China Has Massive Firepower to Battle Global Slowdown: Stephen Roach

Plenty of market pundits point to China the main culprit behind weakness in the US stock .

They say because the data suggests China’s economy is slowing you should run for ; China is trouble.

But Yale University senior fellow and former Morgan Stanley Asia executive chairman Stephen Roach thinks they’re all of hooey.

“ of people who say things like this,” he tells us CNBC’s Fast Money Halftime Report. “Oftentimes they’re just talking own book.”

What he thinks China skeptics don’t understand or conveniently forget is that China is an export and investment led economy.

“Urbanization in China is happening at a that the world has never seen before. Currently, China is moving 15-20 million people the countryside into the city and to do that need to build a huge amount of low and middle income shelter and is an ongoing feature of the Chinese economy.”

In other , when China's exports slow, is currently the situation, Beijing ramps investment in urbanization.

“The state planning agency has approved of new projects – the rate of approval has picked materially, and that’s the tool really works (to drive the economy), says Roach.

But you don’t have to take his for it. All you need to do is at Beijing’s actions a few years back.

“In 2009 they had exports collapse they put the pedal to the metal on the investment ,” he says, And by 2010 China had bypassed Japan as the world’s second economy.

“China has huge pipeline of unmet investment needs the urbanization needs of their economy. It’s what they did (to drive the economy) 3-years ago and I'm convinced they’ll it again.”


Adapted from: CNBC, July 13, 2012.