RE:China Is In Danger Of Repeating Japan's Mistake In Policy Debate

As the New Year opens, the world is being rattled by developments in China’s currency and stock markets. The Financial Times declares this the “Worst start to market year in two decades.”
Many commentators, including myself, have already pointed out the underlying problems that China faces and the challenges for its policymakers. The problems are indeed deep-rooted in the economy, and it is essential for the Chinese authorities to engage in a proper set of policy initiatives.

However, a disturbing trend has emerged from the current economic policy discussions in China. President Xi Jinping has recently begun to emphasize the importance of supply side structural reforms, according to The Economist (“Reagan’s Chinese Echo”). Economists and policy pundits have since fallen in line coming up with slogans to fit in with the official policy line. The Economist relayed the words of Chen Changsheng from the Development Research Center, a government think-tank: “We can no longer delay the zombie corporations…taking painkillers and performing transfusions is not enough. We need the determination to carry out surgery.”

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