This has compelled its leaders to adjust policies, but because they face domestic challenges that require sometimes conflicting policy measures, policy actions have been cautious and contradictory. Appreciating the magnitude of downside risks, the political leadership has now signalled a more forceful commitment to boosting the economy. Infrastructure spending will only jump-start the economy if local officials move expeditiously to implement projects. Fourth, private businesses are unlikely to regain confidence so quickly: Mixed signals from the leadership will keep private entrepreneurs unconvinced of the shift in the government’s attitude towards the private sector. • Growing concerns about China could lead to more capital outflows from China and further renminbi weakness.

Source: The Edge Markets May 10, 2022 09:35 UTC