Chinese economy not out of the woods
20 July 2014
CHINA'S growth might have picked up slightly in the second quarter as a burst of government stimulus kicked in, but the world's second-largest economy is not out of the woods just yet, writes the Straits Times.
"Beijing can allow enough credit growth to prevent a further slowdown but, once the perpetual rolling-over of bad loans absorbs most of the country's loan creation capacity, it will lose control of growth altogether and growth will collapse," said Peking University's finance professor Michael Pettis in a note last month.
Rather than hailing the soft landing as a signal that Beijing is succeeding in managing the economic adjustment, it should be seen as an indication that Beijing has been unable to implement the reforms that it knows it must implement, he added.
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