China's structural problems mean growth will continue to sag as 'negative animal spirits' move it in the opposite direction as the US, Goldman Sachs president says

• China's economy is moving in the opposite direction of the US, Goldman Sachs' John Waldron said.
• He said "negative animal spirits" in China point to slow growth as it battles economic malaise.

China's economy is battling a host of problems that will weigh on growth for a while, and the country is moving in the opposite direction as the US, according to Goldman Sachs president John Waldron.

Waldron said in an interview with CNBC this week that a recent visit to China highlighted the nation's ongoing economic struggle. The situation in the world's second-largest economy is a stark contrast from the US, which has seen steady growth and robust consumer demand, as well as a stock market rally and predictions of a soft landing in 2024.

"My experience when I was there is that it almost felt like there were negative animal spirits. It didn't feel like the US, when we had positive animal spirits when the economy was coming back from COVID. I feel like it's the opposite in China," Waldron said.

Waldron notes that China hasn't seen the same level of recovery as other big economies since the pandemic. That's partly because, unlike in the US and Europe, China didn't inject any significant fiscal or monetary stimulus into its economy. Weak consumer demand has caused prices to recently slip into deflation territory, and soured debts from major property developers have rocked China's real estate sector.

That's dimmed the attractiveness of China's markets to foreign investors. Foreign investment in the nation went negative for the first time ever last quarter, according to State Administration of Foreign Exchange data.

"I think they're going to have a tough time. I think they're going to have to tackle some real structural challenges," Waldron said of China's economy. "I think they're focused on that and they're going to get after it, but it's going to take a while, and I feel like they're going to grow below-trend for a fair period of time."

Other experts have warned of a grim future ahead for China if it doesn't adequately loosen policy and stimulate its economy. The nation is at risk of slipping into a "lost decade," a period of stagnation similar to what Japan experienced in the early 90s, experts say, while others have made far more bleak predictions of a collapse of the banking system and trillions of dollars in losses stemming from the burst in the country's real estate bubble.