Two recent analyses challenge optimistic readings of China’s position. On the domestic front, China’s GDP figures systematically defer loss recognition under soft budget constraints, making reported growth more a reflection of credit expansion than genuine value creation. On the geopolitical front, the US-Iran war is far from a strategic windfall for Beijing.

Two new papers reveal how Chinese monetary policy transmits through distinct channels: internationally via trade and commodity prices rather than financial markets, and domestically via wholesale funding between banks. The domestic channel strengthens policy transmission to non-state banks but creates a critical trade-off by amplifying systemic risk during economic downturns.

Recent research identifies two distinct but complementary channels through which China transmits shocks to global financial markets, namely private portfolio outflows and positive surprises in Chinese Industrial Production. These parallel mechanisms reveal China’s growing role in synchronizing asset prices worldwide.

China’s economy faces significant headwinds from weak domestic demand, a slumping real estate sector, and trade tensions while at the same time continues to lead in high-tech exports and innovation, with targeted state support. Can this “new economy” offset the drag from the “old economy”?

What are the channels through which Chinese monetary policy shocks impact the global markets? In addition, a recent paper develops a novel measure of Chinese monetary policy shocks using high-frequency financial data.

In China due to the unique structure of its financial system, monetary expansion results mainly in credit expansion. The recent monetary policies announced by the PBOC that aim to stimulate growth and combat deflation, how effective will they be?

In China it was expansionary fiscal policy (and not monetary policy) that contributed to the rapid rise in shadow banking which persists despite efforts from the government to contain it.

New research identifies the channels through which an economic shock in China, such as a crisis in the Chinese property sector, impacts global financial markets and the U.S.

The role of government in China  has increased since 2013. How this change has affected the country’s ability to follow activist macroeconomic policy?  What are the emerging structural headwinds faced by the Chinese economy?

Why views vary so widely?