For as much as China’s re-opening may give the world economy a boost, President Xi Jinping would be mistaken to anticipate a two-way street. With a major slowdown or recession widely forecast for the US and Europe, Beijing can’t count on growth being buttressed much from abroad. Domestic initiatives will have to take priority.
How far are authorities willing to go? After a flurry of measures introduced and ideas floated for lifting constraints on Chinese business, the central bank injected a note of caution late last week. Stimulus is fine, but let’s be attentive to the risks of doing too much and generating a burst of inflation. That was the gist of comments Friday by a top executive at the People’s Bank of China. The PBOC then passed up an opportunity Monday to cut a key interest rate and added less cash than expected to the banking system.