China's economic pain will grow but it's needed for the long haul

Power shortages, tottering property companies and slowing growth are outcomes of aggressive reforms under China’s mixed model of economic management

An Evergrande construction site in Dongguan, in China’s Guangdong province, late last month. Evergrande’s woes result from a government campaign begun last year to force property developers to reduce their liabilities.PHOTO: NYTIMES

(NYTIMES) - Crushed by US$300 billion (S$403 billion) in debt, Evergrande, one of China's biggest property developers, is sliding towards bankruptcy. This has prompted fears of a wider property crash or even a financial crisis. But this is hardly the only crisis besieging the government of President Xi Jinping.

An unexpected electricity shortage threatens to slow down manufacturing. And for the past year, the government has waged a fierce campaign to regulate China's vibrant Internet companies, spurring hundreds of billions of dollars in investor losses. The common feature of these crises: all were triggered by government policies.

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