By Deborah Kan
HONG KONG, Aug 4 (Reuters) - China may need a second fiscal stimulus package in 2010 once the impact of the plans announced late last year begins to fade, Morgan Stanley Asia Chairman Stephen Roach said in an interview with Reuters Television on Tuesday.
Roach's views stand at odds with a chorus of optimistic analysts after China last month posted stronger-than-expected annual growth of 7.9 percent in the second quarter.
He said China's recovery so far had been uneven since Beijing implemented a 4 trillion yuan ($585.6 billion) stimulus package in late 2008 in response to the global financial crisis.
"The impact of the investment-led stimulus will fade and the Chinese growth rate will start to slip again some time towards the middle of 2010," Roach said, suggesting that slowing growth could lead to increased layoffs and thus social instability.
"That means, the Chinese authorities will be forced to contemplate another proactive fiscal stimulus."
In May, Roach had said China may face a "W"-shaped economic recovery and had previously said that China's current stimulus is directed too much at the pace of growth rather than the quality of the growth.
The former global chief economist for the U.S. investment bank also reiterated his concerns about excessive investments in infrastructure, rather than on stimulating private consumption or bolstering health care or social safety nets for Chinese.
"Bottom line is they are creating a very unbalanced macroeconomic structure," Roach said in the interview, estimating that investment spending in the first half of the year as a share of gross domestic product had exceeded 45 percent of the economy.
"This is a ratio unheard of in the annals of a modern, large developing economy," he said.
Morgan Stanley's China economist, Qing Wang, has forecast China's economy will grow 9 percent this year and then 10 percent next year. Both are at the higher end of economists' forecasts. ($1=6.830 Yuan) (Writing by Rafael Nam; Editing by Neil Fullick)