China faces systemic risks: BAML

The cash-rich Chinese government was able to deal with such risks individually,but the path of addressing the issues could be bumpy,he added.

Cui said a meltdown in the property market could be the biggest trigger for a hard landing in the world’s second-largest economy,although such risks remained modest.

Our central case is still a soft landing,but we cannot rule out the possibility of a hard landing,he said. A hard landing in China typically means a sudden slowdown of annual economic growth to 7-8 percent.

China’s average housing prices could fall by 5-10 percent in the next few months,but the government was likely to reverse its tightening campaign targeting the property sector,he said.

September or October could be a watershed for the property sector. The number of people not expecting housing prices to rise may have reached a critical mass,Cui said. We are unlikely to see a U-turn in the government’s tightening policy any time soon.

China would unswervingly maintain property curbs for the rest of the year as it fine-tunes macroeconomic policy,China’s cabinet said on Saturday.

Property prices in key Chinese cities have risen ten-fold in the last 10 years,fuelling a speculative bubble and public discontent as prices have risen far beyond the reach of ordinary people.

Following a slew of measures by Beijing’s leaders since late 2009 to rein in prices,residential transaction volumes have dropped since September and some developers have slashed prices for new developments in cities such as Shanghai.

A private survey earlier this week showed the average home price in China’s 100 key cities fell 0.23 percent in October from a month earlier .

Cui said investors in China were seeing a sharp decline in returns from the vast manufacturing sector and that,along with negative real interest rates,had fuelled a boom in wealth management products and underground lending.