SYDNEY: International Monetary Fund (IMF) chief Christine Lagarde said on Thursday that China was unlikely to suffer a hard landing, describing it as a “poorly understood and poorly interpreted” economy that took a cautious approach to growth.
The IMF expects China’s economy to expand by 7.5 percent in 2014, but subdued inflation and manufacturing data has fueled concern about a slowdown in the world’s second-largest economy.
A windback in stimulus by the Unite States Federal Reserve and subsequent exit of capital from the emerging economies has amplified anxieties about the global implications of such a move.
But Lagarde was upbeat on the Asian giant at a public question and answer session in Sydney on Thursday before this weekend’s meeting of Group of 20 finance ministers and central bankers.
“It’s very unlikely that China would have a hard landing,” Lagarde said at the session, recorded for ABC television.
“If I look at the forecast we have for China it’s 7.5-percent growth. It’s certainly a bit less than what they’ve done over the last 10 years but an economy of that size and with that degree of development is bound to slow down a little bit, and we believe it’s appropriate actually that they should slow down their growth,” she said.
Lagarde added that the IMF felt China’s economy “is very cautious with its development and is often poorly understood and poorly interpreted.”
Though the IMF chief believed such an event was unlikely, she said that it would be prudent for China’s partners to “hedge” against the possibility.
“[China’s partners] should make sure that they have trade relationships, financial relationships, foreign direct investment relationships with other countries of the world in order to hedge and protect their position,” she said.