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People's Daily Online>>China Business

Slowdown but no hard landing in 2012

By Wei Tian  (China Daily)

08:27, February 03, 2012

BEIJING - Although forecasts for China's growth rate vary, analysts and economists agree that the world's second-largest economy will achieve a soft landing in 2012, with the prospect of further easing measures.
"We expect the debt crisis in Europe and the weak recovery in the United States to reduce demand and cause a drag on China's export-dependent economy," US-based Standard & Poor's Ratings Services said in a report released on Thursday.

In the report, "Credit Outlook: Chinese Dragon to Fly into a Soft Landing in 2012", the agency forecast that GDP growth would decelerate further in 2012 to about 8 percent in a base-case scenario.

"We also project that there is a one-in-four chance of a medium landing of 7-percent growth to occur, and a one-in-10 likelihood of a hard landing of 5-percent GDP expansion," said S&P credit analyst Terry Chan.

S&P said that different sectors would experience varied effects from the marked slowdowns of the latter two scenarios. "The impact could range from very high to low, which could mean from defaults to no downgrades," the agency said.

"We believe the country's real estate sector and local governments would suffer most" in case of a significant slowdown, it said.

China experienced a slowdown in GDP growth to 9.2 percent in 2011 from 10.4 percent in 2010. S&P's base-case estimate was matched by most analysts, who forecast growth of 8 to 9 percent this year.

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