Headlines about China’s economy have been uniformly alarming. Every time equity markets in the west plunge, Beijing’s woes are cited as a factor with its plunging equity indices, rising debt ratios and exchange rate under pressure. Even with more sensible interventions, or perhaps none at all, increased volatility in the country’s financial markets is becoming the norm as its economy becomes more globalised and subjected to the same market pressures as other nations.

Although a “hard landing” is highly unlikely, the economy is slowly haemorrhaging and this could continue for years unless a sustainable growth path is established. To some extent, however, the pervasive pessimism surrounding China’s prospects is overdone. After all, excluding India, its growth rate of about 7 per cent is higher than that of any of the other major economies surveyed by the World Bank. And even if it declines to say 5-6 per cent by the end of this decade, the “new normal” would still be much better than in the rest of the world.

The concern, therefore, is about the transition to a new growth path. The more optimistic observers see positive signs that the middle kingdom is finally rebalancing from an investment- and manufacturing-led economy to one more dependent on consumption and services. Progress is indicated in the share of consumption relative to gross domestic product having increased by 2-3 percentage points and the share of services by 6 percentage points since 2011.