From sure footed to feet of clay

Over the past two decades China’s economic policymakers have performed brilliantly, transforming China’s economy to become the impressive growth juggernaut of recent years. Even three years ago, when an overleveraged residential property price boom threatened the health of the economy and China’s financial system, the authorities were impressive in dealing with the problem. The current challenge facing China’s policymakers of dealing with a slowing economy while at the same time attempting to change growth drivers more towards services and retail spending appeared to be going reasonably well until the last couple of months. Essentially, China’s policymakers responded in textbook fashion easing monetary policy and expanding government spending – albeit through the less assured conduit of encouraging local government to spend more. Where the policy response really started to go haywire was when China’s authorities started to respond to financial market turbulence, some of which was of their own making. To read the full report click the (VIEW LINK)