Xi Doubles Down on Stability-First Slow Growth in China
While the U.S. and Europe pursue easy money policies, Beijing takes a cautious approach.
Donald Trump has called the leaders of the Federal Reserve “boneheads” for not doing enough to juice U.S. economic growth—even though the Fed has already cut interest rates twice this year. Meantime, the European Central Bank says it’s ready to buy as much debt as it takes to reflate the euro area. That leaves China as the only one of the world’s big three economies that isn’t slamming its foot on the growth pedal. It’s an extraordinary policy turnaround.
In past cycles, any hint that the Communist Party’s lofty growth forecasts were under threat led to all-in stimulus. This time around, even with the Chinese economy headed for the slowest expansion in almost three decades—and with more space to cut interest rates than its global counterparts have—President Xi Jinping is doubling down on his stability-first strategy. There’s stimulus, but it’s moderate, even minimal, and that has big repercussions for the world economy.