I make no pretence of being a China hand, but I’ve long been convinced that approaching some understanding of the world’s most populous nation is crucial to understanding today’s world. The Financial Times is running an excellent series on China’s future that digs into the truths behind the easy hype.
Today, James Kynge explains that China’s economy is more fragile than is generally realised. “If China is to avoid slipping into its own version of Japan’s malaise, it must lose no time in pushing through structural reform, several analysts say. The most pressing task is to address a gross misallocation of capital that results in two thirds of the country’s credit resources being channeled toward state-owned companies that contribute only around one third of GDP. China’s policy makers understand the urgency of this imperative but are constrained by their fear of social chaos from acting resolutely upon it. No Chinese leader can afford to ignore the latent tensions among 1.3bn people; the famines, political upheavals and civil wars of the 20th century have delved deep into the national psyche.”