China faces an historic choice

Their cus­tomers’ economies tee­ter­ing on the edge of what may be a pro­longed peri­od of low-growth sig­nals that the time has arrived for Chi­na to accel­er­ate a long-forseen tran­si­tion in its own growth strat­e­gy; from export-demand dri­ven to domes­tic-demand dri­ven. But can the Bei­jing lead­er­ship do it? Now? Does it have the pol­i­cy flex­i­bil­i­ty that the eco­nom­ic man­agers of the West do not?

Mak­ing that tran­si­tion is not going to be easy. Apart from the lim­it­ed eco­nom­ic options avail­able to Bei­jing, there is a very mus­cu­lar sta­tus quo in place polit­i­cal­ly. No one pow­er­ful in Chi­na is eager to sac­ri­fice their advan­tages. State agencies—and the entre­pre­neurs in heavy indus­try and ener­gy they support—want to pro­tect the perks of access and influ­ence they have earned. Well-con­nect­ed exporters are not eager to see fur­ther RMB reval­u­a­tion any­time soon, for that would fur­ther erode mar­ket share for them.

Extract from Rus­sell Moses in the WSJ

A thought­ful and time­ly report. Well worth read­ing in full.

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