Hard landing not likely in China's economy

By Kim Young-gyo
HONG KONG, June 7 (Yonhap) -- A hard landing is not likely to take place in China's economy as its economic growth is steady despite the country's tightening moves, a Hong Kong-based bank said Tuesday.
In the first quarter of 2011, China's economy grew 9.7 percent, slightly down from the 9.8 percent expansion during the same period a year earlier. For all of 2011, the economy is forecast to grow in the 9 percent range, compared to a 10.3 percent increase last year.
Beijing said it is seeking to contain its economic growth in the 8 percent range amid mounting concerns that the overheating Chinese economy is driving the country's high inflationary pressure.
"Looking ahead, mainland China's economic growth is likely to be more moderate on the back of tightening monetary policies and uncertain global prospects," Bill Leung, senior economist at Hang Seng Bank, said in a report.
"However, no hard landing is expected as GDP growth is still forecast to be 9.3 percent for the year as a whole."
A hard landing is an economy rapidly shifting from growth to slow growth to being flat as it approaches a recession, usually caused by government attempts to slow down inflation.
In its tightening moves, the central People's Bank of China last month raised the benchmark interest rate for the second time this year and the deposit reserve requirement ratio for its major banks for the fourth time this year.
Hang Seng Bank said that although China's economy is losing some momentum, overall growth should still be supported by infrastructure spending and rising income growth.
Meanwhile, Yu Bin, a researcher with the Development Research Center of the State Council, said last week in a forum that a hard landing is not likely in China.
"For the past 30 years, urbanization, infrastructure and consumption had been going on in China. These domestic spendings have contributed to 70 percent of the economic growth," Yu said.
"The idea that China's economy has solely been relying on the overseas demand is not right."
ygkim@yna.co.kr