IMF predicts soft landing for Chinese economy

An IMF report on Wednesday predicted a soft landing for the Chinese economy amid increasingly turbulent global economic trends but stressed the importance of continued reform and currency appreciation to mitigate risks, Reuters reported. The report said that while timely expansionary policies have significantly reduced external imbalances, China’s investment-led growth model has led to severe domestic imbalances. “Policies should continue to be geared toward achieving this year’s growth targets. In the event of a worsening of the external outlook, China has ample room to respond forcefully,” the report said. Ironically, the IMF’s announcement that the Chinese yuan was now only “moderately undervalued,” comes as the People’s Bank of China guided the currency to its lowest level in 2012 against the US dollar on Wednesday, its third consecutive day of pushing down the value of the yuan.