Fitch: China economy will avoid hard landing

16 january 2013

China’s economy will avoid a hard landing as the current slowdown is much less abrupt than during the global financial crisis four years ago, ratings firm Fitch said in a report on Monday.

China’s GDP grew 7.4 percent in the third quarter from a year earlier, the National Bureau of Statistics said on Thursday, down from 7.6 percent in the second quarter.

More positively, September’s retail sales saw the biggest year-on-year increase since March, although this may have been due to higher sales during the holiday period, while industrial production was up 9.2 percent year-on-year.

“China has scope for policy flexibility: we think fiscal stimulus will be modest while the labor market remains resilient, and the authorities are mindful of the risks of rapid credit growth — such as weakening the banking system. Nevertheless, the stimulus could still be sufficient to help raise growth towards 8 percent by year-end and support a rate of about 8.2 percent in 2013,” the report said.

In Fitch’s September Global Economic Outlook, the company trimmed its expectations for China’s full-year GDP growth for 2012 to 7.8 percent from 8 percent, following the Q2 reading.