China should experience a soft landing, European Commissioner Pierre Moscovici told CNBC on Thursday, after slower growth in world's second-largest economy was named as a risk that could affect growth in Europe. Meanwhile the dwindling price of oil would help consumption-led growth in the economy.
We are very conscious of the risks and we are closely monitoring what's happening in China although our basic scenario is that seeing a soft landing in China," Moscovici, the commissioner for Economic and Financial Affairs, Taxation and Customs, said.
"Our basic scenario is that growth in China is slowing down but we think that this very strong economy has the capacity to successfully face the transition from a previous model based on production to a model based on consumption and services," he said.
"Of course we need to have in mind all possible other scenarios whether if it is a hard landing or financial instability but our assumption is that a soft landing is on its way."
His comments come after the European Commission published on Thursday its latest economic forecasts for the region in which it forecast "moderate" growth in 2016, warning of increasing major challenges and risks to the growth outlook.
The euro zone is expected to grow 1.7 percent in 2016 (from 1.6 percent last year) and 1.9 percent in 2017, with expansion driven mainly by consumption.
"Certain factors supporting growth are now expected to be stronger and last longer than previously assumed," the Commission said in its report.
"They include low oil prices, favorable financing conditions and the euro's low exchange rate. At the same time, risks to the economy are becoming more pronounced and new challenges are surfacing: slower growth in China and other emerging market economies, weak global trade as well as geopolitical and policy-related uncertainty," it added.
Moscovici noted there were upside and downside risks to certain factors, such as oil prices.