'Speed up reform', Moody's to China
Expectations of steady expansion means China is unlikely to suffer any economic hard landing, or abrupt slowdown, Moody's said, but warned that the days of easy growth for the world's fastest-growing major economy are over.
Difficult financial reforms that make space for a more market-driven system must be made to cut inefficiencies, it said. At the same time, China no longer enjoys the wide berth it had before to bolster growth in unforeseen downturns.
Without more market-based price signals driving the efficient allocation of capital and improving the competitive delivery of services, China's trend growth rate will likely slow more rapidly than otherwise, Moody's said in a report.
Crucial areas of reform include increasing market-based competition, improving regulation to allow greater certainty and transparency on future rules and decisions, and making China's hulking state firms more efficient, Moody's said.
While these changes should uncover new engines of growth, the road will not be smooth sailing.
The 4 trillion yuan stimulus from Beijing four years ago that led to explosive growth in China's local government debt and rapid expansion of its banks means the country can no longer indulge in a credit binge if the economy swoons, Moody's said.
Banks were especially imperilled by China's previous credit extravagance, it said, noting China's total bank
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