The Hong Kong Observation Wheel and the HSBC Building in Victoria Harbour, Hong Kong.
UCG | Global Photo Collection | Getty Images
HSBC The British bank's chief financial officer told CNBC that the bank is “very positive” about the medium- and long-term outlook for the Chinese economy despite the current headwinds.
Growth in China over the past year was affected by the decline in the country's traditional economic pillars of real estate, infrastructure, and exports. This has prompted Beijing to intensify its efforts to boost domestic manufacturing and technology in a bid to modernize its economy and remain globally competitive.
Speaking to CNBC's Karen Tso on Wednesday, HSBC's chief financial officer, George Al-Hadiri, said the bank — which is headquartered in London but does much of its business in Hong Kong and across the Asia-Pacific region — was confident that the second-largest lender in… The world economy will weather short-term headwinds.
“We are looking at a major economic transformation that is taking place now, which gives us very strong reasons to be very optimistic about the outlook in the medium and long term,” Al-Hudayri said.
He pointed out that China's economic maturity has reached such a stage that it is now “the right time to move to more mature economies.”
Al-Haidari described this maturity as relying more on consumers, the service industry and high-value, sustainable products, such as electric cars and batteries, aspirations that he said are evident in the Chinese government’s recent massive push towards these sectors.
“This shift will mean that China will avoid falling into the middle-income trap and will be able to continue the growth pattern,” he added.
“Some Western economies have gone through these transformations in the past, [and] China is going through a transition period today. This gives us a lot of positive prospects in the medium and long term for China.”
Al-Haidari said the most pressing economic challenges may last “from a few quarters to a few years,” but he expressed confidence that China will be better off in the long term, as the country positions itself for a “tangibly better future.” a path.”
HSBC missed its full-year 2023 pre-tax profit forecast on the back of a $3 billion write-down on its 19% stake in China Bank of Communications, while the bank reduced its overall exposure to Chinese commercial real estate by $4.6 billion year-on-year.
However, Al-Haidari insisted on Thursday that most of the challenges related to China's faltering property market are “behind us,” even as he said the sector is not “out of the woods” yet.
“We think the bottom for the sector is behind us. We think in our case, our exposure and expected credit losses cover the bulk of the charges we take, but that still means there will be lingering impacts as the sector continues to adapt, and we may continue to see some impact but “Not at the level we saw last year on our credit charges.”
