China: What happens when the money runs out?

Overview

Recent economic numbers have fostered expectations that China has beaten the downturn and that its stimulus package has set the scene for sustained recovery. Data over the summer are likely to add to this optimism owing to the sheer scale of the fiscal and monetary programme, totalling Rmb9 trillion (US$1.3 trillion). However, our view is that while the government will be able to achieve rising growth rates in the coming quarters, the quality of that growth will be in question as...