Failure in rebalancing China's economy may jeopardize growth: Paul J. Heytens

Beijing, Apr 7 (ANI): A senior Asian Development Banks (ADB) official has said the country's economy carries very little risk of a hard landing, but any failure in implementing the government's agenda to rebalance the economy may jeopardize the sustainability of growth in the longer term.

"One important risk is whether China's rebalancing agenda will be vigorously pursued", "If it is not, China may find at some point in the future growth could begin to slow significantly," said Paul. J Heytens, the ADB's director for China.

The fragility of external demand along with fiscal and debt concerns in the European Union, China's largest trading partner, and in Japan, as well as the rapid increase in local governments' debts to an estimated 7.6 trillion yuan are three other downside risks to China's economic outlook, he added.

The bank also predicted that China's Consumer Price Index, a main gauge of inflation, will accelerate to 4.6 percent on average in 2011 as a result of higher global prices for food and oil, rising wages and robust domestic demand.

The pace is expected to ease in the second half of the year because of the base effect, the bank said.

The Chinese economy is likely to expand by 9.6 percent this year and 9.2 percent in 2012, slower than the 10.3 percent growth rate last year, the Manila-based bank forecast in its 2011 Asian Development Outlook.

While fixed asset investment will remain a key driver of the nation's economic growth during the next two years, the momentum of the expansion will decelerate because of the winding-back of the government's fiscal stimulus measures and a tighter monetary policy, ADB said in its report. (ANI)