Opening the liquidity tap a little ensures further reforms

Every time the central government further opens the tap of money supply, it can be seen as just a new payment for reform insurance. The national strategy now is to channel the money to the modernization of public infrastructure.

It is still hard to tell how long that insurance will have to be used - at least a few more years, one can reasonably infer.

In an immense economy used to one way of doing business for at least 20 years, the transition to a more economical and creative way cannot be made just by pressing a button. If the country's previous transition, that from the Soviet-style planned economy, is taken as a reference point, it may take more than a decade.

In fact, as investors have recently learned from many Chinese companies, from the once-celebrated e-commerce giant Alibaba Group Holding Ltd and scandal-ridden Minsheng Banking Corp to the wildly expanding Anbang Insurance Group, they would need changes in both business strategy and company structure if they ever want to grow into truly respectable global players. There are major lessons still to be learned.

In the meantime, it is only from this year that China's local governments have begun lowering their ambitions and cutting their borrowing. They still haven't got around to shedding their existing debt burden.

Taking all the above-mentioned factors into consideration, what the central government wants to do is to keep up enough of the money supply to generate a certain amount growth while forcing all companies and local governments to change their ways by not providing them with as much money as they would feel comfortable with. Such will be the big picture of China's 2015.

The author is editor-at-large of China Daily. Contact the writer at edzhang@chinadaily.com.cn