Salient to Investors:

William Pesek writes:

China’s escalating war on free expression is unfolding in ways that even George Orwell could not have dreamed up, and clear evidence that China will not be serious about economic reforms and its leaders lack an ingredient vital to overhauling the economy: self-confidence.

Markets are looking for China to be bold and introduce reforms in November, but the latest Internet rules signal timidity rather than strength.

There has been a rollback of the campaign to clamp down on runaway credit growth – the broadest measure of new credit nearly doubled in August.

The primacy of state-owned enterprises is the biggest barrier to China switching from manufacturing to services and to ending corruption. Too many Communist Party power brokers are making tens of millions of dollars off state-dominated China Inc. while Beijing lacks the political will to irk these cronies.

A freer media and Internet could end this corrosive dynamic fast and empower would-be entrepreneurs China still lacks. If your Web comment gets more than 5,000 hits or is reposted more than 500 times, expect a knock at the door.

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