How Xi Jinping can fix China’s ‘Great Recession’

AS IT turns out, reopening alone is not enough to get China’s economy back on track. Only six months after the end of Covid Zero, manufacturing is already spluttering, one in five young people are jobless, and private businesses are not investing for the future.

There is a sense that the People’s Bank of China’s (PBOC) easing measures are no longer working. In a cover story last weekend, Caixin, an influential local news outlet, asked where all the central bank’s money went. M2, a broader measure of money supply, has been growing in double digits since the Shanghai lockdown more than a year ago. But there’s been little economic growth, and no inflation.

Consumers, for one, are not taking advantage of the central bank’s lower rates on new home purchases. Rather than buying more apartments, they’re speeding up payments on existing mortgages. Private businesses don’t seem to be expanding their fixed-asset investments either. Instead, consumers and entrepreneurs are cutting down debt, and putting excess cash into bank deposits.