Fink says China needs more aggressive reforms
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[May 17, 2016]
By Lisa Jucca
HONG KONG (Reuters) - China needs to be
more aggressive in its reforms if it wants to smoothly transition from
an export-oriented economy to a services-driven one, the head of
BlackRock Inc., the world's biggest asset manager, said on Tuesday.
"China is struggling with excessive leverage within a lot of
financial institutions," BlackRock Chairman and Chief Executive
Officer Larry Fink said at a BlackRock forum in Hong Kong.
"They need to be more aggressive in their reforms. Reforms are
slower than what I would have preferred."
Fink said Beijing has done a good job in identifying the need to
transform its economy and make it less dependent on manufacturing.
But he noted similar reforms in the West in the past took decades
and were marked by periods of economic recession.
Although remaining slightly bullish on China, he said there were
still too many state-owned enterprises in China and that the recent
explosion in credit was "the wrong way to reorient the economy".
Fink said the ultra-low interest rate environment globally, which
was exacerbated by Japan's decision to introduce negative rates this
year, is harming the economy. He called on governments to implement
fiscal stimulus programmes, particularly for infrastructure.
Japan, which is hosting the upcoming meeting of the Group of Seven
nations this month, had failed to fully deliver on the economic
reforms promised through "Abenomics", he said.
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Fink hoped G7 leaders would discuss the need for fiscal stimulus at their
"We have not seen any true fiscal policy. It is going to require a heavy dose of
infrastructure investments," he said.
"You cannot have central banks stopping this low rate environment unless we have
(Reporting by Lisa Jucca; Editing by Sam Holmes)
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