I'm Robert Lawrence Kuhn and here's what I'm watching: Foreign media reports on the Chinese economy, said to be in sad shape, juxtaposed with recent government policies intending to bolster the economy in the short term, in ways that benefit, not sacrifice, the economy in the long term.

First, the challenges. A slowing economy, not achieving the anticipated post-COVID "rebound." Manufacturing activity has been contracting and prices have been falling. Low consumer confidence and thus low consumer spending; people are worried about the future and expect prices to fall further. Real estate is troubled, and the real estate sector is about 30 percent of China's economy, the foundational asset of the financial sector, and a major source of revenue for local government. Local government debt is estimated by the IMF at over 9.3 trillion US dollars, roughly half of China's GDP. Fixed-asset investment is becoming less productive. Youth unemployment hit record hights before reporting was stopped. International demand has fallen and international tensions have risen. Direct investment by foreign companies has plunged. At the same time, the population is ageing and shrinking.

How is the Chinese government addressing these challenges? The first thing to say is what the government is not doing. It is not injecting a massive, blanket stimulus, the way it did in the financial crisis of 2008-2009. Leaders know that the benefits of short-term boosts are not worth the cost of even larger long-term debt and diminished productivity. Moreover, President Xi Jinping emphasizes the importance of high-quality development, which cannot be achieved with fast money. So, no massive stimulus is a good sign.

What the government is doing is making multiple, targeted policy adjustments. These include: cutting interest rates; helping private businesses access funding; helping consumers purchase household goods, such as electrical appliances and furniture; support for new car purchases, especially new-energy vehicles; easing of restrictions in buying property; renovating urban villages; reducing the stamp tax on stock trades — the list goes on.

One innovative approach is local governments acting as venture capitalists by taking minority stakes in private companies, whose success would provide local jobs. The city of Hefei in Anhui Province has transformed itself into a major metropolis, in part, by making shrewd investments in science-based businesses — such as BOE Technology Group, now the world's leading manufacturer of LCD screens.

The bottom line is that there is no perfect policy, no magic solution. Many specific, targeted programs are being tried, tested, monitored; correcting course when needed; always seeking to optimize and improve, recognizing that conditions are always changing.

A recent surprise spurt in China's retail sales and industrial production is encouraging, although it is always unwise to make long-term projections based on short-term results.

This is the first of a series of Watchers on China's economy — I'm keeping watch. I'm Robert Lawrence Kuhn.

Script: Robert Lawrence Kuhn

Editors: Yang Yutong, Hao Xinxin

Designer: Qi Haiming

Producer: Wang Ying

Supervisors: Xiao Jian, Adam Zhu

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