‘Slowdown may cause stimulus dependence syndrome’
As China’s economic slowdown continued, the world’s second largest economy faced the prospects of being trapped by “economic transition syndrome” of dependence on stimulus measures, an influential state-run think tank has warned. China’s economy is in transition from an industrial economy into a post industrial economy where both international and domestic markets can no longer support high speed growth of industrial sectors, state-run Global Times quoted a report by Chinese Academy of Social Sciences (CASS).
China is facing the possibility of being trapped by “economic transition syndrome,” which means a vicious cycle of weakening of internal driving force for growth, demand for stimulus policies and increasing financial fragility, the Yellow Book of World Economy released by CASS said. Mismatch between demand and supply is enlarged due to over-regulation in service sectors, causing the economic drive force to weaken, it said.