Q1

With analysts forecasting China's second-quarter GDP growth to hit a new low, do you envisage an even lower growth rate in the coming months? How much GDP growth do you forecast for the third quarter?

Q2

The central bank has already cut interest rates twice, first in June, then in July. How much do you think the interest rate cuts are helping the economy's growth? And do you think there is still room for further interest rate cuts and cuts in banks' reserve requirement ratios in the remaining months of the year?

Q3

While inflation is coming down, do you think it is coming down so abruptly as to threaten deflation? What's the likelihood of deflation emerging in China today?

Q4

Do you think a large increase in investment in government projects will help turn around the economy? Or do you think there are other ways to better-stimulate growth?

Chris Leung

senior vice-president and senior economist at DBS Bank (Hong Kong) Ltd

A1

Worries of a hard landing are overblown and inconsistent with market growth estimates of above 8 percent in 2012. This level of growth is characteristic of a soft landing, rather than a hard landing. But our annual growth projection has just been lowered to 8 percent from the previous 8.5 percent.

It is often the case that an economy will grow slower during a structural transition. China will likely grow slower in the range of 7 to 8 percent in years ahead compared to an average growth of more than 10 percent in the past decade. But this should not be cause for pessimism.

What really matters is the perceived growth differential between China and the rest of the world in the long run, a gap that still clearly favors China.

A2

Rate cuts will not boost headline GDP growth much unless there are concurrent relaxations on the curbs placed on the property market alongside deeper reserve requirement ratio cuts.

We forecast there will be another cut in interest rates by 25 basis points in the coming months, and two cuts in RRR, each by 50 basis points.

A3

It would be exaggerating to say that China faces the risk of deflation, because inflation levels cannot be fully reflected by the consumer price index.

The inflation level in China is still high - although CPI has declined. Otherwise the government wouldn't need to continue having tight controls on the property market.

A4

After the Chinese leadership recently emphasized the need to prioritize growth stabilization, hopes for more economic stimulus have been reignited. All the recent official statements were, however, unanimous, that stringent restrictions on the property market will remain. If that were the case, aggressive loosening of monetary policy would contradict its goals. The pent-up demand for property accumulated over the past two years could be explosive.

The fastest way to boost growth is to loosen credit controls and restrictions on the property market simultaneously. But policy makers know too well the consequences of pursuing this route.

If domestic demand retreats further for whatever reason potentially the "Grexit" and its resultant rippling effects across financial markets worldwide the right response should be a Keynesian solution.

The size of the stimulus package needs not be akin to the 4 trillion yuan launched in 2009. The essence is rationalizing capital allocation with an aim to yield long-term economic gains instead of offering temporary respite to prop-up growth in the short term.