China's Uncannily Stable Growth vs The Price of Reform

IN THE pantheon of economic clichés, the concept of “short-term pain for long-term gain” is surely a contender for top spot. It is trotted out again and again when discussing why Country X must undertake such and such difficult reforms to reap untold benefits down the road. For those analysing or reporting on the Chinese economy, it has become a familiar refrain. This does not mean it is wrong; China’s old growth model of credit-fuelled investment has led to a vast accumulation of debt and a big drop in productivity. Change is needed, even though there will be costs. But being a cliché, it can obscure details. What exactly is this short-term pain?