Night view of clusters of high-rise buildings in Shanghai, China, 13 December 2013. AAP
Although rising debt increases the probability of a hard landing, for now I expect neither outcome. More likely, I believe, is a ‘long landing’, during which growth rates will drop by roughly one to two percentage points every year for the rest of this decade. Implementing reforms will protect China from a hard landing. It will, however, force much lower (albeit healthier) growth rates.