China economy to dodge hard landing: IMF
The International Monetary Fund on Friday all but ruled out a hard landing for China’s slowing economy, saying it would expand despite increasing headwinds from battered markets in Europe and the United States.
The Fund has cut its estimate for growth in the world’s second-largest economy this year, raising fears that China is running out of steam, with expansion pegged at 7.8 per cent this year and 8.2 per cent next year.
That is down from a July estimate of 8.0 per cent and 8.5 per cent growth respectively.
However, Anoop Singh, director of the IMF’s Asia and Pacific department, told a Tokyo press briefing that China was not on the road to economic ruin, describing the possibility of a hard landing as “remote”.
“China is not having a hard landing. The numbers are clearly recognising that China will grow this year,” he said at the IMF and World Bank’s annual meetings in the Japanese capital.
China has suffered the knock-on effect of a severe debt crisis in Europe and a hobbled recovery in the United States, its two key export markets, which have led to a slump in trade and contraction in manufacturing activity.
Authorities have moved to spur the economy by slashing interest rates twice in quick succession this year and cutting the amount of funds that banks must keep in reserve three times since December in a bid to encourage lending.
On Thursday, the World Bank’s newly-installed chief said he expected Beijing to take “very aggressive” steps to kickstart its slowing economy after a once-in-a-decade leadership shuffle next month.
“They are going through a political change right now, and once the political change is complete, my sense is that they’ll be very aggressive in trying to restore growth,” said Jim Yong Kim.
The country’s political scene is gearing up for a major leadership change at the helm of the ruling Communist Party, with Vice President Xi Jinping widely tipped to succeed President Hu Jintao as China’s next leader.
According to an IMF report released on Friday, Asian growth averaged at about 5.5 per cent during the first half of this year, the lowest rate since the 2008 global financial crisis, although the continent remained a key driver of world economic growth.