China’s economic model is ‘washed up on the beach,’ says veteran investor David Roche

• Despite a remarkable rally in stock markets so far this year, concerns have been growing over the potential ripple effect of a prolonged slowdown in the world’s second-largest economy.
• David Roche, president and global strategist at Independent Strategy, told CNBC’s “Squawk Box Europe” on Thursday that global stock markets were failing to price in a long-term decline in the role that manufacturing plays in powering emerging market economies.
• He suggested the market is due a “very big” downward correction, once many concurrent geopolitical and macroeconomic risks are properly priced in.

China’s economic model is “washed up on the beach” and “not going to take off again,” which will have a big impact on global markets, says veteran investor David Roche.

Despite a remarkable rally in stock markets so far this year, concerns have been growing over the potential ripple effect of a prolonged slowdown in China.

Beijing has acknowledged its immediate economic headwinds and signaled more fiscal policy support, while the People’s Bank of China unexpectedly cut interest rates on Tuesday. China has experienced meteoric growth that outpaced developed countries over the past two decades, overtaking Japan as the world’s second-largest economy. However, many economists now see a longer structural downward trend amid diminishing contributions from property and manufacturing — the traditional pillars of China’s rapid economic expansion.

Source: cnbc