Monitor | Fears over a 'tail risk' hard landing in China are growing

Yesterday, the South China Morning Post reported how Beijing's central propaganda department has instructed mainland media organisations not to give air time or column inches to foreign bank economists worried about the dangers posed by China's ballooning debt levels.

As a crisis prevention measure, that's like thinking you can eliminate the threat of a fire by disabling your alarm.

Yet while Beijing is keen to play down the risks, private sector analysts are getting increasingly concerned.

Most believe that China's economic growth rate is likely to stay above 7 per cent over the next couple of years at least. That's what China's leaders have decided is the slowest acceptable growth rate, and recent history shows they have the tools to support economic growth as well as the willingness to use them.

But although a painful period of deleveraging which pushes growth below, say, 5 per cent may not be the most probable outcome for the Chinese economy, it remains a possibility. And the effects should China experience such a hard landing would be so severe and so widespread that the scenario, unlikely though it may be, merits careful examination.

Asia's private sector analysts clearly think so. In a report published yesterday, Tim Condon, the chief economist for Asia at Dutch banking giant ING, argued that just as China's rapid growth in the 2000s lifted economies across the world, so a Chinese slowdown will inevitably cause casualties.