China faces test of nerve on reform

An export-driven decline in China's economic growth could make today a crucial one for Beijing as its leaders grapple with a looming decision to get back on track with long-delayed financial reforms, or push the panic button to underwrite jobs and stability in the near term.

Data due today is set to reveal mainland economic growth eased for the second consecutive quarter, marking the 11th quarter of slowing growth in the past 13 and putting it back on a downward trend interrupted in the last three months of last year after a brief easing of monetary and fiscal policy in the middle of the year.

"There is a clear sense that there is a looming test of the authorities' tolerance for a slowdown in growth," Tim Condon, the head of Asian economic research at ING in Singapore, told the South China Morning Post.

"Think about what they did last year. It looked like exports were going to slow too much so they eased precipitously in the middle of last year. You really don't have to go back very far to see that they have an unsteady hand on the tiller."

That is a gloomy prospect for those who are banking on Premier Li Keqiang assuming the mantle of Zhu Rongji, renowned as China's arch-reformer when he became premier in the late 1990s.

Li has made encouraging noises to investors anxiously waiting for the restart of a reform effort stalled in part by the global financial crisis and made more difficult to resume by the policy moves still needed to this day to fight the inflation and property bubbles inflated by the 4 trillion yuan (HK$4.54 trillion) stimulus programme unleashed by then-premier Wen Jiabao to deal with the downturn.