Hesitant reforms: China's problem is not growth

At the beginning of the year, China's leadership saw an opportunity: Because the economy had weathered the pandemic relatively well, structural problems such as the barely regulated hustle and bustle and the high level of debt in the private sector can now be solved.

If this causes growth to be a little smaller in the short term, that doesn't matter.

In the long term, the system will be more stable and wealth will be distributed more evenly.

Anyone who looks at the following tough regulation of the private sector and the drama surrounding the over-indebted housing giant Evergrande can be of the opinion that Beijing has kept its word: After it imposed fines in the billions against the monopolies of the Internet companies and turned off the credit tap to the real estate developers In order to reduce high house prices, economic development stagnated in the third quarter. If China hadn't experienced an energy crisis and if it didn't have to constantly cordon off entire cities because of its zero-covid policy, growth would have been higher. So is the second largest economy on the right track?

Doubts are allowed. Beijing is not giving up its high growth target for the full year and beyond. But that is exactly what it would have to do if it wanted to reform the economic model over the long term. In the past 15 years, this has only achieved its high growth rates with investments financed through debt. In order to lower house prices, for example, the local governments would have to release more land for development.

But the state is dependent on the high income from sales.

Limiting the high profits in the private sector and instead strengthening the state-owned corporations will not give China the technology self-sufficiency it has longed for.

Beijing only treats the symptoms, not the cause of the problems in the system.

Because that is riddled with conflicting interests that could only be broken in an economic crisis that threatened the very existence of the country.

As a result, growth will soon pick up again.

But prosperity for all Chinese will remain a dream for a long time to come.