The writer is professor of finance at the Shanghai Advanced Institute of Finance
Recent swings in global financial markets have occurred partly because the market is unsure of the direction of post-Covid economic policy in the US and China. While inflation is probably the most daunting challenge facing the US Federal Reserve, growth has become the focal point of the People’s Bank of China’s deliberations.
Given that “stability” is the keyword for China’s economic policy in 2022, some investors have been surprised that the PBoC’s monetary policy has not been as active as they might have hoped. And such sentiment has grown stronger after a number of Chinese cities went into lockdowns of varying degrees of severity in response to the spread of the Omicron variant of Covid-19.