China's Politics Hinder Effort to Shore Up Economy Aly Song/Reuters A depot for aluminum ingots in Wuxi, in Jiangsu Province. China's industrial output is rising at its slowest rate in three years. BEIJING - When it comes to confronting economic slowdowns, the Chinese government has not been shy about making bold moves. Faced with the contagion of global recession four years ago, policy makers created a $585 billion stimulus package that helped inoculate the nation against the economic malaise still sapping the United States and Europe. But today, even as China's vaunted export manufacturing juggernaut loses force and the Shanghai stock market remains in a slump, the Communist Party appears so distracted by its politically tangled once-a-decade leadership transition that it is unwilling or unable to pursue the more ambitious agenda that many economists say is necessary to head off a far more serious crisis in the future. Although the departing government has tried in recent months to address decelerating growth by easing bank loan restrictions, increasing pensions and offering tax breaks to small businesses, a lack of consensus among the top stewards of the economy has stymied a more muscular response, insiders say. Similarly, many analysts question whether the incoming leadership has the political will to overcome the resistance of the so-called princelings and other well-connected families that have prospered under the current system. China's standard economic formula, they say, is losing its potency: overzealous government investment and lagging consumer spending are creating serious imbalances that are expected to lead to a much more painful reckoning, perhaps not long after the new raft of younger leaders assumes power in early 2013. "There are tough choices to make, but the central government appears to be so paralyzed they are just sitting on their hands," said Ho-Fung Hung, a political economist at Johns Hopkins University in Baltimore. The situation is looking increasingly dire. The economic data is indeed glum. Direct foreign investment has fallen for 9 months out of the past 10, and industrial output is rising at the slowest rate in three years. Last week, Frederick W. Smith, the chief executive of FedEx, the global airfreight titan, warned of more trouble to come, saying that China's faltering exports pointed to a weakening global economy in the coming year. Since the death of Deng Xiaoping, the wily leader who steamrollered his conservative opponents to introduce market reforms in the 1980s and "90s, China's political system has increasingly operated through consensus. The horse-trading, involving a dozen or so men who negotiate in secrecy, has dimmed the prospect of significant political or economic change. "The slogans are loud and the plans are grand, but when it comes to implementation, the constraints are many," said Zhao Xijun, an economics professor at Renmin University in Beijing. Prime Minister Wen Jiabao is a vocal advocate of what many experts see as the kind of change China needs: breaking up state-owned monopolies, encouraging more consumer spending and reducing reliance on investment in real estate and heavy industry. But he has already been rendered something of a lame duck because of his planned retirement in March. He lacks the political capital to undertake a more ambitious overhaul of the economy, particularly anything that would undercut the favored position of state monopolies, analysts say. "Wen is a spent force," said a person with close contacts in the upper levels of the Chinese government. To be sure, China's developing economy enjoys many advantages over those of most other major industrial nations, with growth still robust enough to prevent unemployment from rising significantly. But unrest is increasing, as riots at a big Foxconn electronics factory on Sunday demonstrated, and there is so much uncertainty surrounding economic policy and the leadership hand-over that few are willing to hazard a prediction about the future. "The system is so opaque and the new guys are such unknown entities that no one really knows what to expect," said Alistair Thornton, senior China economist at IHS Global Insight. Supporters of Xi Jinping, the man expected to be China's next president, and Li Keqiang, who is all but certain to replace Mr. Wen as prime minister, have been quietly putting out the word that the new team plans to introduce a more far-reaching agenda once the incoming leaders are secure in their new posts. Some even argue that the worse things get, the better the chance the new leaders will have to deal with China's biggest challenges after the successors are announced at the 18th Party Congress, expected to take place next month. Keith Bradsher contributed reporting from Beijing and Hong Kong. Patrick Zuo contributed research from Beijing.