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What Kind of Landing for the Chinese Economy?

Policy Briefs 04-7


At the heart of imbalances in the Chinese economy is an unsustainable investment boom that has been in the making for at least four years and that will probably take at least several years to undo, even with good policies. Judging from the unwinding of China's last investment boom, the most likely outcome is that economic growth will decline during this adjustment period-probably on the order of 4 to 5 percentage points from its current rate. Hence, the growth decline will last longer and may be more gradual than some have envisaged, but its cumulative magnitude may not be much less marked.

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