Cyclical policies mask big issues in economy

The Chinese government has again proved its ability to maintain economic growth despite widespread pessimism. Yet the pickup in the second quarter has failed to erase market concerns about continued downward pressure in the year's second half.

Concerns continue to mount, and not only because, of the more than 20 provincial areas that have released their six-month GDP statistics, including powerhouses like Beijing, Shanghai and Guangdong, not one has met the growth target set at the beginning of the year.

It is also because investors tend to overreact to even the slightest policy change like a bird on a wire, indicating their uncertainty and lack of confidence in future policy direction. It seems the economy has fallen into a cyclical policy trap over the past few years.