Opportunities may open up for more reforms if slowdown fears are pushed aside

Once again Chinese leaders are on their research tours to the provinces, just a week or so before the National Bureau of Statistics reports on the economy's performance in the first half of the year.

That would be the first half-year report about an enormous economy that is moving at its slowest speed as it is expected to take a sharp turn from its familiar course.

Small wonder that the stock markets - those on the Chinese mainland and the Hong Kong one, which lists many of the largest State-owned enterprises - have been edgy.

Analysts tend to agree that the policy line followed by the Chinese cabinet, headed by Premier Li Keqiang, is to deliberately incur some short-term pain to avert the risk, probably a couple of years from now, of a fully fledged financial crisis.

Indeed, from the Chinese Internet one can tell that most Chinese agree that if the building boom continues, there will be a crisis based on trillions of yuan of debt resulting in unwanted, and often highly polluting industrial capacity, and half deserted office towers, shopping malls, cultural palaces and even entire urban districts everywhere.

Politically, it would certainly be a responsible thing to do - for China and for the rest of the world - for the economic authority to start a house cleaning for the country and to discontinue the dangerous addiction, on the part of local governments and large corporations, to growth powered only by big-ticket projects.

But opinions are divided on what kind of short-term pain investors will have to bare, how much can be done to relieve that pain and how short the short term will be. For the moment, everything is up in the air.

But if you take a step back to get a broader perspective, some certainties and near certainties come into view.

The current cabinet is an executive team that, since it took office in mid-March, has neither acted busily protecting this or that sector of the economy, nor attempted to impose or reimpose, controls that are seemingly harsh but are hard to get to work. That should not be taken as a sign of indecisiveness or procrastination. Beneath it all there seems to be an aversion to taking quick action to interfere with the economy.

Beijing can, if it wants, once again flood the market with easy credit, as it did in the past few years, to help companies, especially the large ones, survive in the global economy's down cycle.

It can give the market a huge impetus by announcing a big city-building plan. But it has repeatedly pointed out, first of all to local officials, that urbanization does not mean building new buildings, but new urban communities.

It can easily name this or that machine industry, or this or that region, as a new powerhouse for the country's growth, but it attaches more importance to services.

In the face of continuous rises in urban housing prices, the government can take additional measures to curb prices, thus appeasing public opinion - even if the price controls previously imposed have not really been closely stuck to.

In fact, the past 30 years or so of reform and opening up have allowed China to afford the luxury of no longer having to take almost instant action whenever growth dips. That is because in the past growth was more closely tied to providing basic goods and basic jobs. Now the government can afford to feel no qualms about a slowdown and perhaps use it as an opportunity to embark on new reforms.

Only thus can the economy trade its short-term pain for its long-term health.

The author is editor-at-large of China Daily.