China is focusing on the wrong things to fix its economy, says economist

by Dramelin 5:30 AM 0 comments

China should focus on fixing fundamental problems that may trigger a financial crisis instead of witch-hunting, an economist said Friday.
Speaking to CNBC`s "Squawk Box," independent economist Andy Xie said China has managed to avoid a financial crisis now by tightening capital controls, but there`s more to be done.
"Any other country would`ve collapsed, but China had started with that big cushion (of foreign reserves).
Still the government had to crack down on capital flight.
Without bottling up the country, China would be in a crisis now," Xie said.
Chinese companies and individuals have been snapping up overseas assets, prompting authorities to tighten controls on outflows such as limiting offshore investments.
Recently, several of China`s largest overseas asset buyers were scrutinized on instructions from the banking regulator.
"Unfortunately, China is focusing on who`s going to trigger the crisis; they are not talking about the fundamental conditions for the crisis, rather they focus on the technical aspect, on who`s going to trigger the crisis," said Xie.
The recent actions from Chinese authorities, he said, are more about: "The people who took the money out last year, let`s check them out, maybe send some to jail.