Experts see no reason to panic about slowdown in the economy
Source: Xinhua |
July 24, 2012, Tuesday
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Print Edition
Print Edition
SOME experts see little reason to fear a hard landing in China's economy despite GDP growing at 7.6 percent in the second quarter, the slowest pace in three years.
They said the slowdown is more because of the government's self-initiated efforts to restructure the economy and shift its development model.
They also said the deceleration, which was expected, would allow more space for the country to put its growth on a sustainable path.
Nicholas R. Lardy, a senior fellow at the Peterson Institute for International Economics, said the slower growth "is not necessarily a bad thing," as it still falls within the official growth target of 7.5 percent set up at the beginning of the year.
The fine tuning showed Beijing cares more about the quality and sustainability of its economy rather than growth figures, he said.
In this connection, "this (the slowdown) is fully consistent with what they are trying to achieve," Lardy said.
Michael Pettis, a senior associate at Carnegie Endowment for International Peace, a Washington-based think tank, said "it is almost impossible for China to re-balance except under conditions of much slower growth and rising real interest rates."
"The fact that Beijing allowed growth to slow so sharply, and more importantly that it has refrained from lowering interest rates as quickly as inflation has declined, shows that the leadership is willing to take decisions that are necessary for sustainable Chinese growth in the medium term," he said.
Yukon Huang, also a senior associate at Carnegie Endowment for International Peace, said the disappointment regarding China's growth figures reflects how dependent everyone has become on China to propel the global economy given the protracted economic woes still plaguing the US and Europe.
The slowdown in China's economic progress might rattle other economies, Huang said, but for the nation itself, slower growth can be a good thing if it is part of a transition to a more efficient and sustainable growth path.
The International Monetary Fund on July 16 revised down its projections for China's growth this year from 8.2 percent to 8 percent, citing external shocks as a major drag.
As the eurozone debt crisis reaches a crescendo and the US economy continues to weigh on global markets, China would face more downward risks.
Premier Wen Jiabao warned the economic hardship may continue for a period of time, but promised further efforts to fine-tune policies to make them more targeted, foresighted and effective.
The People's Bank of China has cut interest rates and reserve ratio requirements to stabilize the economy.
"China has ample capacity to avoid a hard landing," said Lael Brainard, the US Treasury's under secretary for international affairs.
"Chinese authorities have been very pragmatic ... We've seen some indications they are going to be much more focused on lifting domestic consumption" to make growth more sustainable.
They said the slowdown is more because of the government's self-initiated efforts to restructure the economy and shift its development model.
They also said the deceleration, which was expected, would allow more space for the country to put its growth on a sustainable path.
Nicholas R. Lardy, a senior fellow at the Peterson Institute for International Economics, said the slower growth "is not necessarily a bad thing," as it still falls within the official growth target of 7.5 percent set up at the beginning of the year.
The fine tuning showed Beijing cares more about the quality and sustainability of its economy rather than growth figures, he said.
In this connection, "this (the slowdown) is fully consistent with what they are trying to achieve," Lardy said.
Michael Pettis, a senior associate at Carnegie Endowment for International Peace, a Washington-based think tank, said "it is almost impossible for China to re-balance except under conditions of much slower growth and rising real interest rates."
"The fact that Beijing allowed growth to slow so sharply, and more importantly that it has refrained from lowering interest rates as quickly as inflation has declined, shows that the leadership is willing to take decisions that are necessary for sustainable Chinese growth in the medium term," he said.
Yukon Huang, also a senior associate at Carnegie Endowment for International Peace, said the disappointment regarding China's growth figures reflects how dependent everyone has become on China to propel the global economy given the protracted economic woes still plaguing the US and Europe.
The slowdown in China's economic progress might rattle other economies, Huang said, but for the nation itself, slower growth can be a good thing if it is part of a transition to a more efficient and sustainable growth path.
The International Monetary Fund on July 16 revised down its projections for China's growth this year from 8.2 percent to 8 percent, citing external shocks as a major drag.
As the eurozone debt crisis reaches a crescendo and the US economy continues to weigh on global markets, China would face more downward risks.
Premier Wen Jiabao warned the economic hardship may continue for a period of time, but promised further efforts to fine-tune policies to make them more targeted, foresighted and effective.
The People's Bank of China has cut interest rates and reserve ratio requirements to stabilize the economy.
"China has ample capacity to avoid a hard landing," said Lael Brainard, the US Treasury's under secretary for international affairs.
"Chinese authorities have been very pragmatic ... We've seen some indications they are going to be much more focused on lifting domestic consumption" to make growth more sustainable.
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