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The View | China’s economy is in a fix, but authorities are right to resist more stimulus measures
- Despite the country’s many economic challenges, cushions of support exist to prevent a crash
- Officials have the tools to act if a more aggressive rescue is needed
Reading Time:3 minutes
Why you can trust SCMP
For four decades, China has seemed like an overly energetic start-up company. It has always had ambitious targets, from the “Four Modernisations” to “Quadrupling National Income” and “Made in China 2025”.
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Now, it seems, “slogan fatigue” is setting in and officials appear to have run out of ideas.
In my view, that’s not a bad thing. Indeed, it is a sign of maturity and increasing sophistication. If officials can take a back seat, the economy will be able to grow “not only at night, but also during the day”, to borrow a phrase from the Indian businessman and author Gurcharan Das.
China faces many challenges at present. At the current exchange rates, its credit balance is bigger than those of the euro area and the US combined, despite its much smaller economy.
Very few local governments or companies have been forced to liquidate their assets despite an economic slowdown in recent years that is still unfolding
However, its constant flood of liquidity is not enough to prevent mass bankruptcies among its small and medium-sized businesses.
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