China’s long, slow road to reform

A new Chinese policy plan that promotes a shift to an economy driven by consumers and entrepreneurial vigor also recognizes that the transition from state spending and smokestack industries is years away. As WSJ’s Mark Magnier reports:

The annual budget and policy program, unveiled by the government Thursday, acknowledged China’s entrance to an era of slower growth and outlined the need for new sources of job creation by nurturing innovative small businesses.

“The government should be bold in imposing reform on itself so as to leave ample space for the market,” Premier Li Keqiang said in a nationally televised state-of-the-nation address.

Even so, the government signaled its preference for the strong hand of the state over the marketplace. Across the board, the 8.1 trillion yuan (about $1.3 trillion) budget—a deficit-funded, more-than-9% boost from last year—promised outsize outlays for defense, infrastructure projects and other state favorites.

… The overall impression, economists said, is that after decades of heady growth fueled by investment in infrastructure and industries, China is finding it difficult to loosen its extensive grip over the world’s second-largest national economy.