Is risk in eye of the beholder?

The International Monetary Fund's (lMF)latest assessment on the Chinese economy was released on Feb 6 by the IMF Resident Representative Office in China. It included recent developments, the outlook, risks and policy suggestions. Reflecting the worsened external environment since the last update several months ago, China's economic growth for 2012 was revised down to 8.25 percent. But still, China remains a bright spot in the midst of intensifying strains in the euro and fragilities elsewhere.

Steady progress is being made on many fronts. The external current account surplus fell to about 3.3 percent of GDP; monetary policy has been fine tuned; and owing to prudent policies, inflation is now forecast at about 3.3 percent, barring any food supply shocks; and measures to contain speculation in the property market have been successful.

Having said that, China is not without internal risks. Balance sheet deterioration from the slowing real estate and export sectors, and outstanding loans to local government financing platforms could dampen economic activities.