BEIJING (AP) – The Federal Reserve chief’s rare comments on China reinforced unease its weakening economy might be headed for a deeper slump. But many experts still think fears of a China crisis are overblown.
The world’s second-largest economy has been stubbornly resistant to stimulus following five interest rate cuts since November. Growth in many industries is still decelerating. August exports and auto sales shrank.
On Thursday, U.S. Federal Reserve chairwoman Janet Yellen mentioned China along with inflation after Fed governors put off a long-expected interest rate hike. Such concern is unusual for the Fed, which usually limits its focus to the U.S. economy.
“The question is whether or not there might be a risk of a more abrupt slowdown than most analysts expect,” Yellen told reporters.
Much of China’s slowdown is self-imposed as part of the ruling Communist Party’s effort to replace a worn-out model based on trade and investment with more self-sustaining growth driven by domestic consumption.