China moves to stimulate a slowing economy

Overview

The storm clouds generated by the spreading global financial crisis have spurred China’s policymakers to put into motion major economic policy changes. Although some analysts anticipate a large new fiscal stimulus programme, we think priority will be given to the loosening of monetary policy via reductions in banks’ required reserves and increases in loan quotas. We expect fiscal initiatives to follow, focused on tax relief and speeding up the pace of spending on existing infrastructure...