Mainland outlook down, but not causing worries
While economists are busily revising down China's outlook on the back of weakening export growth and concern about its property and banking sectors, many economists still do not expect a 'hard landing' for the mainland next year.
Liu Li-Gang, head of greater China economics at Australia and New Zealand Banking Group (ANZ), who sees the country's gross domestic product expanding by 9.5 per cent in 2012, said a hard landing was a 'distant scenario'.
Wang Qinwei, China economist at Capital Economics, who forecast 8.5 per cent GDP growth next year, agreed.
John Tang, UBS China strategist and Shen Jianguang of Mizuho Securities said the country was shifting toward a domestic consumption-driven economy post-crisis, which was a more sustainable growth model.
While the economists tended to agree in general terms, definitions of a hard landing varied. ANZ's definition of a hard landing is gross domestic product growth below 5 per cent, but Capital Economics said a hard landing involved GDP growth dropping more than three percentage points year on year.
GDP rose by 9.1 per cent in the third quarter compared with a year ago, the slowest pace in two years, but still strong, economists said.
Despite the deteriorating situation in Europe and its effect on mainland exports, CCB International's Banny Lam said he thought domestic economic growth momentum was healthy and he expected retail sales and industrial production to remain strong. He forecasts GDP growth of 8.5 per cent for China next year.
Economists said the government had tried to maintain annual GDP growth above 8 per cent, the magic number that officials believe will help maintain employment and social stability. Premier Wen Jiabao said earlier this year that the country would set an annual growth target of 7 per cent over the 12th Five-Year Plan spanning 2012 to 2017.
Not everyone is bullish on China's prospects, however. While not dubbing it an 'armageddon' scenario, Diana Choyleva, a director of Lombard Street Research, a London think tank, said she thought China's hard landing 'was in motion'. She predicted that Chinese banks would need a government bailout just as they did a decade ago.
Standard Chartered lowered its estimate for China's GDP growth to 8.5 per cent from 10 per cent for next year yesterday. Stephen Green, Standard Chartered Bank's greater China regional head of research, said the country's inflation remained higher and domestic growth momentum slowed more this year than expected.
The International Monetary Fund's figure for China's economic growth in 2010. The IMF expects growth of 9.5 per cent this year