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China's Economy ‘Unbalanced,’ Says Morgan Stanley’s Roach

Stephen Roach, Morgan Stanley’s new Asia chairman, shared insights on China and the global economy on “Closing Bell.”

“The world economy is certainly a fairly resilient place, in being able to withstand even a tough blow in China,” Roach told CNBC’s Maria Bartiromo.

The East Asian country exhibits “great growth on the surface,” Roach explained, but it’s “unbalanced.” The bulk of China’s economy, for example, is concentrated in fixed investment and exports.

China needs to bolster its consumer culture, he said: “They need to balance that economy much more toward a consumer-led economy,” he said. “If they don’t do it, they could have some serious over-heating problems -- and we’re seeing some early signs there right now, given the bubble in their domestic stock market.”

Roach also highlighted the “complimentarity” between China and India: “China’s got great macro… A lot of savings, good infrastructure, but not the best micro,“ he said. On the other hand, “India’s got great micro… they got a lot of world-class companies, but the macro has been, until recently, deficient.”