China's economy: Speed isn't everything FOR years, critics of China have complained that it prizes speed over balance. The economy's expansion has been heedless as well as relentless, breakneck as well as headlong. Rapid development has turned fishing villages into factory towns and factory towns into financial hubs, but it has also taken a toll. Heavy investment has crowded out consumption, and heavy industry has muscled out services, as if making stuff mattered more than serving people. This week, however, China faced a less familiar complaint: it is not growing fast enough. New figures showed the economy expanding by 7.7% in the year to the first quarter, marginally slower than the previous quarter's pace and notably slower than expected. The loss of momentum was a puzzle, given the spectacular surge in credit in January and March (see article). The fact it came at the same time as a lull in the American economy (see article) and a relatively gloomy set of forecasts for most big economies from the IMF did not help the mood. China's stockmarket reacted unhappily. However, just as fast growth masked underlying strains, so China's disappointing growth has obscured two encouraging trends that may matter hugely for China's future. Consumption, although still low, made a bigger contribution than investment to China's growth in the first quarter. That sustains a break with investment-led growth that dates back to 2011. Even more notable, services have trumped industry's contribution to GDP in the past three quarters and have almost matched it over the past four - which has not happened since the 1960s. In short China is modernising, becoming more like a Western economy, with consumers and services to the fore. And these two promising trends reinforce each other. Because services are more labour-intensive than industry, their growth boosts wages and household income. Fatter pay-packets then encourage consumption, and consumer spending, in turn, favours services. In economic life, as one economist has put it, "Result becomes cause and cause becomes result." Some of the results reflect political causes. By passing stronger labour laws in 2008, China's government bolstered workers" bargaining power and thus their consumer power. By allowing its exchange rate to appreciate, it has directed China's energies inward, away from exports and towards services, which are often consumed at the point of production. The regime is also busy easing the fiscal burden on the sector, replacing a clumsy turnover tax with a lighter value-added tax. Slower can be better If China's growth slows too sharply, throwing lots of people out of work, such structural improvements will count for little. Better balance is scant consolation to an economy on its knees. But the slowdown has not yet hurt employment. According to Nomura, a bank, the number of job vacancies per applicant in the first quarter was 1.1, the highest since records began in 2001. Urban employment grew by 3m. This tightness in the labour market suggests that China's economy is operating close to its limits. "Ultra high-speed growth" is no longer feasible, let alone desirable, as Xi Jinping, China's new president, points out. Rather than chasing growth at any cost, his government has imposed regulations on shadow banking, persevered with curbs on property speculation, and clamped down on government extravagance, such as the schmoozing and boozing, kowtowing and Maotai-ing that accompanies so much official business. As China's economy matures, its pace will slow. Fighting this economic law will only invite inflation, excess and harder reckonings. Growing fast is a poor alternative to growing up.