China Policy Levers Jammed in Trump’s Flip-Flop World
Rare public infighting betrays the government’s paralysis.
Trump threw a spanner into China’s policy gears.
Photograph: iStockphoto/Getty Images
Caught unwillingly in a trade war, China’s economy is faltering. But those expecting a repeat of the stimulus during the global financial crisis a decade ago will be sorely disappointed. Rather, the country is sliding into a state of policy paralysis.
The latest sign of desperation came in a state media report on Monday that the Ministry of Finance is asking the China Banking and Insurance Regulatory Commission to allow banks to lower their risk weighting on local government bonds to zero percent from 20 percent. Under this proposal, municipal notes would be considered as safe as the ministry’s own debt. Since local government securities offer higher yields, banks would swarm to buy them.