Lack of reform will hobble mainland growth, says economist

The mainland was unlikely to see strong growth in the future without structural reforms, said Tao Dong, an economist at Credit Suisse.

Tao said the mainland had entered an era of moderate growth of 7 to 8 per cent and this would continue as structural reforms were unlikely in the next one to two years because of the transition of political power.

For the first time, monetary easing has failed to jump-start private investment. Industrial investment saw four consecutive months of growth below 10 per cent.

"What China really needs is a structural breakthrough instead of counter-cyclical stimuli," Tao said.

Monetary easing would not be able to generate another economic miracle that stemmed from rural reforms and the establishment of special economic zones in the early 1980s, state-owned enterprise reforms in the 1990s and the World Trade Organisation entry and bank reforms of the 2000s.

Tao said the mainland needed to cut corporate tax rates, open the services sector and liberalise interest rates.