Alastair Newton, senior political analyst, Nomura:
There's a 1 in 3 probability of a ‘hard landing’ starting between now and the end of 2014 (where a ‘hard landing’ is defined as four consecutive quarters of growth at 5 percent or below);
- The risk of such is skewed to the latter part of that period. Between now and mid-2013 China’s leaders will be firmly focused on ensuring a smooth economic trajectory around the political inflexion point of the handover of power to the fifth generation leadership;
- They have plenty of firepower to ensure that that is so, even taking into account the possibility of a fairly sharp exogenous shock – although, clearly, a major exogenous shock (e.g. break-up of the eurozone, a military strike on Iran and consequent sustained oil price spike) could make keeping the economy on an even keel very difficult to impossible;
- Beyond mid-2013 China’s leaders will need to address significant structural and systemic challenges, which will not be straightforward. However, since 1992 (i.e. Deng Xiaoping’s "nanxun" or inspection visit to southern China, which marked a speeding up in the nation's development), they have shown an impressive ability to steer the economy through very choppy waters.
