Latest News:  
Beijing   Sunny/Overcast    28 / 16 ℃  City Forecast

Home>>China Business

Interview: Financial expert says China's economy less likely to make hard landing in 12 months


10:16, May 26, 2012

NEW YORK, May 24 (Xinhua) -- Chen Zhiwu, a professor of finance at Yale School of Management, said Wednesday that chances are slim for China's economy to make a hard landing in the next 12 months as no big problems have been detected in its banking system.

"There is only a 5 percent probability in the coming 12 months that China's economy will have a hard landing," Chen said in a recent interview with Xinhua at an event organized by the Chinese Finance Association in New York.

In response to the projection by economists and hedge fund managers that China's banking sector will suffer a crisis soon, Chen said that such concerns are largely groundless.

"In China, the banking industry is positively correlated with the government's fiscal situation. As long as China' s fiscal situation remains sound, the bank sector will be fine," said the professor.

However, he voiced concerns about possible financial problems over the next 10 years.

"Three factors have driven China's economy in the past decades," said Chen, explaining the reasons for potential financial problems in the future.

The first is the so-called "WTO-related factor."

Chen said that since its entry into the WTO, China's exports have been greatly boosted. The country's export-oriented economy has thus been lifted up.

However, following an outbreak of the global financial crisis and the European sovereign debt crisis, China's economy is likely to be harmed by shrinking imports of its trade partners.

The second, according to Chen, lies in the infrastructure sector. From 2008 to 2010, the government invested heavily in infrastructure. With the construction projects in the sector being completed, the investment-driven economy will lose much of its impetus.

The last, he said, is related to real estate bubbles. With the boom in housing industry in the 1980s, China gathered pace in its economic development. Potential bubbles in the real estate industry may backfire on its economy.


Leave your comment0 comments

  1. Name


Selections for you

  1. China's naval escort fleet conducts drill

  2. Magnificent Xigou Great Wall

  3. Fifth Hangzhou Art Fair kicks off

  4. Flower wall made of over 40,000 roses

Most Popular


  1. Much-needed cooling awaits China
  2. Why is Washington so scared of Confucius?
  3. Chance to peacefuly resolve Iranian nuclear issue
  4. What is the US' aim behind arms sales to Taiwan?
  5. Investment-driven growth no longer a viable option
  6. Summit can't stop NATO from being marginalized
  7. Easing liquidity not a cure-all
  8. As Beijing remains mum, trade relationships suffer
  9. Intentions behind Japanese right-wingers’ collusion with ‘World Uyghur Congress’
  10. Real intentions of US exercise in Middle East

What's happening in China

First food festival held on train

  1. Solar firms rally against US antidumping probe
  2. Confucius Institute to promote Chinese food
  3. Illegal Vietnamese workers found in Anhui
  4. Parents protest school policy in Beijing
  5. Home prices to dip, but tumble unlikely

China Features

  1. High ticket prices, unaffordable landscapes
  2. Huangyan tensions
  3. 2012 Russia-China joint naval exercise
  4. 2nd Beijing International Film Festival
  5. Auto China 2012

PD Online Data

  1. Spring Festival
  2. Chinese ethnic odyssey
  3. Yangge in Shaanxi
  4. Gaoqiao in Northern China
  5. The drum dance in Ansai