A revival in China? Recent govt stimulus fails to address deeper issues

The Chinese government has announced a stimulus, a “big bazooka”. The Shanghai composite index first surged 26 per cent and is now 19 per cent up over a month. Does this mean that the Chinese economy is healing, and that the machinery of government stimulus will bring the economy back to health? It is unlikely.

The Chinese government has a philosophy of control which extends into macroeconomics. Policymakers have desired “fine tuning” of the economy. Non-traditional levers of financial policy have been used for this purpose, such as rules in the central planning system that govern credit growth