Hard landing unlikely for 'poorly understood' China: IMF chief

IMF chief Christine Lagarde (left) said on Thursday that China was unlikely to suffer a hard landing, describing it as a "poorly understood and poorly interpreted" economy that took a cautious approach to growth. -- PHOTO: AFP
IMF chief Christine Lagarde (left) said on Thursday that China was unlikely to suffer a hard landing, describing it as a "poorly understood and poorly interpreted" economy that took a cautious approach to growth. -- PHOTO: AFP

SYDNEY (AFP) - IMF chief Christine Lagarde said on Thursday that China was unlikely to suffer a hard landing, describing it as a "poorly understood and poorly interpreted" economy that took a cautious approach to growth.

The International Monetary Fund expects China's economy to expand 7.5 per cent in 2014, but subdued inflation and manufacturing data has fuelled concern about a slowdown in the world's second-largest economy.

A windback in stimulus by the US Federal Reserve and subsequent exit of capital from the emerging economies has amplified anxieties about the global implications of such a move.

But Ms Lagarde was upbeat on the Asian giant at a public question and answer session in Sydney on Thursday before this weekend's meeting of G20 finance ministers and central bankers.

"It's very unlikely that China would have a hard landing," Ms Lagarde said at the session, recorded for ABC television.

"If I look at the forecast we have for China it's 7.5 per cent growth. It's certainly a bit less than what they've done over the last ten years but an economy of that size and with that degree of development is bound to slow down a little bit, and we believe it's appropriate actually that they should slow down their growth."

She said the IMF felt China's economy "is very cautious with its development and is often poorly understood and poorly interpreted".

Though the IMF chief believed such an event was unlikely, she said it would be prudent for China's partners to "hedge" against the possibility.

"(China's partners) should make sure that they have trade relationships, financial relationships, foreign direct investment relationships with other countries of the world in order to hedge and protect their position," she said.