Credit stimulus not panacea

Efforts should concentrate on upgrading industrial structure and increasing government spending on public services

It is very clear that Chinese economy is slowing substantially. The Purchasing Managers' Index, a key gauge of manufacturing, fell to 50.2 in June, and other indicators, such as electricity consumption, rail cargo volume and the M1 measure of monetary supply, suggest that the economy is still facing downward pressure.

Against this backdrop, China has begun to implement fine-tuning measures to stabilize growth, while continuing to implement a proactive fiscal policy and a prudent monetary policy. Obviously, there is an expectation that we might see a return of the 2009-style credit spree to boost the economy.