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The economy seems to be undergoing a soft landing, though global headwinds

are increasing. Growth is expected to moderate to around 8 percent this year and inflation

to drop to 3½ percent. Meanwhile, a political transition is underway.

Focus. The economy has been slowing partly as a result of policy action to moderate

growth to a more sustainable pace, but a worsening of the euro area crisis poses a key risk

to the outlook. The mission also discussed domestic risks related to the property sector,

financial system, and local government finances. Another theme related to the medium-

term priority of internally rebalancing the economy toward consumption. Finally, the

mission also exchanged views on inward and outward spillovers, with particular attention

to how China’s investment impacts the rest of the world.

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