Monitor | Forget about stimulus, support growth with sweeping reforms
For China to boost its economic prospects over the long term, the government needs to deregulate interest rates and cut red tape
World Bank boss Jim Yong Kim is upbeat about China's growth prospects.
Speaking in Tokyo last week, he said China's leaders stood ready to boost the economy. "Once the political change is complete, my sense is that they'll be very aggressive in trying to restore growth," he said.
Some China-watchers assumed he meant the country's new generation of leaders would cement their accession to power with a full-blown stimulus package. That would mean a relaxation of the government's property market restrictions, coupled with a hefty interest rate cut and orders from Beijing to the banking sector to ramp up lending to fund local government-backed infrastructure investments.
In other words, they are looking for a repeat of 2009's stimulus efforts, albeit on a smaller scale.
That would be aggressive all right, and it would certainly stimulate headline growth, but it's not what Kim had in mind.
The sort of aggressive steps Kim wants to see are wholesale deregulation and liberalisation measures of the sort the World Bank detailed in a major report on China's economy back in March.