NAB senior economist for Asia Gerard Burg said China has been slow to enact its proposed economic reforms, especially concerning “board deregulation and liberalisation of the finance sector”.
“[The slow pace is] concerning, given the widespread view that China’s growth model has run out of steam, and that transition towards a consumption-based economy (as opposed to the investment model that has fuelled the country’s growth in recent decades) is urgently required,” Mr Burg said.
“The reform agenda has been viewed as necessary to support this transition – particularly financial market reforms which would end the long standing policies of financial repression and boost the household sector’s share of the economy,” he said.
Mr Burg also pointed out that China’s aim to double the size of its economy between 2010 and 2020 will be challenging given the nation's growth rate is “currently slowing”.
“Growth projections for China’s economy beyond 2015 depend in a large part on assumptions around the path of reform, but generally assume that the rate of growth is set to slow,” Mr Burg said.
“[Also], a recently released report from the conference board has a less positive outlook for China. Over the period from 2015 to 2019, the organisation expects China’s economic growth to slow to around 5.5 per cent a year.
“Central to this projection is the view that China’s productivity is declining – in part due to diminishing returns on investment in infrastructure and real estate – while at the same time the pace of reform is too slow,” Mr Burg said.
