The slowing Chinese economy looks headed for a "soft landing" but could face turbulence from the crisis-plagued eurozone, the International Monetary Fund said Wednesday.
In a staff report on the Chinese economy, the Washington-based
crisis lender said that the world's most populous country would see
2012 growth "moderate" to about 8 per cent, which would be a roaring
pace almost anywhere else.
With the eurozone in recession and the United States economy
sputtering, China remains an engine of rapid growth.
The slowing in China has been partly due to Beijing's plan to ease
into a "more sustainable pace" of expansion, trimming inflation to
about 3.5 per cent by the IMF's 2012 projection.
"But a worsening of the euro area crisis poses a key risk to the
outlook," the report said.
Domestically, risks to China's economy include the property
sector, the IMF report found. The country's banking system and the
balance sheets of local governments were additional looming issues.
If the impact of the eurozone crisis and other external factors
worsens, China has "ample room to respond forcefully" through
domestic spending.
The IMF reiterated its longstanding call for China to make faster
progress in moving its economy from dependence on exports and
investment to internal consumer demand, which would "substantially
boost living standards and make growth more balanced, inclusive, and
sustainable."
The staff report noted a "welcome" and significant reduction in
China's current account surplus since a 2007 peak but greater
reliance since then on investment spending, which "will be difficult
to sustain."
