No pain, no gain for China's reformers
Updated: 2014-03-31 07:50
By Ed Zhang (China Daily)
|
|||||||||
|
A housing sales office in Shenzhen. Property industry has been one of the key engines promoting China's economic development. MAO SIQIAN/XINHUA |
Now the question is how all this gets done. Treating just the symptoms would mean a hard economic landing, starting with a "Lehman moment", as some would say, followed by the knock-on effects of a collapse.
Premier calls for financial innovation |
|
Yes, there will be defaults by funds tied to unfinished property projects. There will be bankruptcies of companies burdened with excess capacity. There will be banks with ugly balance sheets - and runs on small financial institutions.
Some cities, and some industries, will have to endure almost as much distress as they would under shock therapy.
But the worst outcomes will be limited to the regional level. And the authorities won't let them trigger a chain reaction.
On the national level, major indexes, such as inflation, will be kept within the public's comfort zone as reform is methodically carried out.
Most importantly, as Premier Li Keqiang said two weeks ago, as the economy keeps growing, it will also generate new jobs.
A thorough cure means it could take a long time for the patient to feel better. Judging from the immense task China faces, it's going to be another two years, at least, before change can be quantified in the central government's statistical reports.
Some assets, valuable just a few years ago, will become useless. The money that was spent on them, and their contribution to GDP, likewise will vanish.
Those assets will include costly building projects in cities that never find a niche and industrial facilities unable to compete in the world.
|
|
- On reform, China needs to 'keep peddling': expert
- Premier urges capital market reforms
- The road to public finance reform
- China needs reforms for inclusive growth: Lagarde
- China should manage reform tradeoff, implementation
- China's reform fosters new growth impetus: vice premier
- Reforms give NGOs a level playing field
- World's tallest ferris wheel opens in Las Vegas
- Did we get ya? Happy April Fools' Day!
- Meet the crew of the drama of Green Snake
- Students compete in Chinese competency
- Chinese, Belgian heads of state launch panda house
- New British royal family photo released
- Xi watches China-Germany youth football match in Berlin
- Participants run for color
Most Viewed
Editor's Picks
Reforms set to boost NGOs |
President Xi visits western Europe |
Malaysia Airlines plane 'ended' in sea |
Reforms give NGOs a level playing field |
Crossing the great relationship divide |
Baby hatches raise controversy |
Today's Top News
New iPhone 6 screens to enter production as early as May
We should join hands,
Xi tells EU
Ukraine sees troop pullback
Urgent hunt for black box
China calls for calm on Koreas
Chinese investors in US
Village elects new leadership in wake of scandals
Former senior military officer faces graft charge
US Weekly
Geared to go |
The place to be |