Every decade or so in the United States, the financial sector decouples from the real economy, like what’s happening currently: GDP growth is tepid, job growth is mostly part-time, corporate earnings don’t grow at all, and yet, stocks are at record highs.
In China, it’s the other way around. GDP growth, at least according to official numbers, but also by some independent estimates, is around 6 percent. Unemployment is stable by regime dictate, inflation is coming back, and corporate profits are growing.
But stocks are trading at late 2009 prices, about 40 percent off the bubble top of 2015. Government bonds are trading at two-year lows, and the currency lost 6.8 percent against the dollar in 2016.
To shed light on this dichotomy between finance and the real economy, Epoch Times spoke to Alicia Garcia-Herrero, the Asia-Pacific chief economist at French investment bank Natixis.
