Beijing can stimulate economy, says IMF

Beijing could "easily boost domestic consumption", says the IMF. Photo / Supplied

China could easily boost domestic consumption to stimulate its economy if its slowdown is too sharp, the International Monetary Fund says.

IMF representative for Asia Anoop Singh said Europe's plunge into recessionary conditions could pose a challenge for Beijing to keep its growth steady.

"We don't see a hard landing as a likely event in China," he said yesterday.

But, he added, "there are clear risks, in particular an escalation of European events. There is room for fiscal stimulus if downside risks materialise."

Generally in Asia, Singh said, governments still had the fiscal cushions to be able to intervene to help their economies without large financial risks.

"The pace of consolidation could certainly be slowed in many economies which have relatively low levels of public debt, such as China, of course."

Beijing, he said, already had clear, established tools to counter too-slow growth by boosting domestic consumption.

Despite a still-quick pace of growth, China's economy has shown some weaknesses in recent months.

On January 20 a key index of manufacturing activity, HSBC's preliminary purchasing managers' index, contracted for the third straight month.

AAP