Coming back to China world has to realize that ‘ The tree doesn't grow to touch the sky ‘
As we plant a seed and the sprout comes out , and then it spreads its roots and grows very fast . But can we extrapolate that same rate of growth for the next 100 years !! Of course not ! As the tree grows older and bigger its growth slows down . Same with our economies .
Thus China cannot continue to compensate for slowdown in EU , Brazil , Russia et all forever . Growth has to moderate to more sustainable levels . And for the size of Chinese economy 6 to 6.5 pct should be considered very good. However China has set very high expectations . It's like the student who always scores 100 out of 100 in all exams . For her 99 is bad and if it’s 97 then Oh my God , she must have got brain damage!
China has to now temper world expectations without creating panic. But financial market knows no middle path . Its either euphoric or expecting Judgement day and end of civilization. ( Risk On / Risk Off ) On this the Chinese Government is not in a very enviable situation!
The perceived lack of transparency and reliability of data from China also adds to the problem . Being transparent is easier but changing perception is much more difficult .
We may conclude ‘ It's not enough to be honest , one also needs to be perceived as honest ‘. China in the past bothered little about the perception of the outside world , but this time it's different . The country cannot afford a major capital flight even if it's for the wrong reasons .