Consumption, innovation to drive China growth

Speaking coming from the sidelines of the Fortune Global Forum in Guangzhou, China, Ulrich highlighted China’s newest inventions: “China’s payments system is number 1 in the world regarding size and sophistication, plus the sharing economy. Therefore we’re really seeing innovation taking carry in the whole economy.”

Many Chinese tech companies are “planting seeds” in Southeast Asia and North Asia, and Ulrich said she expects more to venture abroad.

China’s economical growth has mainly surpassed expectations this year, helped by a global recovery in exports. Which has boosted corporate revenue and allowed the country to cut fiscal leverage, which includes been a key source of concern among investors.

An increasing number companies in the troubled steel industry, a significant source of dangerous debt in the Chinese economy, are successful nowadays, Ulrich said. She mentioned that 85 percent of steel companies are earning money today, compared to just 5 percent two years ago.

“For the first time since the financial crisis, financial leverage found in China is decreasing because corporates, the major borrowers from banking institutions, are finally making a lot of money,” she said.

“So they’re paying down some of their debt, and, consequently, we’re seeing leverage ratio decreasing. With that said, many Chinese banking institutions have grown so rapidly subsequently as you grow, as you lend, you need more capital. So I think for the smaller banking institutions, in particular, they have to replenish their capital placement before they can grow into the new year,” added Ulrich.

The International Monetary Fund on Thursday morning hours released its assessment of the Chinese economic climate. It said a anxiety test of 33 banking institutions, which take into account three quarters of total banking assets, revealed that 27 of these were under-capitalized.

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