I thought I would publish Michael Pettis's reply to my piece yesterday here rather than approve as a comment:
Good piece but one correction.
I don't think 8-9% growth this year and next is impossible. On the contrary, I think that if the government keeps up its stimulus they can force high levels of growth for at least another year or two.
My concern is different -- that unless consumption picks up signficantly this kind of growth is not sustainable without continued government pumping, and if it leads to wasted investment, which it almost certainly will, the cost of cleaning it up will fall, as always on Chinese households.
This will make even the consumption growth of 8-9% of the past few years tough to maintain. Since GDP growth must be less than consumption growth over the next decade, ultimately this is the number that has to be boosted.
Thanks, Michael
