China reforms stay on course as Beijing plays it safe
Mainland leaders are playing it safe, focusing on gradual progress as opposed to riskier changes
Six months into the mainland's grand economic makeover, Beijing is playing it safe, choosing gradual progress on many fronts over game-changing, riskier reforms such as removing all controls over bank interest rates.
Yet the incremental steps promise to reach enough critical mass to sustain reform momentum and help the world's second-largest economy shift down smoothly after decades of red-hot, investment-fuelled growth.
It's a 21st century version of Deng Xiaoping's "crossing the river by touching the stones" strategy of cautious testing in the 1970s and '80s. The caution is still there. The difference today is that Beijing is crossing the river in many spots at once and the water is probably deeper.
Economists say there is no substitute for fundamental changes if the mainland is to change from a bureaucratically run, pollution-spewing industrial powerhouse to a more balanced, market-driven economy.
However, reforms such as freeing up bank interest rates or dismantling state monopolies will cause much short-term pain, and provide gains only in the long term. With the economy expected to grow by 7.3 per cent this year, the slowest rate in 24 years, those reforms will have to wait.
"We are doing easier ones first and leaving the difficult reforms for later," said Xu Hongcai, senior economist at the China Centre for International Economic Exchanges, an influential think tank in Beijing. But Xu and others are encouraged by the progress and the consistency President Xi Jinping and Premier Li Keqiang have shown in pushing for a greater role for markets.