China’s economy showed signs of improvement in the first quarter. The indications are that Beijing’s fiscal and monetary stimulus measures have begun to make an impact on the real economy — but the reaction within the country to what appears to be good news has been mixed.

The real estate sector began to grow again; prices of steel, aluminium and coal increased substantially despite a negative producer price index ; and the consumer price index rose to more than 2 per cent.

However, while some economists believe stimulus is necessary to restore China’s growth to its potential rates, many more worry that the government is reverting to its old growth model of investment and credit expansion. On May 8, the People’s Daily, the Chinese Communist party’s official newspaper, published a rare interview with an “authoritative person” who expressed strong views about the Chinese economy. His most provocative opinion is that China’s economic growth is not going to have a V-shape or U-shape recovery, but instead will experience an L-curve. That is, he predicts that China will have a low growth rate for the time being. Consistent with this, he strongly opposes using fiscal and monetary measures to stimulate growth and puts paramount importance on structural reform.