China Can Usher in Soft Landing: Former Adviser

China is well placed to steer its economy to a soft landing and a slowdown would be a normal part of the country's development cycle, prominent economist Yu Yongding said in comments published on Wednesday.

Greg Baker / AP

The government should focus more on restraining inflation than on helping exporters and should allow the yuan to appreciate further with that goal in mind, Yu, a former member of the central bank's monetary policy committee, wrote in the China Daily. Yu's optimism on growth and hawkish stance on inflation stand out in China at a time of mounting fears over a sharp drop in the economy's pace of expansion and a decrease in price pressures.

Annual growth in the third quarter was 9.0 percent, down from 11.9 percent in all of 2007. Consumer price inflation, meanwhile, slowed to 4.6 percent in the year to September from a 12-year high of 8.7 percent in February.

"We should have full confidence to curb any possible serious slide in our economy and bring it to a soft landing," Yu wrote in the newspaper.

"The country should still stick to a restrictive financial policy aimed at curbing inflation. We have no need to excessively worry that such a policy might hamper the country's economic development," he wrote.

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The government is armed with strong finances and the world's largest stock of foreign exchange reserves, and could easily stimulate domestic demand through a burst in public spending, he said.

China has already turned to government investment to pick up slack in the economy, approving capital spending of nearly $300 billion in the country's railways. It has also increased export tax rebates to cushion firms from drooping global demand.

At the same time, Yu said Beijing must keep pushing the yuan higher, in the process lessening the economy's reliance on exports and dampening inflation caused by high import prices.

"Any attempt to pursue a rapid trade surplus growth is only for the interests of foreign trade sectors at the expense of the whole economy," he wrote.

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