The highlight of China's 20th Communist Party Congress starting on Oct 16 will undoubtedly be the likely appointment of Mr Xi Jinping as the country's President for an unprecedented third term. But what will elicit much curiosity will be the guidance on future directions that emerge from the Congress, particularly relating to economic policy. China's economy is going through arguably its most challenging period in its post-reform era that began in 1978. Its economic growth rate, which the World Bank estimates will be just 2.8 per cent in 2022, will fall below that of the rest of Asia for the first time since 1990. But the pace of growth aside, there are questions about the viability of the economic model that China has pursued, particularly since the global financial crisis of 2008. A key feature of that model has been debt-fuelled, investment-led growth focused on infrastructure and real estate.

With national debt running at a record of around 275 per cent of gross domestic product (GDP), returns on infrastructure investments on the decline and the real-estate sector in crisis, that model looks no longer sustainable. The growth slowdown, aggravated by movement curbs linked to the zero-Covid-19 policy, has had serious ripple effects, including rising unemployment, falling productivity and an erosion of local government finances, which depended heavily on land sales. The slowdown, especially if prolonged, will impact Asia's economies, most of which count China as their biggest trading partner. Indeed it will also drag down global growth to which China has been a major contributor over the last two decades. There is also a risk that the stresses built up by China's investment-and real-estate-driven growth model will cause long-term damage, impacting the banking system, household wealth - most of which is held in property - and consumer confidence.