The pace of economic growth in China, the world’s second-largest economy, is slowing as the “emerging” country matures. But that economy is expected to stay healthy and vibrant in 2015.

Growth next year in China’s gross domestic product (GDP) is likely to be 7%-7.5%, according to a variety of forecasters, including the World Bank and the International Monetary Fund. That rate is significantly lower than the average annual rate of 10.2% for the 30 years ended 2011, but it’s nevertheless a strong pace.

“I am cautiously optimistic about the level of growth in China and am not concerned about a major blowup or hard landing,” says Chuk Wong, vice president of 1832 Asset Management LP and lead portfolio manager of Dynamic Far East Value Fund. “Previous double-digit rates were not sustainable. Growth is now at a healthy pace and the quality is better.”

The Chinese government can pull several levers to keep to its growth target of 7.5%, a level sufficient to maintain strong employment and keep a lid on social unrest. In November of last year, the People’s Bank of China chopped the benchmark one-year lending rate by 40 basis points to 5.6%, the first cut since July 2012. The government also has announced new spending on railways and social housing, and has lowered the reserve requirement ratio for banks that lend to the agricultural sector.

“There could be more cuts in interest rates and in the reserve ratio to keep [GDP] growth from slipping any lower,” says Eng Hock Ong, portfolio manager in Singapore of AGF Asian Growth Class Fund, sponsored by AGF Investments Inc. of Toronto.

Inflation remains tame, and lower oil prices will help to keep the inflation rate under control. The rate was running at 1.6% in late 2014, after averaging 5.7% for the years from 1986 to 2014.

However, high government and corporate debt levels are considered a key risk. And with the previous heated pace of economic expansion and infrastructure spending, there could be some bad loans on the books of banks, as well as within the “shadow banking” system comprising private sources of credit.

Eileen Dibb, portfolio manager with Connecticut-based Pyramis Global Advisors, a division of Boston-based FMR LLC (a.k.a. Fidelity Investments), is concerned about the risk of implosion in the overheated property sector, which would have trickle-down consequences; that sector accounts for 15% of China’s GDP and is linked to many other industries, including cement, steel, chemicals and furniture.

“There are concerns about the financial system in general, as a lot of loans are tied to real estate,” Dibb says. “If asset values drop, a lot of loans could go bad throughout the economy, including alternative lending.”

Although one of the government’s goals is to stimulate domestic consumption’s role in the Chinese economy, last year’s focus on anti-corruption measures initially had a slowing effect on retail sales.

Cleaning up corruption has suppressed demand for high-end luxury goods because officials have less money to spend and also are being cautious about any conspicuous consumption, says Mark Lin, vice president of international equities with CIBC Asset Management Inc. in Montreal and portfolio manager of CIBC Asia-Pacific Fund.

“The anti-corruption tiger has been put down,” says Ronald Chan, head of Asian equities in Hong Kong for Manulife Financial Corp. of Toronto. “It’s now just a matter of catching the flies, and there will be more attention paid to economic reforms. The government can spend if necessary to avoid a hard landing, and a lot of work orders have been put out for railroads and other projects to stimulate urbanization.”

A sign of the opening of China to world markets is the Hong Kong-Shanghai Stock Connect initiative, which allows mutual stock market access between Hong Kong and mainland China. The pickup in trading has spurred Hock Ong to invest in domestic stockbrokers, including China Galaxy Securities Co. Ltd. and Haitong Securities Co. Ltd., as well as in Hong Kong Exchanges & Clearing Ltd.

“The Hong Kong-Shanghai Stock Connect brings in more foreign investors and increases liquidity,” says William Fong, director of the Asian equities team with Baring Asset Management (Asia) Ltd. in Hong Kong and portfolio co-manager of Excel China Fund, sponsored by Excel Funds Management Inc. of Mississauga, Ont. “It’s an important step in opening up Chinese markets.”

E-commerce is a popular theme with fund portfolio managers investing in China. Fidelity’s Dibb, AGF’s Hock Ong, Manulife’s Chan and Excel’s Fong all hold shares of Tencent Holdings Ltd. in their respective funds; Tencent offers online gaming and a social-media platform similar to that of U.S.-based Facebook Inc.

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