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China Growth To Slow Down, but No “Hard landing”: IMF

A recent IMF Working Paper titled China’s Growth: Can Goldilocks Outgrow Bears? focuses on recent growth dynamics in China, and analyzes both cyclical positions and long-term growth prospects for the country. The paper was authored by IMF analysts Wojciech Maliszewski and Longmei Zhang.

Maliszewski and Zhang explain the thesis of their paper: "Currently, the ‘finance-neutral’ gap—our measure of the financial cycle—is large and positive, reflecting imbalances accumulated in the Chinese economy since the Global Financial Crisis. A period of slower growth is therefore both likely and needed in the near term to restore the economy to equilibrium. In the medium term, growth will slow as China moves closer to the technology frontier, but a steadfast implementation of reforms can ensure that China follows the path of the “Asia Tigers” and achieves successful convergence to high-income status."

Slower growth, but no "hard landing" for Chinese economy

The paper highlights that Chinese GDP has been moving up at the average rate of almost 10% annually for almost 40 years. A number of analysts have suggested we are seeing the development of a Goldilocks economy in China, ie, not so hot as to drive high inflation, but not too cold to slip into recession...