China says ‘it won’t panic stimulate’ this time

As we know, there have been three large scale reform and stimulus periods in China since 2011:

  • 2012 reform to lower investment and higher consumption.
  • 2013/14 higher investment and lower consumption.
  • 2015 reform to lower investment and higher consumption.
  • 2016/17 higher investment and lower consumption.
  • 2018/19 reform to lower investment and higher consumption.
  • 2020 higher investment and lower consumption.

Although this looks pretty damning in terms of wild policy gyrations, it has not been without progress. The consumption share of growth is higher today than in 2011. And there have been important structural legacies such as local government bond markets, deleveraged developers and yuan liberalisation.

Still, what is most obvious about it is that Beijing has never had the cojones to stick to its own policy objectives and prescriptions. It has always panicked in the end, broadly speaking because its legitimacy has, until now, rested upon the pedestal of growth.

There are 1472 words left in this subscriber-only article.

Start your free 14-day trial today!

Comments are hidden for Membership Subscribers only.