China's High Stakes Tennis Match

Even though the commentary was in Mandarin (my knowledge of which is limited to around 4 phrases), it was clear that Murray was struggling to gain the initiative and he was being bounced around the court by his opponent but it seems to us that China’s economic policymaking has entered a similar phase vis-à- vis the management of its economy.

For example, in 2013-14 the economy was strong and inflation was threatening and, so the authorities tightened aggressively. Naturally, as they tightened policy the economy slowed and, by early 2015, they had reversed

their stance and were easing (fiscal) policy again, apparently to little effect. Then came a much more concerted monetary easing in mid-2015 but this in turn pressured the currency, with the result that more and ever

more stringent capital controls were embraced. Then came problems with corporate indebtedness and bank solvency in early 2016 that resulted in a further easing of fiscal policy and even a de facto QE regime followed