It may take 20 or 30 years for China to complete its transition to a consumption-based economy from one based on production and investment, Paul Sheard, chief economist of Standard and Poor’s Financial Services LLC, said.
Nonetheless, it is unlikely that the country will experience a hard landing any time soon, Sheard told the Hong Kong Economic Journal in an interview.
China should put in place risk management and regulatory policies to weather any economic headwinds, he said.
Regulatory frameworks should be improved to better lead economic policies to be more market oriented during the course of the transition, Sheard said.
He said the Chinese government is capable of managing the country’s debt, which has been accruing since the Beijing Olympics in 2008.
Sheard’s comments came after Moody’s Investors Service downgraded its outlook for China.
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