Prof Zhang Jun

How Beijing’s overmanagement is doing China’s economy and businesses more harm than good

Disruptive policies in environmental regulation and debt management, for example, hurt investor confidence, stymie reforms and contribute to China’s economic slowdown. For long-term stable growth, Beijing needs to get out of its own way

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People walk past a shopping centre in Beijing on September 29. The government must step back from economic overreach to allow investor confidence to return and the most dynamic companies to thrive. Photo: AP

Prof Zhang Jun

Published: 1:00am, 2 Jan 2020Updated: 3:22am, 2 Jan 2020

China’s economic growth is expected to have slowed to just over 6 per cent, and it is unlikely to accelerate any time soon. In fact, analysts generally agree that China’s economic performance last year – its worst in nearly 30 years – could be its best for at least the next decade.

What observers cannot seem to agree on is how worried China should be, or what policymakers can do to improve growth prospects.

Optimists point out that, given the size of China’s economy today, even a 6 per cent growth in gross domestic product translates into larger gains than double-digit growth 25 years ago.

That may be true, pessimists note, but slowing GDP growth hampers per capita income growth – bad news for a country at risk of becoming mired in the middle-income trap – and compounds the fiscal risks stemming from high corporate and local government debt.

Whichever side of the fence one falls on, one thing is indisputable: policy inconsistencies and governance errors have contributed significantly to China’s economic slowdown. The problem lies in the slow progress of structural reforms.

Long-term growth depends on the decentralisation of government authority, increased marketisation and greater economic liberalisation, with the private sector gaining far more access to finance and other factors of production.