2013.07.2302:44:17UTC+00HSBC: China progress under 7% could spark stimulus

Economic development in China of 7% or less would possibly spark additional stimulus from the government and central bank, HSBC Group Chief Economist Stephen King said Tuesday, though he said HSBC doesn't expect growth to slow that far.

In Hong Kong to promote his new book about slowing growth in the West--"When the Money Runs Out"--Mr. King said Chinese authorities indicated recently that they're more concerned with the quality than the quantity of growth, unlike in years past. Still, annual growth below 7% could spark social or political unrest that would likely lead authorities to provide more fiscal or monetary stimulus.

"That's the magic number, if you like," Mr. King said.

HSBC assumes that the Chinese economy will progress 7.4% this year and next, he said. China's official goal for 2013 is 7.5% development, which would be its slowest expansion in years.

Mr. King said the recent decision by the People's Bank of China to remove a floor on lending rates should lead to more efficient allocation of capital and said authorities should next remove a cap on deposit rates. He also predicted authorities would make the Chinese currency, the yuan, fully convertible on international markets within four or five years. 

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