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Timeline of key events (Times BST)

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Timeline of key events (Times BST)

By William Bi
     BEIJING (MNI) - China International Capital Corp., the first joint-venture
investment bank established in the country, said it is "more optimistic" than
other forecasters on China's growth next year given the strength of consumer
spending, investment in the property sector and capital expenditures in
manufacturing.
     While China faces difficult challenges, including bringing down high debt
levels, it has the willingness and capability to address those problems while
maintaining a strong economy, CICC's chief economist, Liang Hong, wrote in an
email to MNI.
     Liang made the comments after MNI questioned the firm's bullish report on
the outlook for China's economy published two weeks ago. The report predicted
6.9% GDP growth in 2018. The comments also came as October key indicators fell
short of expectations, leading some to question whether the economy has lost the
unexpected bump in the first half, when a flood of investment projects,
government-led capacity cuts and revived exports injected strength back into the
sluggish manufacturing sector and the economy.
     The slight fall in October conditions wasn't enough to change Liang's view,
though. "We believe China's recovery has more legs to run," said Liang, who was
with Goldman Sachs before joining the state-owned investment bank in 2008.
     Both monetary and fiscal policies remain accommodative to economic growth,
and a global expansion will benefit Chinese exports, she said.
     Liang also pointed out that on the back of the government's decisive
anti-poverty and anti-corruption policy efforts, income and wealth distribution
have been improving in China over the past five years.
     President Xi Jinping, who is also the leader of the Communist Party of
China, has vowed to bring every corner of the country out of poverty by 2020,
prioritized a cleaner environment, and announced that the government will no
longer set hard GDP growth targets while the economy transitions to more
sustainable growth.
     A more balanced increase in the strength in consumer demand should give
investors confidence that China's growth model has become healthier and more
sustainable, Liang said.
     In many ways, Liang's views are shared by other economists, except that
Liang was more bullish and predicted that the benefits from the turn toward a
consumption growth model will have a more immediate impact.
     Lu Zhengwei, the chief economist of Industrial Bank Co. of China, presented
the same argument: that China's reform is on track, and that the economy is
shifting to a healthier and more sustainable model. The government is less
concerned about growth, which means the rate will likely fall back, although
still within the government's tolerance, said Lu, who projected 6.5% GDP growth
next year.
     What is telling, though, is that domestic investors are shrugging off
concerns that international bodies, such as the International Monetary Fund,
still fret over, including China's high leverage ratio, banks' bad loans,
so-called zombie companies, and a resurgence of state-owned companies that seem
to roll back a market-based economic transformation.
     "Everything needs to be looked at in relativity," said a Beijing-based
investor. "If you make the whole economy bigger, then as long as the government
doesn't allow the problems to get bigger, those problems won't seem as big," he
said.
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com
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