A delicate balance in Beijing

IN China, a fear of social instability has long constrained government efforts toward economic and structural reform. After three decades of nearly unrestrained and uncoordinated growth, China’s leaders are now facing a moment in which change is no longer simply desirable; it is a necessity. The global economic system is rebalancing, economic power is becoming more diffuse, and China’s export- and investment-driven economy has, as its regional predecessors, largely run its course.

Beijing talks of a shift to an internal consumption-based economy — one less susceptible to the vagaries of international trade and overall more self-sustaining. But that is not a simple change, particularly in a country where the government is dictating that the transition take place over a very short span of time. Decades of redundancies and inefficiencies in the economy, significant overcapacity in some sectors and undercapacity in others, and a pervasive culture of local self-interest and corruption further complicate the desired transition.