According to the Pathfinder report, China’s economic woes boil down to a “failure to reform the system.”

“Given the lack of major reform announcements so far this year, similar weakness is expected in 2024, and growth could weaken further next year due to adjustment difficulties if Beijing announces concrete reforms,” the report said.

China’s economy showed signs of a comeback in the third quarter, thanks to a series of supportive measures introduced since July to revive growth that peaked just months before the end of 2016 0.8 percent in the second quarter compared to the first quarter. But the real estate collapse, rising local government debt, weak confidence in the private sector and foreign companies, and a rapidly aging population have expressed concerns that China could repeat Japan’s decades of economic stagnation. And that could hinder Beijing’s goal, takes place in 2017to achieve “socialist modernization” by 2035.

A slower economic growth rate could also mean that China’s dethroning of the US as the world’s largest economy “would not happen this century, let alone this decade,” the report added.

“This change in expectations has global implications. “For developing countries, the relative appeal of liberal markets compared to China’s “state capitalism” approach will shift in ways that require the attention of policymakers and business leaders.”

Chinese economists and former officials have also called for reforms, and expectations have risen for a strong signal from top leaders ahead of the third plenum of the Communist Party’s 20th Congress.

These third plenums are convened about a year after the establishment of a new central committee of the party and traditionally revolve around economic issues.

Correcting policy is indeed reform. Yang Weimin Wei Jianing, chief economist of the China Industry Development Promotion Association, said this is the only way for China to avoid this Japanification According to a report by The Paper, an online publication of Shanghai United Media Group, the way forward is to seize the opportunity to embrace reforms and “hold high the flag of reform and opening-up” while “pushing forward structural reforms with all our might.”

“If we can do it, we will recapture the reform dividend and boost economic growth,” Wei added.

Yang Weimin, a former deputy director of the Office of the Central Leadership Group for Financial and Economic Affairs, said at the Bund Summit in Shanghai last month that the current situation requires a policy course correction.

“All ministries and provincial authorities should review the variety of measures, including those introduced during the pandemic, to correct those that contradict the principle of the decisive role of the market in resource allocation and those that affect or restrict business operations and consumption. Yang said.

“Policy rectification is indeed reform,” he added.

China’s manufacturing sector is recovering in the latest sign that the economy is stabilizing

The Pathfinder report also said Chinese leaders should allow a “vigorous” debate on structural slowdowns and reforms as one of the measures to inspire optimism for economic growth in 2024.

“It is a positive sign that Chinese economists are discussing the status of progress on macroeconomic reforms, but there is a long way to go between an academic discussion among economists and officials and the actual implementation of difficult structural reforms by China’s top leadership,” it said report said.

Hopes are growing after Xi’s speech at a Politburo study session in September on international trade and opening-up was widely interpreted as pro-business and pro-business.

“Modest commitments to reform have been made regularly this year, so there is reason to expect that there will be even more in the third plenary. In fact, since none of the reforms to date are sufficient to address the major problems now emerging, the chances of a more significant announcement increase,” said David Rosen, partner and co-founder of Rhodium Group.

In the past, Beijing has been able to drag out policy; Today they have come to the end of this journey: China Pathfinder Annual Scorecard

The report also said that China has continued to deviate from market norms in the openness of its innovation system and that it has not improved competition in the market, as evidenced by the increase in state ownership in the overall economy and the capricious regulatory environment.

“In the past, Beijing has been able to drag out policy; Today they are at the end of that road and have to deal with the current problems,” the report says.

It also suggested that Beijing stop publishing “symbolic” GDP growth targets and instead disclose its employment and inflation targets to help limit any “political imperative” and minimize the risk of frivolous efforts to boost GDP. The report said this could be “one of the best things Beijing can do to improve the quality of growth and policymaking.”

“The central government must take responsibility for local spending or develop responsible resource strategies,” it said.