[TOKYO] China's economy remains in a controlled slowdown and authorities there should be able to avoid a hard landing, said Tatsuo Yamasaki, Japan's former currency chief.
Mr Yamasaki said that while China's inexperience in communicating with financial markets was apparent after its currency devaluation, upheaval in equities will only have a limited impact on the real economy.
"China has ample financial resources available compared with developed nations," he said in an interview on Monday in Tokyo. "It can cut rates unlike Japan, the US and Europe. So, it still has policy options." Authorities in China, which is Japan's biggest trading partner, "have a firm grip on problems and are trying to deal with them," said Mr Yamasaki, 58, who served as the top official for currency matters at the Ministry of Finance until July. He is now a Tokyo-based professor at the International University of Health and Welfare.
Japan should look past the market volatility and closely monitor trends among Chinese consumers, whose purchasing power is important to the Japanese economy, Mr Yamasaki said.
"Some people, including those in the market, seem too pessimistic about China's economy, but they don't need to worry about a crash," he said. "China's economy is going through a major transformation, from manufacturing to services, from investment to consumption." The devaluation in August was part of China's ongoing efforts to increase the currency flexibility and internationalise the yuan, according to Mr Yamasaki. Giving the market greater sway for price setting is also important for the country's efforts to have the yuan become one of the International Monetary Fund's reserve currencies, he said.