John Foley is Reuters Breakingviews' China editor. Based in Beijing, he writes on China’s economy and financial markets. John established Breakingviews’ Hong Kong bureau in 2009, and previously wrote on mergers and acquisitions, capital markets and consumer goods in London. Before joining Breakingviews in 2004, John worked as a copywriter for a London-based advertising agency. John read English Literature at Exeter College, Oxford. Follow John on Twitter @johnsfoley
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The latest meme, as heard in Davos, has caught on fast. As well as lower growth, it might mean an end to bad habits, a return to global greatness, or the start of a painful correction. Mostly it just disguises the fact that China’s economy is still far from normal.
Growth of 7.4 percent in 2014 - a rare miss of the country’s target - distracts from the real goal in 2015: keeping the all-important middle classes content. City-dwellers’ incomes are lagging GDP, property prices are falling, and job creation is losing momentum.
When companies like developer Kaisa get into trouble, the result is often a messy scramble. Foreign creditors can be left with pennies as government meddling and offshore structures create unpredictable outcomes. Collateral helps, but nuisance value is often the deciding factor.
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