Logic of China's economic growth policies Orwellian

There is a scene in George Orwell's masterly political satire 1984 where the Party interrogator O'Brien uses high-voltage electric shocks to convince Orwell's everyman protagonist Winston Smith that two plus two equals five.

Barring the electric shocks, it looks as if Beijing is trying to work a similar trick on the world's economists.

China's new leaders have persuaded the world they are genuine reformers, and that they will accept slower growth, in exchange for a healthier, more balanced economy.

In a nutshell, that means they want to wean China off its unsustainable dependence on investment, which last year accounted for a record 46 per cent of gross domestic product. Instead, they want to engineer a greater contribution from consumer spending, which in 2012 made up a feeble 36 per cent of GDP (see chart).

At the same time, however, Premier Li Keqiang has pledged the government would not permit economic growth to fall below a minimum acceptable floor rate, which, judging from recent comments by senior officials, has been set somewhere around 6.5 or 7 per cent.

Unfortunately, basic arithmetic dictates that these two policy objectives - rebalancing and maintaining growth above a 6.5 per cent floor rate - are contradictory.