China last year slipped to 6.9 per cent from the hay days of double digit growth and the government has fixed the target between 6.5 per cent to seven per cent for this year with an official rider that it will not be easy to achieve
China's economy is slowing down much more than the official figures show and a calamitous "hard landing" of the world's second largest economy is the greatest threat to global economy, former International Monetary Fund chief economist Ken Rogoff has said.
"China is going through a big political revolution. And I think the economy is slowing down much more than the official figures show," Rogoff told BBC, raising concerns over Chinese economy's continued slowdown.
As per official figures, China last year slipped to 6.9 per cent from the hay days of double digit growth and the government has fixed the target between 6.5 per cent to seven per cent for this year with an official rider that it will not be easy to achieve.
Rogoff said that a calamitous "hard landing" for one of the main engines of global growth could not be ruled out.
"If you want to look at a part of the world that has a debt problem look at China. They've seen credit fuelled growth and these things don't go on forever," he said.
"Everyone says China's different, the state owns everything they can control it," said Rogoff, now Professor of Economics at Harvard.
"Only to a point. It's definitely a worry, a hard landing in China. We're having a pretty sharp landing already and I worry about China becoming more of a problem," he said.
"We've taken it for granted that whatever Europe's doing, Japan's doing - at least China's moving along and there isn't really a substitute for China," he said.
"I think India may come along some day but it's fallen so far behind in size it's not going to compensate."
Last week, the Bank of International Settlements – the global think-tank for central banks - said that China's credit to GDP "gap" - which analyses the amount of debt in an economy relative to annual growth - stood at 30.1 per cent, increasing fears that its economic boom was based on an unstable credit bubble.
The figure was described as "very high by international standards" by the Financial Policy Committee of the Bank of England, which will now test British banks' exposure to a Chinese slowdown, the BBC report said.
Rogoff said European economies and the US had to ensure they were "on their feet" before any slowdown started to bite.
"The IMF has marked down its forecast of global growth nine years in a row and certainly the rumour is they're about to do it again," he said.
Beyond China, Rogoff said there was a good deal of uncertainty in the world over issues such as whether Donald Trump or Hillary Clinton will win the US presidential polls.
He argued it was difficult to judge what Trump would do if he won, and that a victorious Clinton might have her plans for infrastructure spending, for example, blocked by the Republican House of Representatives.
"I am certainly nervous, probably much more about a Trump victory, just because of not knowing what's next," he said.
