Where now for Chinese policymakers?

CHINA

In April, when the Chinese authorities announced more policy stimulus, it looked like Chinese demand growth, after the summer, could become a meaningful driver of emerging markets growth again.

In June, we saw the first cautious evidence of the accelerated policy easing coming through: credit growth and infrastructure investment growth clearly improved from the average level of the first five months of the year. Since then, the global trade picture has deteriorated sharply, which has had a big impact on the Chinese manufacturing sector. This is the main reason why aggregate Chinese growth data has been so weak in recent months. The problem now is not that the policy easing is not working – we do see evidence of accelerating infrastructure investment growth – but that it is not ...