The wealth management arm of investment bank UBS said on July 8 that downside risks to China's economy are rising in the second half of the year, and corporate bankruptcy risks may become pronounced, particularly in some industries with overcapacity where orderly bankruptcies may occur.

Pu Yonghao, Chief Investment Officer for Asia-Pacific at UBS Wealth Management, said at a press conference that China's main problem is an excess of low-end products, and some companies in industries with overcapacity may face bankruptcy, including in LED, solar, steel trading and private equity, but he believes these will be controlled, gradual bankruptcies.

He also said such bankruptcies may become evident in the second half of the year. Regarding China's economy in H2, Pu said he expects the economy to pick up slightly in the fourth quarter after China sets its direction in the third quarter, and given stable consumption, sustained investment and slight improvement in exports, he maintains his forecast of 7.5% GDP growth for this year. However, he noted that downside risks to China's economy are rising.