China's economic slowdown, 'sign of soft-landing'

WASHINGTON -- China's economic slowdown appeared to be heading for a soft-landing, said experts in Washington on Thursday in a forum sponsored by a US think tank.

China's economy "is slowing because of policy efforts to cool investments and to control the housing boom, compounded with external headwinds", said Markus Rodlauer, deputy director of IMF Asia and Pacific Department, in Carnegie Endowment for International Peace, at the forum.

"A large current account surplus (of China), over 10 percent (of Gross Domestic Product) in 2007 and 2008, has come down to 2.5 percent of GDP," he said.

Accompanied with external rebalance, Rodlauer also acknowledged the risks that China's domestic imbalance grew significantly, which was engineered as a response to global crisis.

"In order to sustain this soft-landing in the next few quarters, in order to keep the economy an even growing at around 7 to 8 percent each year, a package of policies is needed to shift towards more consumption-based and inclusive growth," noted Rodlauer.

Stephen Roach afterwards, a senior fellow of Yale University School of Management, also said "China can and should run a high investment ratio for years, if not decades, especially given their commitment to urbanization, which is a hugely infrastructure- and capita- intensive activity."

In his opening address, Yukon Huang, a senior associate at Carnegie Endowment for International Peace, said "A year and a half ago, you read headlines talking about Chinese overheated economy, property bubble, excessive inflation, over-investment and the need to put on all the brakes to achieve soft-landing. If you picked up headlines today, you hear exactly the opposite, like the concerns about economic collapse."

The intensifying concern reflected how dependent the world had become on China driving the global economy given the protracted problems in the United States and Europe, noted Huang.

He also pointed out that in fact in the depths of the 2008-10 financial crisis China accounted for nearly half of the global increase in demand.