Warnings of short-term pain
The release of China's economic growth figures has long been a numbers game with global market-moving ramifications, but there's rarely been one more nervously anticipated than today's quarterly data dump.
Growth in China's economy is slowing. The question is how rapidly it is doing so, and how much of it is by design.
Poor economic data in recent months has had a growing number of economists pondering the previously unthinkable - that China could miss its official GDP growth target for the year of 7.5 per cent.
Li Keqiang would be the first Premier to do so since the Asian financial crisis 15 years ago.
The sentiment towards the health of China's economy has shifted to such a degree that consistently bullish analysts are now warning of considerable pain, especially in the short term.
Speaking at the Australian National University's China Update last week, noted economist Yiping Huang warned the dreaded "hard landing" of China's economy was "inevitable", and could spark a "China-induced global recession".
As ominous as that sounds, Mr Huang argues that it is necessary short-term pain and that he would be far more worried if the government was not taking action.
"Likonomics", a term Mr Huang and his team at Barclays coined to describe their interpretation of Li Keqiang's economic policies, is all about transitioning China's economy away from its unsustainable investment-led growth model and addiction to cheap credit.
In Japan, Abenomics is about ending deflation and restarting economic growth. Likonomics is about deceleration, deleveraging and improving the quality of growth. But both will come down to the success of structural reforms.
Consigned to history is the magic 8 per cent economic growth rate target the Chinese government has insisted for most of the decade to be necessary to create enough jobs for the millions of young Chinese entering the workforce every year.
Demographic changes brought about by China's one-child policy mean its labour force has already peaked and is steadily shrinking. While this has major repercussions for how it can support its ageing demographic, it at least means a lower rate of economic growth is needed to support new job creation.
Those keeping the faith with the new leadership's stewardship of China's economic miracle will also point out that its 12th five-year plan targets an average GDP growth rate of 7 per cent for 2011-2015.
But there are also those who think any quarterly growth rate with a 7 in front of it will be overstated and lead to suspicions that things are so bad, the numbers are being massaged.
If it all goes to plan, China's economic growth in the longer term will settle somewhere closer to 6 per cent in the next decade.
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