China’s Slowdown May Not Be as Stable as We Thought

China’s economy may be facing a period of instability and imbalance as it transitions from high-speed growth, a state researcher said.

“Growth inertia should not be underestimated, as new growth engines and patterns have not been formed,” researcher Yu Bin said in a report by China’s Development Research Center released yesterday in London. “Market expectations are unstable, downward pressure has increased, and existing and new structural mismatches exist. The economy has become unstable and uncertain like never before.”

China’s growth slowed for a second straight quarter to 7.5 percent in the April-June period, increasing the risk that Premier Li Keqiang will miss a full-year target for the same pace. Reports in Chinese media indicating that Li will act to support expansion if needed helped send the Shanghai Composite Index up 2 percent yesterday.

The DRC is an agency advising China’s cabinet, and Yu said that if China can maintain “an appropriate macroeconomic environment,” start suitable reforms and control risks, “the growth rate for 2013 can approach 7.5 percent.”

Bloomberg

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