IMF: Pessimism about China is strained

Recent data on the Chinese economy fueled fears about the second largest economy in the world, that slows down the speed that can put the global economy into recession.
Changyong Rhee chief economist of the International Monetary Fund for Asia said that such pessimism may be misplaced. Service sector and retail supply thrive, which is likely to offset the decline in production, he said.
"We do not think that there is enough evidence on the manufacturing sector, there will be a hard landing," said Mr. Rhee said in an interview. "They certainly have a delay in the proceedings, which is a problem of overcapacity.
The real estate sector in China also fueled concerns. But Mr. Rhee said there are signs property prices to stabilize.
Beijing star nourishes its growth over the past two decades by cheap loans. The IMF estimates overinvestment account for nearly 25% of growth domestic product of the country.
Beijing faces a difficult task. The termination of the lending system too quickly can delay growth. But insufficient reduction of the levels of corporate debt and the inability to cope with bad credit can quickly create greater credit crisis over the next few years.
"One question is whether China can manage this transition with the current system of government," said senior official of the IMF. "This is a critical issue."
Rhee said the IMF is confident that the economy will slow to around 6.5 percent in the second half of this year.
E.Dimitrov JrTrader