China's Economy Needs Help, But Will It Come?

IF EVER THERE were conditions that cried out for stimulus, China appears to have met them. Recent gauges of growth and inflation were more than just disappointing.

- Bloomberg

After an encouraging start to the year, the expansion is in trouble. But authorities have given little sign they are prepared to jettison the caution that has characterized their actions. Fiscal policy has already done some work and, while economists predict interest-rate cuts later this year, the reductions are likely to be modest. The wait-and-see approach could be justified while activity was holding up reasonably well and the US was figuring out just how punitive tariffs would be. Beijing seems intent to just muddle through.

Figures released on Friday show a pronounced slackening. Production was more sluggish than anticipated and retail sales, which President Xi Jinping hoped would be a bright spot, were off the boil. Fixed-asset investment, a proxy for capital spending, languished. The jobless rate in urban areas edged up; at 5.2% it exceeds the US national measure by a fair margin. Deflationary pressures persist and the number of new loans plunged.