[TOKYO] China's economy is unlikely to suffer a hard landing as Beijing has room to deploy fiscal and monetary stimulus if the world's second-largest economy slows further, Asian Development Bank President Takehiko Nakao said on Thursday.
ADB, the regional lender, expects Chinese growth to slow to 6.8 per cent this year from last year's 7.3 per cent, and to be 6.7 per cent in 2016.
Since last year, China has rolled out a raft of measures to avert a shaper slowdown, including fast-tracking infrastructure investment and cutting interest rates six times since November 2014. But such steps have been slow to take effect. "Even if GDP falls, there won't be a hard landing," Nakao, a former Japanese vice finance minister for international affairs, told a lecture. "There's room for fiscal and monetary policies to stimulate the economy if it slows further... I think they will act if necessary to maintain a certain rate of growth." Nakao said Chinese authorities would refrain from Keynesian economic policy, which could lead to more debt and excess investment, while Beijing tries to achieve harmonious growth led by private consumption and the service sector.
He also said he hoped ADB would cooperate with the Chinese-led Asian Infrastructure Investment Bank (AIIB) through co-financing projects starting "next spring".
Japan and the United States have stayed out of the AIIB, which is seen as a rival to Japan-led ADB and the US-led World Bank. But Nakao said if the two countries cooperate with the China-led AIIB indirectly through ADB and the World Bank, it would serve the best interests of Japan.
Nakao said he hoped Myanmar's new government would continue with market-oriented economic reform, saying President Thein Sein has promoted stable growth.