy.”
Elkhedery characterized this maturity as a greater reliance on consumers, services and high-value, sustainable products such as electric vehicles and batteries. This commitment is evidenced by the Chinese government’s recent massive push into these sectors, he said.
“This transition will mean China avoids falling into the middle income trap and can continue its growth pattern,” he added.
“Some Western economies have gone through similar transitions in the past. [and] Today China is going through a period of transition. This gives us a lot of positive prospects for China in the medium to long term.”
More immediate economic problems could last “a few quarters to a couple of years,” Elhedery said, but said he was confident China would be better off in the long term as the country puts itself in a “substantially better position.” track.”
HSBC missed its 2023 pre-tax profit forecasts due to a $3 billion write-down of its 19% stake in China Communications Bank, while the lender cut its overall Chinese commercial property investment by $4.6 billion year on year. .
However, Elhedery insisted on Thursday that most of the problems associated with China’s weakened property market were “behind us”, although he said the sector was not yet “out of the woods”.
“We think the failure of this sector is behind us. We think in our case our exposures and our ECLs (expected credit losses) cover most of the costs behind us, but that still means there will be long-term impacts as the sector continues to operate.” there is an adjustment to be made and we may continue to see some impact, but not to the extent that we saw last year in our lending costs,” he said.