BHP says China can sustain growth, Roubini sees ‘hard landing’

The Chinese economy would continue to grow by between 7% and 8% in the foreseeable future, without any major changes to its economic model, the world’s largest diversified miner said on Tuesday. “Everything we see from our offices in China points to the fact that the country, without doing anything extraordinary, can continue to grow at 7% or 8%,” BHP chief commercial officer Alberto Calderon said at the Commonwealth Heads of Government Meeting and Business Forum in Perth. Calderon was responding to comments from renowned economist Nouriel Roubini, who said at the forum that China was in for a “hard landing” in the not too distant future, because of its “unsustainable model” of significant over investment. “Over-investment booms during the last 60 years have resulted in a hard landing for that economy,” said Roubini, who is also known as ‘Dr Doom’ for his persistently negative outlook on the global economy since correctly forecasting the recent financial crisis.The economist is predicting that China’s growth would stall by 2013/14.

Calderon pointed out that China’s current economic model was driven mostly by domestic consumption, with net exports contributing little in the way of economic growth.

“The fundamental factor that has underpinned growth in China over the last few years is basically the urbanisation of between 150-million and 200-million people and urbanisation in China will grow from 50% to 60% until 2025, and that will bring the same cycle of development,” he said.

Calderon noted that with China’s economy expected to continue to grow strongly, the company would require natural resources to feed the growing demand.

“So BHP’s long-held strategy of investing in large, long-life, low-cost expandable assets across a diverse range of commodities remains right for the times.”

Edited by: Mariaan Webb