China’s economic malaise boils down to ‘a failure to reform’ the system, Pathfinder report warns

A lack of major reform announcements by Beijing could serve to keep China’s economy in a weakened state next year

‘Structural threats to economic stability have never been greater’ for China, according to an annual scorecard by Rhodium Group and Atlantic Council

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China’s lacklustre economic growth since reopening early this year has sparked a growing chorus of calls for greater reforms. Photo: AFP

Published: 6:00am, 5 Oct 2023Updated: 11:50am, 12 Oct 2023

China’s bumpy economic recovery has become a global concern despite a slight comeback since late summer. In the second part of a series on China’s economy, analysts call for the resumption of overdue reforms to unleash growth. You can read part one here.

China’s lacklustre growth since reopening early this year has sparked a growing chorus of calls for greater reforms to address deep-rooted problems that could continue to weigh on economic prospects over the long run.

“Structural threats to economic stability have never been greater,” said the China Pathfinder Annual Scorecard, a flagship report jointly compiled by Rhodium Group and the Atlantic Council, on Wednesday.

“The economic malaise that policymakers in Beijing are staring down now is not caused by cyclical factors like Covid, but by a failure to reform the country’s economic system,” the report said.

It expects China’s economy to grow by less than 4 per cent in 2023, which is at the lower range of estimates by major international institutions and much lower than Beijing’s target of around 5 per cent.

“Given the lack of major reform announcements, year to date, similar weakness in 2024 should be expected, and growth may slacken even more next year as a result of adjustment pains if Beijing announces concrete reforms,” the report said.

China’s economy has shown signs of a comeback in the third quarter thanks to a slew of supportive policies unfurled since July to reinvigorate growth, which reached only 0.8 per cent in the second quarter compared with the first quarter.