A tale of two halves

Donna Kwok, Greater China economist at HSBC in Hong Kong, is one who is confident the government will deliver a smooth outcome.

"We don't believe China is heading for a hard landing. If you look at all the indicators we have in hand, the economy is cooling on a relative basis but still operating at very high levels," she says.

"If you look at the growth rate and compare it with the long term historical average, it is tracking around trend, if not slightly above. Any economy that is heading for a hard landing would not be growing at the trend rate."

Kwok says HSBC would consider a hard landing in China at anything below 8 percent economic growth.

"The way we see it if the economy grew by less than that we would classify it as a hard landing," she says.

Duncan Innes-Ker, senior economist at the Economist Intelligence Unit in Beijing, believes the economy will be in for a benign landing but there could be pain in the private sector with some companies going bust.

"I would say that overall we are optimistic about the landing being quite soft. We are expecting gross domestic product (GDP) to drop down year-on-year to around 8 percent by the end of the year," he says.

"But we think it will be a tale of two halves. The private sector will probably experience a relative hard landing because of the lack of credit and scarcity of loans. I am fairly sure we will see more bankruptcies over the next six months."

The economist, who is also chairman of Roubini Global Economics and has recently made two trips to China, believes the world's second largest economy is heading for a hard landing some time after 2013.

"The economy is overheating here and now, but China's over-investment will prove deflationary both domestically and globally. Once increasing fixed investment becomes impossible - most likely after 2013 - China will be poised for a sharp slowdown," he wrote in a recent report.

He added the Chinese government should divert its attention away from trying to secure a soft landing and take steps to re-engineer its economy so that it is not so reliant on investment in infrastructure and other projects for growth.

"Instead of focusing on securing a soft landing, policymakers should be worrying about the brick wall growth will hit when the growth model will break."

Another Stern School of Business professor is less pessimistic about where the China economy is heading.

Michael Spence, who won the 2001 Nobel Prize for Economics with Joseph Stiglitz, believes a hard landing is highly unlikely.

He says it will be quite a difficult feat for the Chinese leadership to pull off but he believes they have the proven ability to achieve it.