While the China slowdown and market upheaval continue to be in focus, analysts hope stability will return as China adjusts its currency and removes stock restrictions. Speaking to Bloomberg TV India, Standard Chartered Asia’s Head of Macro Research David Mann says the US interest rate is as critical as China.

We have heard several market experts saying they are not very concerned about what is happening in China. Indian government officials are saying that India is looking pretty stable right now. What is your view on how everything has been panning out in China ever since 2016?

I think we have to take the long-term perspective and also look at what the actual fundamentals are telling us. While the markets have been suffering and wondering what the policy priorities are, the actual data has not been that bad. At least the data we were looking in December was starting to point slightly better prospects of growth and that is what we think we are going to see through this year — stability in the growth rate in China.

Now the big question for us is actually on the exchange rate. Is there a deliberate policy bias to try and weaken the currency? Or should we just be watching trade-weighted exchange rate now that we are down a little bit lower compared to where we had been previously — where we stopped seeing weakness in the renminbi because that has been playing a major role in worrying markets and there is some sort of panic going on.

Even the currency is being used to stimulate growth, which everyone including us believes should be the last resort used for stimulating growth. There are so many other types of policy measures that could be taken. So we believe the stability we are seeing compared to what we saw earlier this week should help to reassure investors and stop them from being panicky. Do you think the measures the Chinese government is putting in place — whether it is circuit breaker or trying to increase the trading band for the yuan — are working?

I think at least getting rid of the circuit breakers, if it was being blamed amongst many other things, was really behind the drop in stocks this week in China. At least it gives the opportunity for bargain hunters to tradeI think the currency is where we need to see more clear signals, as well as words — that there are no deliberate policies of trying to weaken the currency in place. Consensus seems to be making the US one of the major areas of concern. What do you think?

I think that is absolutely critical. You cannot be watching everything that has been going on and say everything is ultimately to do with China. The US is important as an economy itself. Of course China has been accounting for around one-third of global growth in the last year or two and we think it will be the same this year. But US rate policy is critical as well. We saw that first rate hike in December and we expect another hike in March. Our view is that we will see by the year end more of a risk of US easing policy as their growth is expected to start slowing.

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