Asia to feel the pain of China slowdown, hard landing unlikely: S and P<\/p>\n
Martin Abbugao, Agence France-Presse, Jeju, S.Korea<\/p>\n
Asia will feel the pain of a slowdown in the giant Chinese
\neconomy, international credit ratings agency Standard and Poor's
\nsaid Friday, but stressed that a hard-landing that would wreak
\nhavoc on the region is unlikely.<\/p>\n
The pace of a state-engineered slowdown to cool China's
\noverheating economy is expected to cast a shadow over the Asian
\nDevelopment Bank (ADB) annual meeting that starts here on
\nSaturday although it is not on the official agenda, bank sources
\nsaid.<\/p>\n
China's strong appetite for raw materials and other goods have
\nincreasingly made the country a major export market for many of
\nits Asian neighbours.<\/p>\n
However, the analysts from Standard and Poor's told a news
\nbriefing on the sidelines of the ADB conference that a drastic
\nslowdown in the Chinese economy was unlikely although it cannot
\nbe totally ruled out.<\/p>\n
\"There will be pain with any slowdown in China,\" said Standard
\nand Poor's credit analyst Chew Ping.<\/p>\n
\"The pain will be spread in certain sectors particularly
\ncompanies, even banks (within China) but we do not think that
\nthis will translate into a system-wide meltdown or crash.<\/p>\n
\"Also, the pain will be shared with external partners as well.
\nChina's imports from the Asian countries have increased
\ntremendously so any slowdown will be felt not just across Asia
\nbut also globally.\"<\/p>\n
The World Bank, in a study released this year, said China and
\nits special administrative region of Hong Kong accounted for 25
\npercent of South Korea's total exports, about 35 percent of
\nTaiwan's and 12-13 percent of Malaysia's and Thailand's.<\/p>\n
Standard and Poor's said the likely scenario in China is for a
\n\"soft-landing\", which means the economic expansion will be slowed
\nto between seven and eight percent this year from over nine
\npercent in 2003.<\/p>\n
Any growth below that range would be considered drastic.<\/p>\n
Chew and his colleague at Standard and Poor's, John Bailey,
\nsaid there is overheating in the Chinese economy but only in
\ncertain sectors such as cement, steel, autos, property, aluminum
\nand telecommunications equipment.<\/p>\n
They pointed out that the overheating was not system-wide as
\nthere is also under-investment in other sectors such as power,
\nwater and transportation.<\/p>\n
Chew said that unlike in the 1990s, Chinese authorities had
\ntaken action earlier to cool the economy and their measures now
\nare gradual and targeted at the affected sectors.<\/p>\n
\"In addition, the economy is in the hands of officials who are
\nmore aware of the challenges facing them and of the consequences
\nof their actions than were their predecessors.<\/p>\n
\"The challenges currently facing China, while still
\nformidable, are more manageable than those of the 1990s,\" he
\nsaid.<\/p>\n
Bailey added: \"It is inevitable that growth will lose some
\nmomentum but no collapse is expected.\"<\/p>\n
Takahira Ogawa, another Standard and Poor's analyst, said the
\neconomic recovery in the United States and Japan, and signs of a
\nrebound in Europe would make up for some of Asia's loses in case
\nof a slowdown in China.<\/p>\n
Chinese authorities have taken steps to curb bank lending as
\npart of a string of measures to calm soaring investment by local
\ngovernments, which is contributing to the overheating and over-
\ninvestment in some sectors.<\/p>\n
China's cabinet, the State Council, ordered a stop in
\napprovals for new steel, aluminum and cement projects this year
\nand called for a review of ongoing investment projects, including
\ncommercial offices, golf courses and shopping malls.<\/p>\n
It also wants an end to the process of converting farmland for
\nuse in infrastructure projects.<\/p>",
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