Trillions in Rescue Aren’t Coming From China
Breaking out special last-ditch bonds won’t raise stimulus to levels the world hopes. Beijing is too constrained.
Back to building a bridge in Wuhan.
Photograph: Feature China/Barcroft Media/Getty Images
Don’t hold your breath. Massive Chinese stimulus isn’t coming to shore up the world.
As China tries to get back on its feet from Covid-19, policy makers are announcing more fiscal help to deal with the worst economic hit in decades. This has included plans to spend trillions of yuan on standard measures from the Beijing playbook, such as issuing infrastructure bonds to boost activity, lower lending rates to help struggling companies, and cheap credit for small banks to support them.
One measure from recent days stands out: Special central government bonds, a tool authorities have pulled out only twice before, in moments of dire financial pressure. This signals both seriousness and, ominously as the rest of the world looks for China to join in the rescue, that the country is being pushed into a corner. China’s economic engine, long a driver of global demand, may not rev up.