That's not to say China doesn't have more room to borrow.
Japan's government debt is more than a third larger than its economy; China's is still far less than one-third of gross domestic product. Finance Minister Xiang Huaicheng (
The larger concern is that key reforms will be put on the back burner as Beijing focuses on short-term pump priming. Efforts to modernize, deregulate and shore up the financial markets aren't getting as much attention as investors would like. Ditto for initiatives to increase the efficiency of capital markets. These issues, and others, will get more scrutiny as the nation tries to converge with other WTO members.
Too bad Zhu and other Chinese officials haven't done more to articulate how the government will proceed here. Zhu's recent comments certainly got at the downsides of China's hard-won WTO membership. But the government's fear of social unrest in these uncertain times looms large and will color all decisions.
Rightfully so. China's economy is the second-largest in Asia and seems huge according to some measures. But when viewed on a per-capita income basis, Chinese purchasing power is quite weak.
Add to that the specter of tens of millions losing their jobs in the years ahead and you have some idea of the magnitude of the task.
Exacerbating the risks of social unrest in China is public corruption, which undermines trust in the government. Zhu made some unusually pointed comments on the subject last week. What he didn't do, unfortunately, is suggest a mechanism for ridding China of rampant corruption. Many think the best way to do that is transparency, competitive elections and a freer press. Zhu dropped no hints that such changes are being considered.
Bottom line, 7 percent growth may help lubricate China's historic transition. What it won't do is ensure the process will go smoothly. Only bold, steady and forward-looking policy moves now can do that.
William Pesek Jr. is a columnist for Bloomberg News. The opinions expressed are his own.
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