A weaker-than-expected 4.3% y/y rise in Q2 real GDP has led to a chorus of calls by China-watchers for stepped-up economic stimulus. Such advice is driven by two inter-related developments: (1) the extended slump in domestic demand, both consumer spending and private investment; and (2) growth now running below the government’s 2026 target range of 4.5%-to-5.0%. While we don’t expect Beijing to stand pat, it seems highly unlikely that any forthcoming measures will be meaningful. The fact is that China’s authorities do not have a tremendous amount of fiscal or monetary policy flexibility at their disposal. Thus, we ... (full story)