China needs to kick its stimulus habit

Weak August economic data suggests Chinese stimulus is becoming less effective. Time to get serious about reform, says CLSA.
Xi Jinping: SOE reforms a disappointment, says CLSA
Xi Jinping: SOE reforms a disappointment, says CLSA

China’s latest release of economic numbers at the weekend showed that growth in industrial production slumped to a five-year low in August, despite a mini stimulus earlier this year.

Hitting a 7.5% economic growth target will be difficult if these numbers indicate a broader slowdown. However, slower growth is not always a bad thing. In China’s case, lower growth is an inevitable consequence of meaningful reform because such reform would mean less of an obsession on an arbitrary growth target.

Xi Jinping has already taken some positive steps. The planned share-trading link between Hong Kong and Shanghai should eventually pave the way for further liberalisation of China’s...

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