The Chinese administration has a tricky course to steer in the coming months. It must live up to expectations that it will implement economic reforms and choke off ever-increasing credit supply, without destabilising the economy and provoking popular unrest.
Because China is a Communist state, however much it may have opened itself up to the market, the government still has a great deal of power over all aspects of the economy, but even it is unable to achieve its various goals without a long drawn-out process.
“The naysayers of China’s economic boom are surfacing again, warning all those who care to listen that the country’s debt-fuelled growth will eventually prove its undoing,” says Philip Ehrmann, manager of the Jupiter China fund. He thinks these concerns are misplaced. “The new Chinese administration has made quite clear that it is engaging in meaningful reform to manage the excesses, intended or otherwise, that have been building up in the economy.”