China warned of hard landing

Chinese government policies intended to cool the economy are hurting productive enterprises and could risk a painful "hard landing" if not softened in time, a senior researcher at a cabinet think-tank has cautioned.
The warning, from Xia Bin of the State Council's Development Research Centre, reflects vigorous debate in government circles about the mix of policy measures needed to rein in unsustainable expansion in some sectors of the economy without endangering overall growth.
Mr Xia, head of the DRC's Financial Research Institute, acknowledged that administrative action to stop overheating was necessary in some sectors. But he said that the central bank's target for loan growth of 17 per cent was below the level needed by China's investment-reliant economy.
"I think that this kind of tight money supply is somewhat too fierce to maintain, so I am stressing that we must not have a hard landing," he said in an interview with the Financial Times.

Underpinning the concerns of Mr Xia and other economists and officials is the view that a high rate of money supply growth is essential.
They believe this money supply is necessary to maintain economic growth at a level that can create the millions of jobs needed to maintain social stability.
Mr Xia said the government should prepare to shift the focus of policy away from tough administrative orders and towards monetary measures such as interest rate adjustment.
Such views are shared by a number of economists and officials in Beijing, who have become increasingly concerned about the impact