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China: The Implications of Policy Tightening



China is now a major player in the world economy and its economy has been booming. Last year imports grew by 40 per cent. China has accounted for over 20 per cent of global growth over the last three years (chart 1). Last year China’s real GDP grew by 9.1 per cent. Bank credit is up 21 per cent, inflation is rising and some economists believe the true inflation rate is above 5 per cent.

Authorities have moved to cool the economy. They are likely to succeed. The key questions are whether the economy is in for a hard or soft landing and what does that mean for other Asian and world economies.

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