China Briefing | Time to put economy to new reform index test

Last Tuesday, the mainland reported that its economy grew at its slowest pace in more than five years. The third-quarter result of 7.3 per cent raised new concerns over the country's economic prospects and prompted more forecasts that growth would ease further in the coming months and years.

But on the same day, Premier Li Keqiang remained upbeat and told a group of foreign finance ministers and central bankers that he was comfortable with the slowdown, saying that the expansion was "within a reasonable range".

He said reforms had spurred new impetus for development but he also warned that because of complex external factors and downward pressures, it would take time for the measures to fully take effect.

That encapsulates the biggest challenge the leaders face.

On the one hand, they have repeatedly said that the double-digit growth of the past 30 years is no longer sustainable given the severe industrial overcapacity, rising debt levels and worsening environmental degradation. An economic slowdown would provide a much-needed opportunity for consolidation and painful economic structuring to put the economy on a healthier track.

On the other hand, many economists worry that the leaders have not moved quickly enough on their plan for more a fundamental economic overhaul to develop new engines of growth.

Now is the time for leaders to replace gross domestic product with a new reform gauge as the key economic indicator to motivate officials and businesses to drive high-quality and more efficient growth.