China faces a meaningful probability of a hard economic landing and the euro zone is storing up problems for the future by not tackling the debt crisis head on, said Nouriel Roubini, the economist who predicted the global financial crisis.

He said U.S. Treasury prices, which have risen sharply as investors sought a safe haven from the euro area debt crisis and worries about a slowdown in the global economy, were fairly valued although he was cautious about U.S. equities.

New York-based Roubini is closely followed by Wall Street because he predicted the U.S. housing meltdown that precipitated the global downturn.

China avoided a hard landing during the global credit crunch but faces a downturn after 2013 as it will struggle to keep increasing fixed investments, Roubini said.

There is a meaningful probability of a hard landing in China after 2013, he told a financial conference in Singapore.

Roubini said investment was already 50 percent of gross domestic product. Sixty years of data had shown that over- investment led to hard landings, he said, citing the Soviet Union in the 1960s and 70s, and East Asia before the 1997 financial crisis.

I was recently in Shanghai and I took their high-speed train to Hangzhou, he said, referring to the new Maglev line that has cut traveling time between the two cities to less than an hour from four hours previously.

The brand new high-speed train is half-empty and the brand new station is three-quarters empty. Parallel to that train line, there is a also a new highway that looked three-quarters empty. Next to the train station is also the new local airport of Shanghai and you can fly to Hangzhou, he said.

There is no rationale for a country at that level of economic development to have not just duplication but triplication of those infrastructure projects.

U.S., EUROPE

Roubini said the risks confronting the global economy were evenly balanced. U.S. corporates had strong cash balances of some $2 trillion and the fact that the global financial crisis was not followed by a great depression were positives.

Persistent debt problems in advanced economies and the fact that U.S. consumption is being sustained by tax cuts and other government support were negatives, he said.

It is a glass that is half full and half empty, said Roubini, head of an investment advisory firm that bears his name.

Asked about his outlook on U.S. financial markets, Roubini said he would stay defensive on equities but he did not believe there was a bubble in treasuries.

At current levels, U.S. treasuries are fairly valued. I don't think there is a bond bubble, he said, adding U.S. 10-year bond yields at 3 percent or slightly lower were consistent with the low growth and low inflation outlook for the world's largest economy.

Every time there is a global bout of risk aversion, and every other week there is another tail risk or black swan event, people dump the euro, dump yen and go to the safety of the U.S. dollar and U.S. treasuries, he added.

U.S. 10-year yields edged up just over half a basis point in Europe on Monday to 2.9802 percent. But they have fallen from 3.7 percent in February and 3.9 percent in April last year.

Other risks to the global economy include the debt problem in Europe's so-called periphery countries and the euro zone's reluctance to address issues head on.

Greece, Portugal and Ireland have been financially bailed out over unsustainable debt levels.

The EU is currently thrashing out a second package for Greece to ensure the country is funded through 2014 but many analysts believe Athens will struggle even then to avoid a harsh debt restructuring in the future.

Kicking the can down the road, muddling through, extending and pretending that Greece will be better and you buy time... may make the collapse more disorderly over time, he said.

(Editing by Raju Gopalakrishnan and Neil Fullick)

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