Soft landing of the Chinese economy is possible provided that adequate reforms are implemented, experts gathering in Davos for the World Economic Forum (WEF) Annual Meeting 2016 said.
China's economic transition -- from investment and manufacturing to services and consumption -- is manageable, International Monetary Fund (IMF) managing director Christine Lagarde said at a panel on Thursday in the WEF with the theme: "Where Is the Chinese Economy Heading?"
Lagarde's comments were echoed by the panelists including Ray Dalio, chairman and chief investment officer of Bridgewater Associates, and Gary D. Cohn, president and chief operating officer of the Goldman Sachs Group.
The IMF Tuesday published its updated annual outlook, estimating that China's growth in 2016 will stay at 6.3 percent while the global projection will be 3.4 percent.
The experts forecast China would continue to grow at the slower-but-sustainable trend rate, a track may leading to a soft landing.
"It looks like China's 'new normal' is here to stay," said U.S. economist Nouriel Roubini in another panel on Wednesday.
China's latest GDP numbers released on Tuesday showed the economy grew by 6.9 percent in 2015 -- the slowest rate in 25 years.
China's shift to growth driven less by exports and manufacturing has encountered a gloomy global economical background, and that make it a much more difficult process, Kevin Rudd, former Australian Prime Minister told Xinhua at Davos.
Global demanding weakened over the last year, he said. In Europe, concerns about migration, Brexit, Grexit and Eurozone bailouts have led to a stressed credit market. In the United States, after years in which revenues have been growing, there is now less confidence.
The weak growth hasn't been restricted to China, but indeed all emerging markets have felt the pinch.
"The general direction of the reforms is right. In a longer term of about five years, China's economic transition will succeed, providing that the government has the determination to continue the reforms," Rudd stressed.
"The West is mistaking China's short-term challenge for a long-term challenge," said Ray Dalio.
"There is a communication issue," Lagarde said, "Better and more communication would certainly serve that transition better."
"The communication is really what's important here," Gary Cohn added. He urged Chinese policy makers to "stick with" their transition toward a greater role for markets. "We all want clarity," he said.
2016 began with a period of turmoil in China's stock market. The concern was triggered that the nation is heading for a hard landing, involving a financial crisis and more severe economic recession.
"Markets tend to be manic depressive -- they go from excessive pessimism to excessive optimism," Roubini said.
"What China really needs to do is work on its credibility, transparency and ability to communicate properly about what it's doing," he said.
With a new Five-Year Plan being presented in 2016, some experts said that the world's second-largest economy has the possibility to shift gears without stalling its growth engine.
"But success presupposes less reliance on investment spending and export demand, and more on domestic household consumption, to support growth," Jeffrey Frankel, professor at Harvard University's Kennedy School of Government, said in an article released by the forum.
"China must increase the flexibility of land and labor markets," he advised.
However, the experts warned that there is still a long way for China to go, and success is by no means guaranteed.
"Chinese leaders and economists already know all of this. They adopted a list of reform objectives covering these areas in 2013. And in the last two years, they have made progress in implementing some of them," he added.
