The China Surprise We Should Have Seen Coming
With growth sagging and prices falling, the rate cut is welcome. But how much difference will it make?
Shifting expectations.
Photographer: Raul Ariano/BloombergIn a year of unpleasant surprises from China's economy, here's a development we should have foreseen: The central bank lowered interest rates. With growth disappointing and prices declining, Tuesday's easing from the People's Bank of China ought to have been a no-brainer.
That such an official response to the country's dour performance is considered a jolt speaks volumes about the opacity with which the PBOC operates, relative to its big-power peers. It also says a lot about how much expectations need to be reset. The world has become so accustomed to a China that turns in enviable economic results that it's hard to get our heads around what happens when slow growth becomes the norm rather than the exception.