For years now China’s economic momentum has been cracking all records. But it is now increasingly being mooted that China could be hit by a sharp slump in growth after the Olympic Games. Is the Chinese economy heading for a hard landing?

China’s real economic growth will peak in 2007 at 11.5 % but will also remain high in 2008 despite the downturn in the US. There is no sign of a soft landing, much less a hard one, for the economy. But in the longer term China’s economy will also lose momentum.

A hard landing would have grave consequences, both for China itself and for the world economy. However, the likelihood of such a horror scenario is very low. China’s growth is set to ease only moderately to 8 % this year and next.

Fears that the overheated Chinese economy is heading for a hard landing have been doing the rounds for a while now. They have now gripped the financial markets, which are fretting about rising US interest rates as a result. Such fears are unfounded, not least because Chinese financial investments in the USA are simply too small in relation to the overall size of the US capital market.

Thanks to its success on the foreign trade front, China could soon find itself rubbing shoulders with the USA and Germany as the world’s third largest trading power. Moreover, there is much to suggest that the Chinese economy will continue to record high growth over the longer term. In eight to ten years’ time, the People’s Republic will most likely have overtaken Germany as the third largest economy.