Reuters: China source of hope and worry for Davos regulars

When the global economy nearly choked on toxic debt three years ago, China and its massive investment stimulus was hailed as a savior that helped avert a disaster. Fast forward to 2012 and business and economic elites gathering in Davos have a more sober take on the Asian juggernaut, now seen as a source of hope and opportunity but also possible unpleasant surprises. The world's second-largest economy is still expected to grow this year at a clip that would make most of the world jealous, but concern that Beijing may mismanage a soft landing gets mentioned in the same breath as other risks, such as the deepening of the euro zone crisis or weak U.S. recovery. "There is a mix of hope and concern. People worry on two fronts. One is that China is still far too export dependent and that makes it very vulnerable," said Nariman Behravesh, chief economist at IHS Global Insight about the prevailing mood of discussions about China in Davos. "The second worry is the housing situation. It is tricky because there are very few countries that were able to deflate a housing bubble without creating some other damage." Most economists expect China to grow at 8 percent or more this year, slowing from 9.2 percent in 2011 but in keeping with Beijing's aim to steer the economy away from double-digit export-led growth to more sustainable expansion. Armed with the world's biggest foreign reserves, deep fiscal pockets and a room for credit easing, Beijing is uniquely placed to cope with possible European recession and downbeat markets. But the relatively low-key Chinese presence at the annual gathering of the rich and powerful, mainly because it coincided with the Lunar New Year public holiday, may also be a sign that China's focus is on domestic challenges.
Reuters