China may be implementing a series of easing measures to keep its economy expanding, but some analysts believe the mainland should let growth slow instead.
"China's potential GDP (gross domestic product) growth rate is no longer 7-8 percent, because of lack of productivity increases [and] because of their changing demographic profile and aging workforce," Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management, said last week.
China set its 2014 GDP growth target at 7.5 percent, unchanged from 2013 – a sharp slowdown from the double-digit rates of previous years.
In the first quarter of 2014, the mainland's economy grew an annual 7.4 percent, slowing from 7.7 percent in the last quarter of 2013, and marking the slowest annual growth rate since the third quarter of 2012.
"To try to hit a growth target of 7-8 percent is taking on more and more debt," a precursor to likely economic trouble ahead, Sharma said.
China's debt-to-GDP ratio has risen from around 160 percent in 2008 to over 240 percent, he noted. At the same time, the country last year needed to borrow $4.00 to create $1.00 of GDP growth, up from around $2.00 of borrowing for $1.00 of GDP growth just five years ago," he said.
"This is one of the most rapid increases in debt that any country has seen in recent history," Sharma said. "It's taking more and more debt to produce less and less GDP over time."
He expects China's economic growth to slow sharply ahead.