Hurray! Reform over Breakneck Growth in China

Several articles have come out in recent weeks including this one.  Here is a quote from the article.

“The plan is still to induce some short-term pain in exchange for long-term sustainability,” said Yao. “That is still the most sensible choice, but sure, they need to make some marginal adjustments to make sure the economy doesn’t slow too fast.”

Growth in China

For many years, the Chinese government has always stepped in and made banks make loans to achieve economic targets. It seems the new government is sticking to principles in allowing the market to correct itself and not be over reliant on the government. So growth in China this year might be 7% rather than 8 this year.

Does anyone wish our home countries could ease growth to 7% in 2013?  China is being wise, and the future looks brighter when the government looks to the market rather than flooding the market with money.

It’s fascinating to me how many people like to nay say China development. They always think the government is filled with incompetent people. That is not the case. Any time I deal with high government officials, they are very sharp and have an excellent grasp of the issues.

Corruption is a problem in the West, and also in China.  Western Businesses in China have noted that taking officials out to fancy dinners has slowed dramatically as the government is really facing more and more of the corruption in its ranks.  I wish my home country would do more of the same.

So let’s hope the government can hold out against pressure to dump loan money into the market.  Loans traditionally go to big projects and big  State Owned Enterprises (SOEs).  It hurts the private sector. Now the country can start growing more naturally and the overwhelming influence of the States Sector can decrease. May the reform continue making space for better long term fundamentals in the market.

Thoughts?

 

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Posted in: China, Government Issues, Market Entry

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