China action reduces hard landing risks: World Bank

28 May, 2004

China's measures to cool its economy have sharply reduced fears the country may be headed for a hard landing, the World Bank said on Thursday.
The steps, including curbing credit to burgeoning sectors like property and autos along with controls on investment projects, had already had an impact, said World Bank country director for China, Yukon Huang.
"A month ago, people were worried about a potential hard landing. I think today they think it's going to be a potentially managed soft landing if current trends continue," Huang told Reuters on the sidelines of a global forum on poverty alleviation sponsored by the World Bank.
"China is doing the right thing to watch the situation very carefully. If more needs to be done, I think they'll be prepared to do more," he said.
Fears one of the world's fastest-growing major economies and growth engine for many nations may face an economic downturn as a result of inflationary pressures and over-investment in booming sectors have intensified in recent months, prompting speculation China may need to resort to raising interest rates.
Analysts say the central bank could hike benchmark lending rates for the first time in around nine years if inflation hits five percent, a level being watched closely by the authorities.

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