China well equipped to forestall sharp slowdown

There has never been a shortage of naysayers predicting an impending collapse of the Chinese economy. But not one of the predictions has proven true, and it will be no different this time.

With a host of key growth indicators at their lowest points for a number of years, Tuesday's release of the HSBC flash manufacturing purchasing managers' index, which fell to an 11-month low and came in below even pessimistic forecasts, has spurred a new wave of pessimism.

Such dire predictions, as always, fail to allow for policy makers' room to maneuver -- first in neutralizing the catalysts for a collapse, and then in limiting the damage even if occurs.

Although China's headline growth slowed to its lowest level in 24 years, the 7.4-percent rise is the envy of most other nations and the economy still enjoys sound fundamentals as job creation and income growth continue apace.

Rather than being the kind of "hard landing" many had forecast, China's slowdown is unfolding largely in a manageable way. Senior officials are relatively calm and have consistently ignored pressure from the market to launch massive stimulus packages.

A "new normal" of slower growth is a desirable outcome as China seeks to wean the economy off its reliance on exports and state-directed investment and instead encourage private sector growth and consumer spending to ensure sustainable expansion in the long run.

Taking into account the unique features of China's economy, it is not hard to conclude that it is almost impossible for the economy to nosedive, because the Chinese government won't let it happen -- for reasons as diverse as ensuring social stability, maintaining market confidence and guaranteeing fiscal revenue growth to force through reforms.

Policy makers have the firepower to avert a hard landing and would not hesitate to intervene if the slowdown caused widespread unemployment or a drop in citizens' incomes.

In the short term, policy makers could employ mini stimulus measures, such as reserve requirement ratio and interest rate cuts and tax reductions, to ensure growth does not slide below the lower limit of a reasonable range.

Plans are also in place to engineer longer-term development. Comprehensive reform and three major strategies -- construction of "Belt and Road" Asian trade infrastructure, coordinated development of the Beijing-Tianjin-Hebei region, and development of the Yangtze River economic belt, are designed to unleash potential for future growth.