China Isn't Fixing Its Flaws

In the runup to China's twice-a-decade Communist Party Congress, many analysts have turned bullish on the Chinese economy. Some of the optimism is based on an impressive recovery since the quasi-crisis of late 2015 and early 2016, some on hopes that a strengthened President Xi Jinping will emerge from the congress to restart far-reaching reforms. Whatever the cause, though, the giddiness is ill-founded.

In our China Beige Book, we quiz over 3,300 firms across China about the performance of their companies as well as the broader economy. Their responses reveal that much of the exuberance about China today is based on dangerous misconceptions.